Legislature(2015 - 2016)BELTZ 105 (TSBldg)
03/10/2015 03:30 PM Senate SPECIAL CMTE ON ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| SB50 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 50 | TELECONFERENCED | |
SB 50-AIDEA: BONDS; PROGRAMS; LOANS; LNG PROJECT
3:34:36 PM
CO-CHAIR MICCICHE announced the consideration of SB 50.
3:35:26 PM
FRED PARADY, Acting Commissioner, Department of Commerce,
Community and Economic Development, Juneau, Alaska, explained
that Governor Walker issued Administrative Order 272 (AO 272) in
late January that directed the Commissioner of the Department of
Commerce, Community, and Economic Development to collaborate and
facilitate at the highest levels of the Administration in
pursuit of two topics: one is consumer energy across the state
of Alaska, but the other was to keep the focus on an Interior
Energy Development Project to lower the cost of energy for
consumers and improve air quality for Interior residents in
Fairbanks. He said AO 272, in addition to HB 105, seeks to
essentially switch the evaluation of the gas supply for the
Interior Energy Project from the north to the south.
3:36:30 PM
EUGENE THERRIAULT, Director, Energy Policy and Outreach, Alaska
Energy Authority (AEA), Anchorage, Alaska, stated that he would
provide the committee with a sectional analysis of SB 50.
Section 1 is a portion that suggests the Alaska Industrial
Development and Export Authority's (AIDEA) limits be adjusted to
compensate for the erosion of purchasing power due to inflation.
He detailed that the suggestion is to increase the limit from $6
million to $10 million for projects that AIDEA participates in
that require the consent of the local government for siting the
project. He noted that the language for the $6 million limit was
originally put into the statutes in 1990 and has not been
adjusted since.
Section 2 of the bill is a further adjustment in bond financing
authorization for AIDEA for project development. He noted that
the current limitation of $10 million is suggested to be
increased to $25 million. He pointed out that the $10 million
limit was also put into statute in 1990 with no adjustment.
3:38:14 PM
Section 3 proposes two separate adjustments from $20 million to
$25 million with AIDEA requesting that the two dollar amounts to
be the same.
Section 4 is the proposed change to the Interior Energy Project
(IEP) financing. He detailed that IEP's original financing
package was limited to the "North Slope" via an LNG project. He
said due to the LNG Project's infrastructure price coming in
higher than expected, consideration was given to whether a
source of natural gas can be identified in the Cook Inlet.
[Section 4 deletes the phrase "on the North Slope" and changes
it to "in the state."] He noted that there was concern amongst
members of the Interior Delegation on the House side that a
modification be made to make sure the focus on Interior Alaska
as the anchor-demand to justify the infrastructure would be
retained. He noted that the suggested language is available for
the committee to consider.
3:40:38 PM
Section 5 is the proposed repeal of a portion of a previous bond
authorization used to build the FedEx facilities at the
Anchorage Airport that was never utilized. He explained that
AIDEA's bond-counsel suggested that its old surplus bond
authorizations be removed. He noted that active authorizations
are taken into account when AIDEA goes to the bond market.
Section 6 suggests removal of old bond authorizations that did
not move forward. He noted that the authorizations are all at an
age that the AIDEA board of directors would not utilize them.
Section 7 calls for an immediate effective date.
3:42:23 PM
SENATOR STEDMAN stated that he appreciated seeing language in
the bill that reins in loose bond authority. He asked if the
bill removes all of the bond authority that is older than 2004.
He inquired if a substantial amount of old bond authority still
remains on the books to build a gas-line.
3:43:33 PM
TED LEONARD, Executive Director, Alaska Industrial Development
and Export Authority (AIDEA), Anchorage, Alaska, replied that
AIDEA does not have any bond authorizations that deal with the
gas-line. He stated that the changes in the bill takes care of
any unused AIDEA bond authorizations. He revealed that new bond
authorizations will have five year sunset provisions.
SENATOR STEDMAN recalled that the Alaska Railroad has a number
of unused bond authorizations. He suggested that the committee
look to clean up addition bond authorizations. He remarked that
he likes the idea of a five year authorization window and noted
that the concept is good business.
CO-CHAIR BISHOP concurred with Senator Stedman that cleaning up
authorizations going back to 1994 is good business.
CO-CHAIR MICCICHE addressed Section 1 and noted that the
increase from $6 million to $10 million was roughly a 64 percent
increase. He asked if the proposed increase is based on
inflation numbers or right-sizing the limit.
3:45:23 PM
MR. LEONARD answered that the Consumer Price Index (CPI) was
used from 1990 to 2015 and the end result was a multiple of:
1.79. He detailed that the proposed increase was calculated to
$10.7 million and AIDEA rounded the amount to $10 million.
He noted that even though the proposed limit changes, under AS
44.88.172, AIDEA does not have to go back and get approval for
anything under $10 million. He asserted that AIDEA still has an
obligation to confer with any governmental bodies involved
within any project's area.
