Legislature(2025 - 2026)BUTROVICH 205
05/05/2025 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| SB32 | |
| SB180 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 32 | TELECONFERENCED | |
| += | SB 180 | TELECONFERENCED | |
SB 32-ALLOWED COSTS IN ELECTRIC COOP RATES
3:31:57 PM
CHAIR GIESSEL announced the consideration of SENATE BILL NO. 32
"An Act relating to costs incurred by certain electric utilities
for renewable energy and battery energy storage."
3:32:06 PM
SENATOR HUGHES joined the meeting.
3:32:07 PM
CHAIR GIESSEL, speaking as sponsor of SB 32, paraphrased from
the sponsor statement:
[Original punctuation provided.]
Senate Bill 32 (version N)
Sponsor Statement
"An Act relating to costs incurred by certain electric
utilities for renewable energy and battery energy
storage."
This bill seeks to remove barriers to small renewable
energy and battery storage projects in the Railbelt,
which will benefit Alaskans.
Alaska's electric cooperatives organized under AS
10.25 that participate in the Railbelt Reliability
Council certified by the Regulatory Commission of
Alaska (RCA) are rate-regulated.
RRC Railbelt Reliability Council, integrated
planning process
RTO Railbelt Transmission Organization
This legislation mirrors the approach used by many
electric cooperatives in the U.S., focusing on
renewable energy projects and battery energy storage
projects.
CHAIR GIESSEL explained that the legislature created the
Railbelt Reliability Council (RRC) in 2024. RRC does integrated
project planning for the railbelt grid. She contrasted this with
the Railbelt Transmission Organization (RTO), which manages the
railbelt backbone transmission system.
3:33:32 PM
CHAIR GIESSEL continued to paraphrase the sponsor statement for
SB 32:
[Original punctuation provided.]
This bill would allow small renewable energy projects
and battery energy storage projects to advance at a
faster rate and would eliminate the projects under
five megawatts from rate-regulation by the Regulatory
Commission of Alaska, thus freeing the RCA to work on
larger, more pressing matters.
Projects five megawatts and larger would still need to
go through the RCA for approval, as is currently done.
SB 32 streamlines the approval process for adding
small renewable energy and battery energy storage
projects along the Railbelt.
This will help diversify generation resources and
gradually reduce the reliance on fossil fuel power by
electric utilities, leaving more locally sourced
natural gas available for other uses.
Under this bill, the Houston Solar project is 8.5
megawatts and [would require] rate approval by the
RCA. Fire Island Wind is 17.6 megawatts and would
still be required to seek rate approval from the RCA.
3:34:50 PM
CHAIR GIESSEL commented that Regulatory Commission of Alaska
(RCA) reviews take time. She added that the reviews are
extensive and costly. She emphasized that the intention of SB 32
is to diversify Alaska's generation resources and utilize
renewable energy sources when available. She explained that this
legislation would exempt up to three of the 5-megawatt projects
from RCA approval during a three-year timeframe. She said these
changes would limit the effects of those projects on the
transmission system. She noted that upcoming invited testimony
would address this issue.
3:35:38 PM
SENATOR WIELECHOWSKI joined the meeting.
3:35:54 PM
INTIMAYO HARBISON, Staff, Senator Cathy Giessel, Alaska State
Legislature, Juneau, Alaska, noted that there is a committee
substitute (CS) for SB 32.
3:36:41 PM
CHAIR GIESSEL solicited a motion.
3:36:52 PM
SENATOR WIELECHOWSKI moved to adopt the committee substitute
(CS) for SB 32 work order 34-LS0307\I, as the working document.
3:37:09 PM
CHAIR GIESSEL objected for purposes of discussion.
3:37:14 PM
MR. HARBISON provided a brief explanation of changes from
version N to version I of SB 32. He directed attention to CSSB
32, page 1, lines 9-10. He explained that the CS would reduce
the size from 15,000 kilowatts to 5,000 kilowatts. The CS would
also limit the number of projects to no more than three projects
in a three-year period. He directed attention to CSSB 32, page
1, line 13 and said the CS changes 15,000 kilowatts to 5,000
kilowatts. This is the extent of the changes between version N
and version I.
