04/26/2021 03:15 PM House LABOR & COMMERCE

         SB 69-EXEMPT RENEWABLE ENERGY ELECTRIC PLANTS                                                                      
                                                                                                                                
4:39:29 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS announced  that the next order  of business would                                                               
be  SENATE BILL  NO.  69,  "An Act  extending  an exemption  from                                                               
regulation  as  a  public  utility   for  plants  and  facilities                                                               
generating electricity entirely  from renewable energy resources;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
4:39:52 PM                                                                                                                    
                                                                                                                                
DIRK CRAFT, Staff, Senator Josh  Revak, Alaska State Legislature,                                                               
presented SB  69 on behalf of  Senator Revak, prime sponsor.   He                                                               
explained  that   the  proposed  legislation  would   extend  the                                                               
exemption from  July 1, 2021, to  July 1, 2028, for  power plants                                                               
that   utilize  renewable   resources.     He  noted   Alaska  is                                                               
experiencing increasing private investment  in the development of                                                               
renewable energy and that since  2010 Alaska has exempted certain                                                               
independent  power producers  (IPPs)  from  regulation under  the                                                               
Regulatory Commission  of Alaska (RCA), which  is responsible for                                                               
certifying utilities,  regulating rates, resolving  disputes, and                                                               
protecting  customers.   Exemptions were  available to  IPPs that                                                               
meet  four criteria:   they  generate  electricity entirely  from                                                               
renewable energy, the  facility is under 65  megawatts, they sell                                                               
power  only  to  a  regulated public  utility,  and  the  project                                                               
doesn't receive state tax credits or  grants.  The extra layer of                                                               
regulation  can  prevent  IPPs from  providing  investment  while                                                               
adding  to the  cost  of government;  exempting  IPPs under  such                                                               
narrow  conditions ensures  that there  isn't costly  duplicative                                                               
regulation.    He  said  that consumers  are  protected  due  RCA                                                               
consideration of the public purchase  agreements between IPPs and                                                               
public utilities;  therefore, he  said, the exemption  through SB
 would  continue state oversight  in power  purchase agreements                                                               
and consumer protection.                                                                                                        
                                                                                                                                
MR. CRAFT  pointed out  that an amendment  from the  Senate Floor                                                               
made two  small changes in the  text of SB  69.  He said  that an                                                               
additional reference  to the electrical  reliability organization                                                               
(ERO) statute was  made to clarify that  the regulatory exemption                                                               
under  AS 42.05.711(r)  does  not apply  to  the applicable  ERO-                                                               
related  regulations under  AS 42.05.760  to AS  42.05.790, which                                                               
were  authorized under  Senate Bill  123 during  the Thirty-First                                                               
Alaska State  Legislature.   He also noted  that the  sunset date                                                               
was reduced to seven years.                                                                                                     
                                                                                                                                
4:42:10 PM                                                                                                                    
                                                                                                                                
JENN  MILLER,  Chief  Executive  Officer,  Renewable  Independent                                                               
Power  Producers ("Renewable  IPP"), testified  in support  of SB
.   She said Renewable  IPP is  an Alaskan small  business that                                                               
develops,  builds, and  operates utility-scale  solar farms  like                                                               
the Willow  Solar Farm.  She  explained that an IPP  is a private                                                               
entity that owns  and operates a power generation site  such as a                                                               
solar or wind farm; the IPP  connects to the power grid and sells                                                               
power to  the utilities  at wholesale prices.   For  example, she                                                               
said,  the  Willow  Solar  Farm  sells  power  to  the  Matanuska                                                               
Electric Association  (MEA) for 8  cents per kilowatt  hour while                                                               
the  retail rate  is approximately  18 cents  per kilowatt  hour.                                                               
She  noted that  MEA  operates the  infrastructure  of the  power                                                               
grid.  She  said the IPP model allows private  investment to fund                                                               
projects, thereby allowing  investors to take on the  risk of the                                                               
project   and   subsequently   introduce   competition   to   the                                                               
cooperative  model  of  power  generation.   She  said  that  the                                                               
Houston Solar Farm  is approximately seven times  larger than the                                                               
Willow Solar Farm  and with the addition of  the Houston project,                                                               
the solar  capacity of the  state will  almost double.   She said                                                               
the  Houston project  commenced by  identifying the  location and                                                               
then  approached  MEA  to work  on  technical  studies  regarding                                                               
infrastructure and  the feasibility  of being able  to tie  in to                                                               
the grid.  The IPP worked  with MEA on a power purchase agreement                                                               
and when  MEA and the  IPP agreed on  a pricing model,  she said,                                                               
the contract  went to the  Regulatory Commission of  Alaska (RCA)                                                               
for review  and approval.  She  pointed out that the  function of                                                               
RCA  is  to  ensure  fairness  and public  interest.    Upon  RCA                                                               
approval,  she  said,   the  project  may  be   built  and  start                                                               
generating power.                                                                                                               
                                                                                                                                