CO-CHAIR MICCICHE asked if "government bodies" included the
Legislature.
MR. LEONARD answered that the Legislature is not specified under
that statute. He detailed that "government bodies" meant local
governing local in the area where a project is going to reside
in.
3:47:33 PM
CO-CHAIR MICCICHE asked Mr. Therriault to address the proposed
adjustments made for inflation. He noted that one adjustment
goes from $6 million to $10 million, roughly a 64 percent
increase. He pointed out that the other proposed inflation-
adjustment in Section 2 due to inflation goes from $10 million
to $25 million.
MR. THERRIAULT answered that the proposed adjustments were a
combination of inflation and purchasing power.
CO-CHAIR MICCICHE noted that Mr. Therriault used the same logic
in Sections 1 and 2.
MR. THERRIAULT replied that the numbers were thought to be
reasonable adjustments and round numbers.
CO-CHAIR MICCICHE asked if there was another reason for the
difference between a 64 percent increase and a 250 percent
increase.
3:48:42 PM
MR. LEONARD answered that Co-Chair Micciche was correct and the
actual amount would be around $18 million for just purchasing
power. He noted that the adjustment also takes into account the
types of financing needed. He explained that intent was to align
bonding and loan participation funding. He said AIDEA believes
that $25 million was a reasonable number.
3:50:21 PM
CO-CHAIR MICCICHE asked Mr. Leonard to repeat why the limit is
being set at $25 million rather than $18 million.
MR. LEONARD specified as follows:
To bring parity between the tools that we can finance
through bonding between our different programs, we
would be able to bond for a loan participation up to
$25 million. So we are trying to bring parity in our
development finance program to say it have the same
bonding capability for that tool in our toolbox under
the development finance program.
CO-CHAIR MICCICHE noted that he intended to offer an amendment
during the previous legislative session to remove the "on the
Slope" language under his own suspicions that the project was
inadequately funded. He remarked that he agrees with the House
on bringing lower cost and reliable energy to the Interior. He
noted that he is concerned about the "in the state" language and
remarked that the committee should address that language later
on. He asked for AIDEA to address the eight bond authorizations
noted in the Governor's letter that the bill would repeal. He
asked if the noted projects have been completed and that there
was no additional use for any of the authorizations.
3:52:34 PM
MR. LEONARD replied that AIDEA has no projects that would be
utilizing the noted bond authorizations. He asserted that AIDEA
would feel obligated to come back to the Legislature if
consideration was given to do a project under any of the noted
authorizations.
CO-CHAIR MICCICHE remarked that committee staff-time will go
into looking at other "stale" authorizations.
3:53:50 PM
CO-CHAIR BISHOP noted Co-Chair Micciche's comments on previous
legislation that limited the state to just the "North Slope." He
remarked that the new language in Section 4 has benefit for not
only the Interior Energy Project, but maybe for other
communities yet to be identified. He pointed out that he
appreciates Mr. Shefchik, [Interior Gas Utility], reaching out
and meeting with folks from Glennallen regarding gas.
3:54:50 PM
SENATOR STEDMAN noted that it is rare for Senators who have been
around for a while to ever listen to a freshman Senator, even
when the Senator is right.
CO-CHAIR MICCICHE summarized that he believes that everyone is
particularly focused on a reliable source of energy for Interior
Alaska, something that he thinks is about time. He asserted that
he is focused on all options, but is concerned about a mirage.
He said he is very focused on some real solutions and noted the
inclusion of language into the bill that may help with more
economically feasible long-term options as well. He summarized
that it is imperative the state moves beyond the emergency
management stage of energy to the Interior.
[SB 50 was held in committee.]
3:56:33 PM
There being no further business to come before the committee,
Co-Chair Micciche adjourned the Senate Special Energy Committee
hearing at 3:56 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB50 ver A.pdf |
SNRG 3/10/2015 3:30:00 PM SRES 4/10/2015 3:30:00 PM |
SB 50 |
| SB50 Transmittal Letter.pdf |
SNRG 3/10/2015 3:30:00 PM |
SB 50 |
| SB50 Fiscal Note-DCCED-AIDEA-Zero-2-11-15.pdf |
SNRG 3/10/2015 3:30:00 PM |
SB 50 |
| SB50 Sectional Analysis.pdf |
SNRG 3/10/2015 3:30:00 PM SRES 4/3/2015 3:30:00 PM |
SB 50 |
| SB50 Fact Sheet.pdf |
SNRG 3/10/2015 3:30:00 PM SRES 4/10/2015 3:30:00 PM |
SB 50 |
| FBX North Star Borough R2015-08.pdf |
SNRG 3/10/2015 3:30:00 PM SRES 4/10/2015 3:30:00 PM |
SB 50 |
| Fairbanks Chamber Letter of Support for HB 105 & SB 50.pdf |
SNRG 3/10/2015 3:30:00 PM SRES 4/10/2015 3:30:00 PM |
HB 105 SB 50 |