3:38:00 PM
SENATOR DUNBAR stated that he preferred the original version of
SB 32. He said he would like to hear invited testimony regarding
the decision to change 15,000 kilowatts to 5,000 kilowatts. He
opined that it is unfortunate that the Houston Solar Project in
the Matsu Valley was too large to meet the 5,000-kilowatt cap.
He stated that he would have liked that project to move forward
without requiring RCA approval. He further opined that reducing
the amount from 15,000 kilowatts to 5,000 kilowatts is an over-
adjustment. He suggested the possibility of a future amendment
to raise the limit to 10,000 kilowatts. He emphasized that he
supports the original version of SB 32, but said he would not
object to adopting the CS.
3:39:05 PM
CHAIR GIESSEL said there are electric transmission and economic
reasons for the change from 15,000 to 5,000 kilowatts, as well
as for limiting the number of projects during a three-year
timeframe. She indicated that invited testimony would provide
further details.
3:39:27 PM
SENATOR CLAMAN shared his understanding that the three projects
per three-year period limits the number of projects a particular
utility or project manager can have during that timeframe; the
limit does not apply to the total number of projects regionally
or statewide. He asked whether this understanding is correct.
3:39:53 PM
CHAIR GIESSEL affirmed this understanding.
3:40:04 PM
CHAIR GIESSEL removed her objection. She found no further
objection and CSSB 32, work order 34-LS0307\I, was before the
committee.
3:40:57 PM
GWEN HOLDMANN, Chief Scientist, Alaska Center for Energy and
Power, University of Alaska Fairbanks, Fairbanks, Alaska,
introduced herself and said she would provide technical context
for CSSB 32, work order 34-LS0307\I.
3:41:29 PM
MS. HOLDMANN advanced to slide 1 and provided a brief overview
of CSSB 32. She pointed out the change in the project size
threshold and the project count limit.
3:41:50 PM
MS. HOLDMANN advanced to slide 2:
[Original punctuation provided.]
What this bill does and does not do:
• Does not prohibit the construction of a project
<15 MW. This has already been exempted (42.05.785
section preapproval for large energy
facilities). This does not impact this aspect of
"pre-approval."
• This bill addresses rate basing and pass-through
of costs from IPPs. It allows the utility to put
the entire costs of the project (or PPA) into the
rate base, without being subject to RCA review
(only the coop board of the "constructing"
utility is the decision maker).
• CS limits both the size and the number of
projects that can qualify.
3:42:52 PM
MS. HOLDMANN advanced to slide 3:
[Original punctuation provided.]
Why change the threshold from 15MW-> 5MW?
The 5 MW threshold reflects real system constraints.
Projects larger than 5 MW are more likely to connect
to the transmission system rather than a local
distribution network, making them far more likely to
impact other users and require regional coordination.
There's a practical inflection pointtypically
somewhere between 5 and 10 MWwhere a project begins
injecting more power than the local distribution
system can safely or efficiently carry
MS. HOLDMANN explained that the Houston Solar Farm, a roughly 6-
megawatt project that was connected to the distribution grid for
Matanuska Electric Association, is one example of a project that
lies within that 510-megawatt inflection point.
3:44:12 PM
MS. HOLDMANN said that upcoming slides would help to illustrate
this issue. She invited Steve Colt to present those slides.
3:44:36 PM
STEVE COLT, Research Professor, Alaska Center for Energy and
Power, University of Alaska Fairbanks, Fairbanks, Alaska,
advanced to slide 4, containing an image of an elephant:
[Original punctuation provided.]
Thought experiment
Very expensive project (14 MW)
Current Scenario:
• Not prohibited under AS 42.05.785
• Increased rates could probably be passed through
under SRF for a while
• But, the RCA might not approve rate-basing of the
project at some point (e.g., general rate case).
• Another utility or other parties within their own
service territory could challenge the rates.
Original Language SB 32:
• Project is still not prohibited under AS
42.05.785
• The additional project costs would be
automatically added to the rate base or passed
through (for purchased power)
• They could not be challenged by others at the
RCA.
