03/13/2009 03:30 PM Senate RESOURCES

          SB 121-ENERGY EFFICIENCY BLDGS/PUBLIC WORKS                                                                       
                                                                                                                                
CO-CHAIR   WIELECHOWSKI   announced  SB   121   to   be  up   for                                                               
consideration.                                                                                                                  
                                                                                                                                
3:36:01 PM                                                                                                                    
CO-CHAIR  MCGUIRE  moved  to  adopt  work  draft  CSSB  121(RES),                                                               
labeled 26-LS0586\W.  There was  no objection  and version  W was                                                               
before the committee.                                                                                                           
                                                                                                                                
3:36:36 PM                                                                                                                    
SHELLY MORGAN,  staff to Senator Wielechowski,  explained that SB
  will  reduce  the  cost of  operating  state  facilities  by                                                               
reducing the amount  of energy consumed by them over  the next 15                                                               
years. It  enables the state to  lead by example in  the arena of                                                               
energy efficiency  and better position Alaska  to receive federal                                                               
stimulus  funding  for  the  state   Energy  Program  grants.  By                                                               
prioritizing  energy  retro-fit  projects and  using  performance                                                               
contracts, the state can begin saving energy right away.                                                                        
                                                                                                                                
She  pointed out  that performance  contracts require  no upfront                                                               
payments from  the state. Performance contractors  perform energy                                                               
audits for facilities and make  whatever construction changes are                                                               
needed for  the energy  retro-fit. They  are paid  solely through                                                               
the energy savings the state accrues over time.                                                                                 
                                                                                                                                
3:37:31 PM                                                                                                                    
SENATOR WAGONER joined the committee.                                                                                           
                                                                                                                                
3:38:02 PM                                                                                                                    
MS. MORGAN  said that  these guaranteed savings  are paid  to the                                                               
energy service company  for the retro-fit and within  15 years or                                                               
less cost  savings from  efficiency upgrades  go directly  to the                                                               
state - saving public funds.                                                                                                    
                                                                                                                                
She said the Department of  Transportation and Public Facilities'                                                               
(DOTPF)  first  performance  contract  of  only  eight  buildings                                                               
resulted in a  savings of $365,991 based on  2006/07 rates, which                                                               
would be $557,096 based on 2008  rates. Within the first year the                                                               
savings from  just these eight buildings  could essentially cover                                                               
the annual  staffing and travel  requirements found in  the DOTPF                                                               
fiscal note. If the state  executed just 25 similar contracts, it                                                               
could save  over $13  million based  on 2008  rates in  the first                                                               
year.                                                                                                                           
                                                                                                                                
Two  fiscal  notes  from  DOTPF  are  for  doing  the  work  with                                                               
performance contracting -  $363.600; the other shows  the cost to                                                               
the  state without  performance contracting  - over  $17 million.                                                               
She said it  is their intent that the committee  adopt the fiscal                                                               
note based on doing performance contracting.                                                                                    
                                                                                                                                
3:39:17 PM                                                                                                                    
MS. MORGAN went  on to explain the six changes  made to version P                                                               
dated 3/9/09  that are now  found in  version W. All  the changes                                                               
were based on feedback from  experts and committee members at the                                                               
March 9 hearing; all changes have  been approved by the DOTPF and                                                               
the Alaska Energy Authority.                                                                                                    
                                                                                                                                
The first change is that  the database be updated annually rather                                                               
than  every  10  years.  This   can  be  done  simply  by  having                                                               
individual building  managers update data based  on their utility                                                               
bills.  Basically  the  individual  responsible  for  paying  the                                                               
utility bill for  a facility could easily enter  the utility data                                                               
into a spread sheet and once  each year that data could be rolled                                                               
up into the    rather than  paying a DOTPF staff  person to spend                                                               
hours compiling data on every facility.                                                                                         
                                                                                                                                
The  second  change  is  that all  facilities,  not  just  heated                                                               
facilities,  will be  retrofitted  and  eligible for  performance                                                               
contract retro-fit projects.                                                                                                    
                                                                                                                                
