Legislature(2015 - 2016)BUTROVICH 205
03/20/2015 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| SB8 | |
| HJR4 | |
| SB57 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 8 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HJR 4 | TELECONFERENCED | |
| += | SB 57 | TELECONFERENCED | |
SB 57-CLEAN AIR ACT PLAN
4:30:04 PM
CHAIR GIESSEL brought SB 57 back before the committee and
invited Mr. Rokeberg to continue commenting on the bill. [CSSB
57(NRG), 29-LS0523\G was before the committee.]
4:30:34 PM
NORMAN ROKEBERG, Commissioner, Regulatory Commission of Alaska
(RCA), Anchorage, Alaska, said his opinions on SB 57 are not
official RCA opinions. He clarified his December 1 comments on
SB 57. He said it would require the drafting of a state
implementation plan that may prohibit the submission of a set
from the state. Under the bill the state would have to develop
and proceed with a plan but then it would run into the bill's
requirements which he found troubling. For example, section
(a)(1), on page 1, line 13, indicates that this does not result
in increased electrical utility rates and it would have a
disproportionate effect on households of low to moderate
incomes.
MR. ROKERBERG said page 7 of his comments referring to the
impact of EPA's mandate because of the goals they set and their
impact of shutting down Healy's plants 1 and 2 for the 45,000
Golden Valley Electric Association (GVEA) ratepayers in
Fairbanks. The estimate of increased cost would be $.05-.07 per
kilowatt hour, bringing rates up to $.29-.31 kilowatt hour or a
26 percent increase. The analysis is extremely difficult,
because the RCA does not have the capability to be to determine
the distinction between low and moderate income from a broad
retail rate. The impacts would be $450 per year across all
retail ratepayers. One could assume that increases will impact
low and moderate ratepayers even with a plan that would decrease
greenhouse gases.
4:34:27 PM
Texas, for instance, believes an in-state plan will raise costs
10 percent, but if the EPA does it, it will be 44 percent.
Similarly with the state of Ohio at 36 percent.
Additionally, subsection 2 regarding electrical reliability,
resource adequacy and transmission, is very vague and difficult
to understand. Closing the coal plants in Fairbanks would
exacerbate the problems they have now in terms of reliability.
Additionally, number three, a big part of the EPA plan is to
introduce a greater amount of renewables, but particularly
energy efficiencies and this will clearly impair existing
electrical generation capacity. Number four, obviously if there
is any reduction in Healy 1, GVEA has indicated they are
scheduling its potential retirement sometime around 2023. He was
not sure how that would impact the meaning of the bill, but it
would cost in terms of employment. These hurdles may prohibit or
restrict the ability of the state to do a plan and it is hanging
over the heads of the folks doing it and may have an impact on
the quality of their work.
MR. ROKEBERG said the RCA could look into the areas specific to
electric power, but doing all the rest of the things creates an
extra burden on them. The goal is to just get an exemption from
the EPA and to write a plan that Alaska can live with.
Further, he said Alaska has a long history of fighting against
federal intrusion on policy issues. He also differed on the
notion that not filing a plan would be beneficial to the mining
industry. He didn't think it would be helpful at all. Alaska
needs to write a plan it can live with.
SENATOR STEDMAN said he heard Mr. Rokeberg say that Rule 111(d)
would not impact the North Slope oil basin, but he hears
differently from the companies up there.
MR. ROKEBERG responded that at this point the 111(d) provision
only impacts five utilities on the Railbelt; it has no impact on
the North Slope. That is one of the problems. In every other
state, these designs are statewide, but in Alaska enforcement is
restricted to the Railbelt area. Efficiencies made in renewable
and energy efficiencies there are not even being counted by the
EPA. In addition, the Railbelt has an entire new generation
fleet and the EPA rule applied in 2012. So, a plan needs to be
written that would account for those new plants.
SENATOR STEDMAN said that energy is Alaska's biggest industry
and his understanding from the industry is that it will affect
them.
4:40:51 PM
CHAIR GIESSEL said the EPA is already in Alaska and she had
received letters of support for SB 57 from Alaska's Railbelt
Cooperative Transmission and Electric Company (ARCTEC), the
Alaska Chamber, the Teamsters, the Fairbanks Chamber, Consumer
Energy Alliance, the Miners Association, and more diverse groups
and she wasn't sure what Mr. Rokeberg was advocating for. The
bill advocates for a waiver at the very onset and to have the
rest of the data available to the legislature before any kind of
plan would be submitted seems only transparent.
MR. ROKEBERG said she had done an excellent job of getting
support for the bill, but he believed that the bill is based on
the premise that submitting a plan is not good and that the
requirements do not ultimately serve Alaska's purposes in
seeking an exemption. It adds work and analysis cannot even be
performed for many sections of the bill by the departments,
because they don't have economists on staff, which gave rise to
the fiscal note. In addition, it also gives authority to the DEC
whereas the original comments were developed by a working group
that cuts across numerous agencies that have expertise in doing
that. Putting the authority in DEC could create the need for
further fiscal notes.
CHAIR GIESSEL responded that, in fact, DEC has an economist on
staff and the new zero fiscal note comes about because of HB 140
that passed last year requiring departments to produce a good
faith estimate on the cost of implementing regulations. Federal
actions that require compliance were explicitly written into the
statute through HB 140. That funding, amounting to $278,000 in
FY16 provides for the procurement of an economist III position
as well as contractual assistance for the development of cost
estimates including data collection, analysis, and report of
findings in the amount required for the contract.