• Limits other parties' ability to challenge the
rate (especially another utility that is not
represented in the original decision).
MR. COLT explained that currently, a project larger than 15
megawatts would be subject to RCA preapproval under AS
42.05.785. A project that is 15 megawatts or larger without RCA
approval is prohibited. He briefly described how cost recovery
would impact rate payers and offered examples.
3:50:51 PM
SENATOR CLAMAN shared his understanding that lowering the
threshold from 15 to 5 [megawatts] is essentially providing
consumer protection, insofar as the increased costs would be
passed through via rate increases. He asked for confirmation of
this understanding.
3:51:31 PM
MR. COLT concurred. He said the next slide would provide further
clarification.
3:51:56 PM
MR. COLT advanced to slide 5, containing an image of a small
elephant:
[Original punctuation provided.]
Thought experiment continued
Very expensive project (4 MW)
Current Scenario:
• Not prohibited under AS 42.05.785
• Increased rates could probably be passed through
under SRF for a while
• But, the RCA might not approve rate-basing of the
project at some point (e.g., general rate case).
• Another utility or other parties within their own
service territory could challenge the rates.
CS for SB 32:
• Project is still not prohibited under AS
42.05.785
• The additional project costs would be
automatically added to the rate base or passed
through (for purchased power)
• They could not be challenged by others at the
RCA.
• Limits other parties' ability to challenge the
rate (especially another utility that is not
represented in the original decision).
MR. COLT explained that, in essence, the co-op board would
determine whether the project is prudent for the purposes of
going into the rate base. The Regulatory Commission of Alaska
(RCA) would not be able to (directly) weigh in on the project's
cost-effectiveness and whether the project should be allowed to
influence the rate base (whether in whole or in part). He stated
that projects smaller than 5 megawatts depend on the co-op board
to make cost-effective decisions; therefore, those projects
could potentially have fewer consumer protections. He commented
that this aligns with Senator Claman's interpretation that the
change to the megawatt threshold would result in added consumer
protections. He asked whether this sufficiently answers that
question.
SENATOR CLAMAN replied yes.
3:54:09 PM
MR. COLT advanced to slide 6, containing an image of a small,
caged elephant:
[Original punctuation provided.]
Thought experiment continued
Very expensive project (4 MW)
Current Scenario:
• Not prohibited under AS 42.05.785
• Increased rates could probably be passed through
under SRF for a while
• But the RCA might not approve rate-basing of the
project at some point (e.g. general rate case).
• Another utility or other parties within their own
service territory could challenge the rates.
CS for SB32:
• Project is still not prohibited under AS
42.05.785
• The additional project costs would be
automatically added to the rate base or passed
through (for purchased power)
• They could not be challenged by others at the
RCA.
• Limits other parties' ability to challenge the
rate (especially another utility that is not
represented in the original decision).
3:54:11 PM
CHAIR GIESSEL asked for clarification of the differences between
slide 5 and slide 6. She noted that the elephant on slide 6 is
caged, while the elephant on slide 5 is not.
3:54:44 PM
MR. COLT said that the cage on slide 6 is meant to illustrate
that dropping the limit down to 5 megawatts not only reduces the
threshold but also limits the project pool to those projects
which fit within the distribution system.
3:55:32 PM
MS. HOLDMANN added that from a technical standpoint, this limits
the project to the local distribution network. From the
standpoint of the decision-maker, the co-op board is the entity
making decisions for those projects that are 5 megawatts or
lower. Therefore, if project costs escalate - or if the board
decides the project is worthwhile despite escalating costs -
this is a local decision with local impacts. She stated that the
Alaska Center for Energy and Power does not want to interfere
with a board's ability to move forward with a project of this
kind.
3:56:32 PM
SENATOR MYERS noted that the current scenarios specified in the
presentation included the risk that RCA may not approve the
rate-basing of a new project. He asked what it means, both for
the utility and the consumer, if the RCA does not approve the
rate-basing.