4:46:59 PM                                                                                                                    
                                                                                                                                
MS. MILLER  said that SB  69 would  remove a layer  of additional                                                               
oversight; in  the absence  of the  exemption under  the proposed                                                               
legislation the IPP would be  required to file a quarterly report                                                               
with RCA,  which would require additional  legal and professional                                                               
staff to  support the filings.   She pointed out that  the reason                                                               
why the  absence of exemption  equates to  duplicative regulation                                                               
is that  RCA already  approved the contract  between the  IPP and                                                               
the utility,  MEA; the utility  already files a  quarterly report                                                               
on the  amount of  energy produced  by the IPP  and how  much the                                                               
utility  paid  for  it.   Duplicative  regulation  increases  the                                                               
overhead of IPP projects and costs  money for RCA.  She said that                                                               
private investors  look at opportunities  across the  country; as                                                               
Alaska's requirement  for such oversight  is unique in  the U.S.,                                                               
the exemption  would put Alaska's  IPPs on a level  playing field                                                               
with other  power producers across  the country when it  comes to                                                               
attracting private  investment.   She pointed  out that  wind and                                                               
solar installation are two of  the fastest-growing occupations in                                                               
Alaska  and an  exemption  under SB  69  would increase  economic                                                               
opportunities.                                                                                                                  
                                                                                                                                
4:49:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FIELDS  commented  that  battery  storage  is  used  in                                                               
smaller communities, and  he asked whether the  economics of such                                                               
storage are becoming more favorable for larger communities.                                                                     
                                                                                                                                
MS.  MILLER  replied   that  the  cost  of   battery  storage  is                                                               
decreasing each year.                                                                                                           
                                                                                                                                
4:50:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCCARTY asked whether  the proposed legislation is                                                               
fair to large companies.                                                                                                        
                                                                                                                                
MR. CRAFT explained that when  the proposed legislation was first                                                               
introduced during the Twenty-Sixth  Alaska State Legislature, the                                                               
intention  was to  identify newer  sources  of renewable  energy;                                                               
large projects  are usually generated  by utilities,  while small                                                               
IPPs  are  not classified  as  utilities  but are  selling  power                                                               
wholesale to  the public utilities.   The intention of SB  69, he                                                               
said, is  to create  certainty in  the regulatory  environment to                                                               
attract private investment.                                                                                                     
                                                                                                                                
REPRESENTATIVE MCCARTY  asked how selling energy  to utilities at                                                               
a lower wholesale price translates to savings for consumers.                                                                    
                                                                                                                                
MR. CRAFT said he would send price information.                                                                                 
                                                                                                                                
4:53:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FIELDS asked  Ms. Miller  to  talk about  the cost  per                                                               
kilowatt  hour  for the  IPP  versus  the  cost a  homeowner  may                                                               
experience with a rooftop solar power installation.                                                                             
                                                                                                                                
MS. MILLER  replied that  solar power is  currently sold  for 7.8                                                               
cents per  kilowatt hour, and  future projects should  have lower                                                               
prices.   Residential solar  panel owners  are allowed  to offset                                                               
their electricity  bills by their  solar power production  at the                                                               
full retail  rate of 18  cents per  kilowatt hour, she  said, and                                                               
the payback  time for residential solar  systems is approximately                                                               
10 years.                                                                                                                       
                                                                                                                                
4:55:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NELSON  asked what  the worst case  scenario would                                                               
be if SB 69 fails to pass.                                                                                                      
                                                                                                                                
MR.  CRAFT replied  that Ms.  Miller's  small IPP  would have  to                                                               
start  hiring staff,  at  substantial cost,  to  prepare for  the                                                               
quarterly filings to RCA.                                                                                                       
                                                                                                                                
REPRESENTATIVE NELSON asked,  "So it would start  closing up some                                                               
of the smaller shops around Alaska and give more regulations?"                                                                  
                                                                                                                                
MR. CRAFT  responded yes,  the regulations  would go  into effect                                                               
and  IPPs  would need  to  plan  to  make quarterly  filings  and                                                               
evaluate the  cost and  how it  could affect  the financing  of a                                                               
power project.                                                                                                                  
                                                                                                                                
[SB 69 was held over.]