04/15/2015 03:30 PM Senate RESOURCES

         SB  50-AIDEA: BONDS;PROGRAMS;LOANS;LNG PROJECT                                                                     
                                                                                                                                
4:00:45 PM                                                                                                                    
CHAIR GIESSEL announced  the consideration of SB  50, noting that                                                               
this is the fourth time the committee has taken it up.                                                                          
                                                                                                                                
SENATOR  COSTELLO  moved  to  adopt  CSSB 50  (  ),  version  29-                                                               
GS1019\E, as the working document.                                                                                              
                                                                                                                                
CHAIR GIESSEL objected for discussion purposes.                                                                                 
                                                                                                                                
4:01:32 PM                                                                                                                    
AKIS  GIALOPSOS,   staff  to  Senator  Giessel   and  the  Senate                                                               
Resources  Committee, Alaska  State Legislature,  Juneau, Alaska,                                                               
went over the proposed changes to  SB 50 for the sponsor. He said                                                               
in contrast to  Version W, sections 1,  2, 3, 6, and  7 have been                                                               
removed.  Those   sections  dealt   specifically  with   the  two                                                               
additional  components  of SB  50  that  did  not deal  with  the                                                               
Interior  Energy  Project  (IEP), namely  adjusting  the  bonding                                                               
authorizations for AIDEA for inflation  and repealing of existing                                                               
bond authorizations. The rationale  is two-fold: first, these are                                                               
clean-up provisions  and due diligence  warrants putting  them in                                                               
another bill where they can  be vetted. Secondly, it appears that                                                               
the exigent circumstances of accelerating  the IEP is requiring a                                                               
focus on the IEP's flexibility in  the context of AIDEA and thus,                                                               
scaling that bill to that project.                                                                                              
                                                                                                                                
The second changes address Senator  Coghill's installation of new                                                               
language in a new  sections 1 and 4 of Version  E. He deferred to                                                               
Senator Coghill for an explanation.                                                                                             
                                                                                                                                
4:03:21 PM                                                                                                                    
SENATOR  COGHILL  explained  that  section 1  deals  with  intent                                                               
language.  With  the increased  flexibility,  it  asks that  this                                                               
language focus  solely on advancing  the Interior  Energy Project                                                               
(IEP) referred  to in 26SLA. To  stay consistent, it asks  for an                                                               
open and  competitive solicitation process and  to select private                                                               
entities to participate in the LNG project.                                                                                     
                                                                                                                                
Section  4 in  the uncodified  law  asks for  reports that  would                                                               
require the  Alaska Industrial  Development and  Export Authority                                                               
(AIDEA) to submit quarterly reports  to the legislature by way of                                                               
the Chief  Clerk and Secretary  and to the  legislature generally                                                               
at  the  request of  Legislative  Budget  and Audit  (LB&A).  The                                                               
quarterly  reports   should  include   a  progress  on   all  the                                                               
components: a  status of  the local  distribution infrastructure,                                                               
an   up-to-date  monitoring   of   conversions  and   anticipated                                                               
conversions,  which   will  drive  economies  of   scale,  and  a                                                               
financial accounting  of funds expended and  those anticipated to                                                               
be spent.  Section 5  said there comes  a time  when requirements                                                               
should be repealed.                                                                                                             
                                                                                                                                
CHAIR GIESSEL asked why the year 2025 was chosen.                                                                               
                                                                                                                                
MR. GIALOPSOS  apologized for omitting  a fourth change,  the new                                                               
section 5,  which is repealer  language of the prior  section 4.{                                                               
The reason 2025  was added was to affirm the  IEP's trajectory of                                                               
coinciding with  first gas from  the North Slope production  of a                                                               
large  scale natural  gas project.  The intent  of the  chair and                                                               
others  of having  that timeframe,  even if  the IEP  enters into                                                               
obsolescence earlier, is so there would  be an ability for a post                                                               
mortem on  the positive or  negative consequences of  that policy                                                               
decision to inform future AIDEA endeavors.                                                                                      
                                                                                                                                
CHAIR  GIESSEL  invited  opinions  from Mr.  Therriault  and  Mr.                                                               
Parady on Version E.                                                                                                            
                                                                                                                                
4:08:02 PM                                                                                                                    
BILL  PARADY,   Deputy  Commissioner,  Department   of  Commerce,                                                               
Community  and  Economic  Development (DCCED),  deferred  to  his                                                               
colleague for comment,  but he appreciated the  opportunity to be                                                               
accountable for what is represented in section 4.                                                                               
                                                                                                                                
GENE  THERRIAULT,   Director,  Alaska  Energy   Authority  (AEA),                                                               
Fairbanks, Alaska, said the reporting  requirements and intent in                                                               
SB 50 are reasonable.                                                                                                           
                                                                                                                                
CHAIR  GIESSEL  found  no questions  and  removed  her  objection                                                               
saying CSSB 50 (RES) version \E was adopted.                                                                                    
                                                                                                                                
SENATOR STOLTZE said hope, caution, skepticism burns eternal.                                                                   
                                                                                                                                
SENATOR COGHILL said these reporting  requirements will help keep                                                               
a  bright light  on  the  IEP; due  diligence  by  AIDEA and  the                                                               
legislature  is important.  He guessed  another discussion  on it                                                               
would be needed next year.                                                                                                      
                                                                                                                                
CHAIR GIESSEL  commented that yesterday  they heard  great public                                                               
testimony from Fairbanks  and she had received an  email from one                                                               
of them, Mr.  Merrick Pierce, whose concluding  sentence was that                                                               
the meter price needs to be  closer to $10 mmbtu in Anchorage for                                                               
a  project  to work  and  she  thought  that  was a  pretty  high                                                               
requirement  for this  project to  pencil out  in Fairbanks.  She                                                               
said the main purpose of this CS  was to focus on the IEP and get                                                               
gas to Fairbanks as soon as possible.                                                                                           
                                                                                                                                
SENATOR  STEDMAN  commented  it's   clear  that  Fairbanks  needs                                                               
assistance with  air inversion  issues and the  cost of  oil over                                                               
the last  few years, and a  $10 in Anchorage price  would be nice                                                               
to have across the state.                                                                                                       
                                                                                                                                
4:15:59 PM                                                                                                                    
SENATOR COSTELLO  moved to report  CSSB 50(RES), version  E, from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
note(s). There were no objections and it was so ordered.