3:57:01 PM
MS. HOLDMANN said RCA has the duty to ensure that projects are
in the best interest of consumers. She noted cases where
projects were constructed that may or may not have been in the
best interest of consumers from a rate standpoint. The RCA's
decision regarding any project is unknown, which results in
increased risk for the utility (if a project is built that the
utility cannot recover rates from in the future). She opined
that that is part of what SB 32 is addressing.
3:58:11 PM
SENATOR DUNBAR asked for clarification about whether the 6-
megawatt Houston Solar Farm did or did not alter the
transmission system.
3:58:34 PM
MS. HOLDMANN explained that there are many technical factors to
consider, including the robustness of the distribution system.
She stated that the Houston Solar Farm was connected to the
distribution system - and was at the system's upper limit. She
stated that the 5-megawatt threshold is somewhat arbitrary. An
alternative would be to consider any project connected to the
transmission versus the distribution system. She reiterated that
the Houston Solar Farm was able to connect to the distribution
grid.
3:59:18 PM
SENATOR DUNBAR said that arbitrary lines are often drawn because
of their simplicity (and sometimes out of necessity). He
surmised that it may be better to consider the transmission
versus distribution system; however, he acknowledged that this
could introduce a great deal of complexity. He opined that the
testimony related to the Houston Solar Farm, along with the
upcoming slides related to economies of scale, suggest that the
limit should fall somewhere above 5 megawatts. He suggested that
increasing the limit would allow for larger projects that could
meet the economies of scale outlined in the presentation. He
wondered if increasing the single-project limit to 7 or 7.5
megawatts, with a 3-year limit of 15 megawatts (regardless of
the total number of projects), would be a good alternative.
4:00:51 PM
MS. HOLDMANN agreed that some limits, including the 5-megawatt
limit, are arbitrary. She said that anything over 7.5 megawatts
would almost certainly be connected to the transmission system;
however, it depends on the project's placement within the
overall system. She said she is not prepared to speak
definitively on this issue. She mentioned that CSSB 32 covers
both energy generation and battery storage systems and suggested
that considering a different threshold for battery storage
systems could be appropriate, since those systems interact with
the grid in a different way.
4:01:42 PM
SENATOR HUGHES asked whether the local distribution systems vary
in capacity and could therefore handle different thresholds. She
opined that setting the limit around whether a project moves
beyond the local distribution system makes more sense.
4:02:48 PM
MS. HOLDMANN replied that local distribution systems do vary in
capacity; however, this is related to infrastructure as well as
the physical electrical lines. Each utility likely has its own
unique vulnerabilities and areas with stronger distribution
nodes. She stated that she is unable to speak to any individual
utility. She reiterated that the 5-megawatt threshold was
arbitrary; however, this number is also related to potential
economic impacts. She referenced the remaining three slides in
her presentation (slides 7-9) and explained that economies of
scale are limited when the threshold is raised above 5
megawatts.
4:04:02 PM
CHAIR GIESSEL briefly discussed the role of the Railbelt
Reliability Council (RRC) in the integrated planning process.
She asked Ms. Holdmann to review this.
4:04:26 PM
MS. HOLDMANN said the RRC has two roles: setting reliability and
interconnection standards and resource planning. She explained
that, in this case, any projects greater than 15 megawatts would
be subject to the integrated resource plan developed by the RRC.
She invited Mr. Colt to elaborate on this.
4:05:00 PM
MR. COLT added that, according to Alaska Statute, a project
greater than 15 megawatts must be approved in advance by the
RCA. He emphasized that projects that have not received prior
approval are prohibited. He opined that this is a "blunt
instrument" for projects greater than 15 megawatts.
4:06:20 PM
MS. HOLDMANN added that it may be worth considering the point at
which a project of a particular size may impact neighboring
utility jurisdictions or the transmission system. She indicated
that it is important to ensure that the arbiter is clear in the
event of disagreements between different utilities. She stated
that gaps are undesirable and offered examples to illustrate
this point.