Third,  the  performance  contracts may  also  include  renewable                                                               
energy   projects.  "Alternative   energy"   was  replaced   with                                                               
"renewable energy"  to better fit  with the intent of  this bill.                                                               
When  determining the  best energy  efficiency measures  for each                                                               
facility,  the performance  contractor may  determine that  it is                                                               
appropriate  for a  facility  to generate  its  own energy  using                                                               
renewable sources.                                                                                                              
                                                                                                                                
The  fourth change  is that  the reference  to the  International                                                               
Energy Conservation Code (IECC) was  removed. The bill now states                                                               
that facilities will be made to  meet or exceed the most recently                                                               
published  edition of  the  Illuminating  Engineering Society  of                                                               
North America  (IESNA) standard 90.1  of the American  Society of                                                               
Heating, Refrigerating  and Air Conditioning  Engineers (ASHRAE).                                                               
She explained that  ASHRAE is more typically  used for commercial                                                               
facilities  and does  a much  better job  of addressing  Alaska's                                                               
climate conditions while still meeting  the same basic guidelines                                                               
found in the  IECC. The IECC identifies only  three climate zones                                                               
which are insufficient for the entire state of Alaska.                                                                          
                                                                                                                                
MS. MORGAN said  that fifth, the decision to  postpone a retrofit                                                               
due  to  lack  of  cost-effectiveness   was  modified  to  add  a                                                               
provision that  this decision may be  based in part on  wither or                                                               
not the department  would be able to meet a  return on investment                                                               
within 15 years after project completion.                                                                                       
                                                                                                                                
The sixth change  is that the energy use index  language found in                                                               
Sec.  44.83.955, was  adjusted to  better define  the energy  use                                                               
index  and  the  database.  The  Alaska  Energy  Authority  shall                                                               
establish an energy index to  measure energy consumption, and the                                                               
database they  prepare will be made  up of energy use  index data                                                               
for each facility.                                                                                                              
                                                                                                                                
She explained that  these changes do not alter  content, but just                                                               
provides clarity through definition.                                                                                            
                                                                                                                                
3:43:38 PM                                                                                                                    
SENATOR STEDMAN  remarked that the Railbelt  Energy Fund language                                                               
allows buildings and facilities  for energy conservation that are                                                               
state owned to be retrofitted, and  asked how often the state has                                                               
used it and how that ties into the bill.                                                                                        
                                                                                                                                
MS. MORGAN answered that starting in  2004 the DOTPF has done two                                                               
performance contracts totaling 16 buildings.  Now there is no way                                                               
of prioritizing the  retrofit. This bill not only  allows for and                                                               
encourages  the  performance   contracting,  but  establishes  an                                                               
energy use  database so  that they  can identify  which buildings                                                               
are consuming the  most energy so that the  retrofit projects can                                                               
start with the most energy consuming first.                                                                                     
                                                                                                                                
SENATOR  STEDMAN  added  that the  Railbelt  Energy  Fund  allows                                                               
access to those funds for  retrofitting state owned buildings and                                                               
facilities  for  energy  conservation  and it  appears  that  the                                                               
Railbelt has most of the  major state buildings. He was wondering                                                               
if that fund was every used  for that purpose and how that policy                                                               
affected this bill.                                                                                                             
                                                                                                                                
CO-CHAIR WIELECHOWSKI said  the capital in Juneau  and any public                                                               
facilities outside of  the Railbelt would not be  included in the                                                               
Railbelt  Energy Fund.  This bill  creates an  energy use  index,                                                               
which allows  the state  to prioritize  what will  be retrofitted                                                               
first.                                                                                                                          
                                                                                                                                
He thought it  better public policy and cheaper for  the state to                                                               
undertake performance based contracting,  because it doesn't cost                                                               
anything. The money you would  save in paying for utilities would                                                               
pay for the upgrades.                                                                                                           
                                                                                                                                
3:47:11 PM                                                                                                                    
CO-CHAIR MCGUIRE  moved to  pass CSSB  121(RES), version  W, from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
note(s). There was no objection and it was so ordered.