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.]