04/11/2007 03:30 PM Senate RESOURCES

              SB  44-APPROP: FIRE ISLAND WIND FARM                                                                          
                                                                                                                                
5:05:37 PM                                                                                                                    
CHAIR HUGGINS announced SB 44 to be up for consideration.                                                                       
                                                                                                                                
SENATOR MCGUIRE,  sponsor of SB  44, said the history  behind the                                                               
issue began  in the 1970s when  oil revenue came on  line through                                                               
TAPS  and $500  million was  set aside  for what  was called  the                                                               
Susitna Rive project, a specific  project, but the concept was to                                                               
help fuel the  Railbelt. Later, in 1985, the  Susitna project was                                                               
cancelled  and  $340  million  was  left and  that  is  when  the                                                               
Railbelt Energy  Fund was  created. The idea  behind it  was that                                                               
the Fund  would fuel  projects that help  improve the  grid along                                                               
the  Railbelt. They  talk  about the  Northern  Intertie and  the                                                               
Southern Intertie.  The Northern  Intertie consists  of Fairbanks                                                               
and friends and  they have succeeded in using a  large portion of                                                               
that  money  to  help  improve   their  grid.  She  provided  the                                                               
committee with  a list of  projects and noted some  projects were                                                               
off  the  Railbelt  - places  like  Kodiak,  Valdez,  Glennallen,                                                               
Southeast Four  Dam Pool and  power/cost equalization  (which has                                                               
nothing to do with the Railbelt).                                                                                               
                                                                                                                                
SENATOR  MCGUIRE said  SB 44  proposes to  use a  portion of  the                                                               
Railbelt Energy Fund  for what it was created for  and that would                                                               
be  to   help  improve  power  production   and  distribution  to                                                               
Southcentral Alaska.  The concept  is that  $24 million  would be                                                               
distributed  through  the  Department of  Commerce,  Community  &                                                               
Economic  Development through  a system  that was  set up  by the                                                               
legislature  by which  grants  are distributed.  So,  she is  not                                                               
proposing  something unusual.  This  money would  go towards  the                                                               
building of critical infrastructure.                                                                                            
                                                                                                                                
The  federal  government  also has  an  incentives  package  that                                                               
expires  on December  31, 2007.  So, there  is an  opportunity to                                                               
have some federal assistance in  this project. The partners in it                                                               
now include  Cook Inlet Regional  Incorporation (CIRI)  that owns                                                               
the land the wind generators would be located on.                                                                               
                                                                                                                                
5:09:35 PM                                                                                                                    
The concept  is that roughly 33  wind turbines would be  built on                                                               
Fire  Island  on  a  site  that has  been  carefully  crafted  to                                                               
maximize a desirable  level of wind. She pointed  out that Alaska                                                               
is well  behind the  alternative energy curve  and 30  states now                                                               
have  wind  turbines  as  a  major source  of  energy  for  their                                                               
communities.  She said  that  Canada and  Europe  have used  wind                                                               
power for over a decade.                                                                                                        
                                                                                                                                
SENATOR McGUIRE  explained that what  is unique about  Cook Inlet                                                               
is that  their homes are sitting  either directly on or  close to                                                               
some very serious hydro-carbon reserves,  but developing that gas                                                               
won't happen in enough time to  serve the needs of the community.                                                               
Right now Anchorage depends on natural  gas for 85 percent of its                                                               
residential and  commercial needs.  It is  estimated that  in the                                                               
next seven years, they will not have the energy they need.                                                                      
                                                                                                                                
She said  depending on their  size, turbines generate 1.5  to 3.6                                                               
megawatts   of  electricity   that   could   extend  service   to                                                               
Southcentral and  as far north  as Fairbanks. This is  the reason                                                               
Golden  Valley  Electric  is interested  in  this  project.  That                                                               
community is suffering more than hers.                                                                                          
                                                                                                                                
5:12:33 PM                                                                                                                    
She said there  is a lot of  politics in this area  and she would                                                               
hate  to see  a  good idea  that follows  the  principals of  the                                                               
Railbelt Energy  Fund to fall by  the wayside because of  it. She                                                               
concluded that it is time to  do this project. It isn't replacing                                                               
the hydro-carbon industry in this state, but supplementing it.                                                                  
                                                                                                                                
SENATOR McGUIRE said the planning  and feasibility are well under                                                               
way  and a  contribution  of $24  million from  a  fund that  was                                                               
designed to  help put power  into the grid seems  to her to  be a                                                               
pretty good bill.                                                                                                               
                                                                                                                                
5:13:53 PM                                                                                                                    
MARIT CARLSON-VAN  DORT, staff to  Senator McGuire, said  she was                                                               
available to answer questions.                                                                                                  
                                                                                                                                
JAMES  POSEY,  General  Manager, Anchorage  Municipal  Light  and                                                               
Power  (ML&P), said  he is  an officer  with the  Alaska Railbelt                                                               
Energy  Authority  (AREA).  He  said  ML&P  serves  about  29,000                                                               
customers in  Anchorage and the AREA  was formed by three  of the                                                               
largest  utilities -  Golden  Valley  Electric, Chugach  Electric                                                               
(CEA) and ML&P one and a half years ago.                                                                                        
                                                                                                                                
He  said the  utilities  have concluded  that  Fire Island  could                                                               
provide  good wind  and  renewable energy.  It  would have  ample                                                               
expansion acreage to  support a major wind facility  and one that                                                               
would be located  near the Railbelt system's  largest load center                                                               
and  which would  provide  a source  of  clean renewable  energy.                                                               
CEA, ML&P, CIRI  and Homer have continued research  on the Island                                                               
this  year to  keep the  project  going. Getting  clean power  is                                                               
important;   infrastructure   support   is  important   for   the                                                               
connectivity that  is required in  this medium-sized  load center                                                               
called the Railbelt area.                                                                                                       
                                                                                                                                
5:16:38 PM                                                                                                                    
CHAIR  HUGGINS asked  after the  first few  years of  the project                                                               
what would the price per kilowatt hour be.                                                                                      
                                                                                                                                
MR.  POSEY  replied  6.5  cents  to  9  cents  per  kilowatt.  He                                                               
currently charges 8.5 cents.                                                                                                    
                                                                                                                                
SENATOR WAGONER asked  what costs are figured  into that kilowatt                                                               
price.                                                                                                                          
                                                                                                                                
MR. POSEY  replied that the  kilowatt price  is just the  cost of                                                               
putting up the  turbines and delivering the power  that comes out                                                               
of them.  The infrastructure  support is  the connectivity  - the                                                               
line  to the  Island and  transformers, as  well as  roads and  a                                                               
little dock. He said the merchant  industry puts them up and owns                                                               
them for  6 - 12  years until the tax  credits are done  and then                                                               
generally his area would look at  running them for the next 30 to                                                               
40 years. There are lots of  different ways to approach that. The                                                               
6.5 cents to 9 cents would be a long term price.                                                                                
                                                                                                                                
5:18:13 PM                                                                                                                    
SENATOR WAGONER  asked if  that figure included  the price  to be                                                               
paid to CIRI for the location lease.                                                                                            
                                                                                                                                
MR. POSEY  replied yes, and  they would be  an owner of  the wind                                                               
turbines as well.                                                                                                               
                                                                                                                                
CHAIR HUGGINS  explained that  the committee  had to  adjourn for                                                               
other meetings; public  testimony on SB 44 would  continue at the                                                               
next hearing. He then adjourned the meeting at 5:19:30 PM.