4:07:22 PM
CHAIR GIESSEL said that there is the potential to bypass RRC and
RCA by breaking a large project into multiple small pieces. She
acknowledged that the regulatory review process (done by RCA) is
expensive and lengthy; however, this process provides greater
consumer protection. She added that RRC is responsible for
generation planning. She asked for comment on this issue.
4:08:23 PM
MR. COLT briefly discussed gaps in the supervisory structure. He
offered a hypothetical situation involving a very costly project
that fell just below the 15-megawatt threshold. He stated that,
while RCA would have limited authority in that case, the
utilities involved could take legal action. He offered the
Bradley Lake Hydroelectric Project as an example of one such
case. The result was more costly to the utilities than RCA
involvement would have been.
4:10:21 PM
SENATOR MYERS stated that SB 32 applies specifically to
renewable energy projects and is an attempt to make building
those projects more accessible. He offered several examples and
asked why, if the intention is to increase experimentation and
get projects on the grid more quickly, this is not extended to
all energy projects.
4:11:28 PM
MS. HOLDMANN deferred the question and stated that she does not
see a technical reason why SB 32 could not be expanded.
4:11:48 PM
CHAIR GIESSEL stated that her intention is to expand the ability
for renewable projects (particularly solar and wind). The
independent power producers and the utilities are considering
more renewable energy sources. She opined that nuclear energy is
a great idea but acknowledged that this is not technically
considered a renewable energy source. She further opined that
non-renewable energy sources such as coal and natural gas
require regulation. She stated that she would not object to an
amendment adding nuclear energy to SB 32.
4:13:27 PM
CHAIR GIESSEL opened public testimony on SB 32.
4:13:55 PM
KEN HUCKEBA, representing self, Wasilla, Alaska, testified in
opposition to SB 32. He said he is both a rate payer and has a
history in the energy industry. He opined that SB 32 is a
justification for small infractions to become larger
infractions. He offered several examples to illustrate this. He
said Alaska cannot afford to have unreliable energy sources. He
offered to supply the information to the committee. He
emphasized that regulatory oversight is needed, regardless of
project size. He indicated that renewable energy sources are not
reliable or affordable and SB 32 would result in ratepayers
paying for transmission and backup infrastructure for
"greenwashing profiteers." He expressed resentment at this
proposal and stated that he is opposed to SB 32.
4:16:29 PM
CASSIE ANDREWS, representing self, Anchorage, Alaska, testified
in opposition to SB 32. She asserted that the changes proposed
by this legislation are reckless and dangerous. She emphasized
the importance of RCA oversight. She asserted that, without RCA
oversight, Alaskans will be at the unchecked will of
environmental activists pushing unreliable energy projects. She
reiterated that more oversight is needed, and RCA must retain
the authority to vet projects before they are thrust onto
ratepayers. She asserted that utility co-op boards are being
infiltrated by radical green agenda activists. She stated that
SB 32 has no place in Alaska's energy future.
4:17:32 PM
CHAIR GIESSEL closed public testimony on SB 32.
4:17:46 PM
CHAIR GIESSEL held SB 32 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 180 Sponsor Statement.pdf |
SRES 5/5/2025 3:30:00 PM |
SB 180 |
| SB 180 Fiscal Note DCCED.pdf |
SRES 5/5/2025 3:30:00 PM |
SB 180 |
| SB 180 Sectional Analysis .pdf |
SRES 5/5/2025 3:30:00 PM |
SB 180 |
| SB 180 - RCA Notice if Utility Tariff Filing.pdf |
SRES 5/5/2025 3:30:00 PM |
SB 180 |
| CS v.I.pdf |
SRES 5/5/2025 3:30:00 PM |
SB 32 |
| SB 32 Sponsor Statement.pdf |
SRES 5/5/2025 3:30:00 PM |
SB 32 |
| SB 32 Sectional Analysis .pdf |
SRES 5/5/2025 3:30:00 PM |
SB 32 |
| SB 32 Holdmann Testimony.pdf |
SRES 5/5/2025 3:30:00 PM |
SB 32 |
| SB 32 Fiscal Note RCA.pdf |
SRES 5/5/2025 3:30:00 PM |
SB 32 |