SENATOR GIESSEL said it is spelled out on page 2 of the fiscal
note. SB 57 requires the DEC to perform this analysis; they have
the money and it is unencumbered for FY16. The original fiscal
note estimated about $100,000 over the two fiscal years for the
contractual assistance and that would be included in what was
passed last year. So, in fact, this bill has a zero fiscal note.
4:45:37 PM
SENATOR STEDMAN said he is generally hesitant when committees
start zeroing out fiscal notes to avoid the Finance Committee.
CHAIR GIESSEL said this fiscal note came from the Division of
Legislative Finance.
SENATOR COSTELLO asked if the Department of Law (Department of
Law) could say whether the EPA has the authority under the
111(d) rule to regulate in this manner. In a way they are
recognizing that it has this authority by responding to it in a
manner this legislation does, which is to allow Alaska to seek
an exemption. How does that work?
4:48:31 PM
EMMA POKON, Assistant Attorney General, Department of Law (DOL),
Anchorage, Alaska, responded that the state is currently
participating in litigation in the Washington, D.C., Circuit
challenging Rule 111(d) and EPA's authority to issue the
proposed regulation. This legislation would be outside of the
legal question she is prepared to answer. EPA is continuing to
say that they believe they have the authority for this and the
rule will be issued this summer; the court will decide in the
end whether or not EPA has the authority.
SENATOR COSTELLO said she sits on the Department of Law's budget
subcommittee and earlier this week she asked the Attorney
General Craig Richards what the state's plan is on pushing back
against Rule 111(d). His memo in response says that the Clean
Power Plan rule is an example of an area where the state felt it
necessary to push back against the EPA. It went on to say that
the state is essentially submitting comments dealing with the
EPA's interpretation and how they believe it is wrong. She said
the state attached a legal analysis explaining why it believes
the EPA's proposed interpretation is improper. It mentions the
state is intervening in a lawsuit. Her concern is that the
Department of Law (DOL) is already engaged in this issue, but
maybe it should wait until the legislature weighs in.
4:52:24 PM
MS. POKON said the litigation was started a while ago in the
last administration and she couldn't say which branch of
government should be first to make a statement about the EPA's
authority.
CHAIR GIESSEL commented that this bill is the second line of
defense if the lawsuit should fail.
SENATOR WIELECHOWSKI asked if the state passes this and then
tries to put a plan in place, what happens if the feds reject
it.
MR. POKON replied that the feds would implement a plan.
SENATOR WIELECHOWSKI asked the likelihood that the state would
receive an exemption.
MS. POKON replied that Alaska has been given a lot of
exemptions.
4:54:44 PM
SENATOR WIELECHOWSKI asked if anyone else had asked for an
exemption.
MS. POKON replied that she had not seen specific request for an
exemption or waiver from the rule, but other states have
objected to EPA's authority or commented in a negative fashion.
SENATOR WIELECHOWSKI asked if it is possible that Alaska could
fail to produce an SIP in accordance with our own stringent
criteria and in turn cause ourselves to be subjected to a
federal implementation plan.
MS. POKON answered that her reading of SB 57 is that it would
require DEC to make affirmative determinations of the effect of
the state plan and it would not be submitting a state plan for
approval to the EPA until the determinations could be made. If
DEC could not make those determination then they wouldn't be
submitting a state plan, which under the terms of the Clean Air
Act would result in a federal implementation plan.
SENATOR WIELECHOWSKI said in other words, the legislature could
be making it so hard for DEC to come with a plan that meets
federal requirements such that the federal government rejects it
and then implements a federal plan.
MS. POKON replied that is a possible outcome.
SENATOR COGHILL said he liked what SB 57 was trying to do, but
maybe this should go into effect if the feds start giving us a
hard time on the exemption rather than doing it before the
exemption request is settled. Has the state already applied for
an exemption?
4:58:09 PM
SENATOR STOLTZE asked whether the 111(d) provisions are
implemented or in the development process and that might change
the relevancy of their approach.
4:58:41 PM
ALICE EDWARDS, Deputy Commissioner, Department of Environmental
Conservation (DEC), Anchorage, Alaska, responded that the EPA
has not finalized the rule making for 111(d); the state
submitted comments on December 1, which was at the end of the
comment period. The EPA has indicated that they will finalize
ruling making this summer. In the multi-agency (RCA, Alaska
Energy Authority (AEA), DEC and the Governor's Office) comments
to EPA, the state requested an exemption for this rule making
along with other associated comments. They don't know for
certain whether or not an exemption will be granted.
SENATOR COGHILL questioned the constitutionality of the proposed
rule and thought we need to focus there as long as possible, and
asked if SB 57 would back up their comments or weaken that
position.
MS. EDWARDS answered that state comments take three approaches;
they start with the legal aspects, which Department of Law spoke
about; it asks for the exemption and then depending on where EPA
landed they also put in information that might address some of
the ruling making issues if they moved forward and either of the
options came through. Then the real question becomes: in the end
it is not known how the final rule will look or how the state's
comments or litigation is going to be resolved. If the state
fails to get an exemption, the question becomes how the state
will develop a state plan and if the bill will allow development
of it and meeting the requirements.
5:02:40 PM
SENATOR STEDMAN clarified that the Senate Resources Committee
prepared the fiscal note is.
CHAIR GIESSEL said it may say that, but the consultant to it was
Legislative Finance.
SENATOR COSTELLO asked if the department could comment on her
concern, which is that the state cannot submit a plan that shows
there is no retail electric service rate increase. Every state
realizes that the consumer is the one who will pay and saying
that the state has to submit a plan that has no effect on
increased retail service rates could be tying our hands.
Finding no further questions, Chair Giessel held SB 57 in
committee.