Legislature(2017 - 2018)BARNES 124
04/04/2018 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB230 | |
| SB125 | |
| HB264 | |
| HB262 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 125 | TELECONFERENCED | |
| += | HB 262 | TELECONFERENCED | |
| += | HB 264 | TELECONFERENCED | |
| += | HB 401 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 230 | TELECONFERENCED | |
SB 125-EXTEND BOND AUTH FOR INTERIOR ENERGY PROJ
3:31:27 PM
SENATOR PETE KELLY, Alaska State Legislature, presented SB 125
as prime sponsor. He said the proposed bill was the companion
to HB 261. He explained it would extend the authorization date
for AIDEA bonds for the Interior Energy Project (IEP). He gave
some history of the projects and bonds. He said the sunset is
nearing. He spoke to air quality concerns in the Interior. He
said to date the project is going well. He said the project has
taken a lot of time for due diligence. He spoke to the
distribution system for natural gas in the area. He said
construction had begun on a storage facility. He underlined the
proposed bill does not propose spending more money, just
reauthorizes a project that the AIDEA board has already vetted.
3:35:34 PM
CHAIR KITO asked how much has been spent on the project.
JOSEPH BYRNES, Staff, Senator Pete Kelly, answered questions in
the hearing on SB 125. He referred to the quarterly report on
the project.
3:36:18 PM
REPRESENTATIVE WOOL asked about the ramifications on the project
if the funding is not provided.
SENATOR KELLY suggested the project may be "demobbed."
3:37:07 PM
GENE THERRIAULT, Alaska Industrial Development and Export
Authority (AIDEA), testified in the hearing on SB 125. He
pointed to a table on page 9 of the report showing expenditures
to date. He underlined that none of the bonds have been spent
to date. He spoke to storage issues and an increased source of
LNG. He said there was a general understanding that Fairbanks,
Alaska, has fairly limited overall demand for natural gas. He
said a lot of time was spent negotiating consolidation of the
utilities.
REPRESENTATIVE BIRCH asked how flexible the system is to source
gas from multiple areas.
MR. THERRIAULT answered the project had continually evaluated
the issue. He said it took longer to get a high level of
conversions. He spoke to sourcing from Cook Inlet. He said
supply had been negotiated with Hilcorp. He spoke to working
closely with the railroad. He said the railroad lends itself to
bulk shipments which are more than the current supply. He said
working out logistics with the railroad might tip the costs in
its favor, but currently tankers were used. He said it would
continue to be examined.
3:44:00 PM
REPRESENTATIVE KNOPP asked what is going to be the storage
capacity in the tanks that were being used.
MR. THERRIAULT answered the tank being constructed is 5.2
million gallons. The existing tank is about 300,000 to 350,000
gallons. He said the tank will be redeployed out to North Pole,
Alaska. He said the two tank farms would link together.
CHAIR KITO referred to the report and asked why the authorized
funding is not available for the component of the project.
MR. THERRIAULT answered the remaining capital funds are
committed to Pentex assets for the local utility. He added the
storage tank being constructed is using Sustainable Energy
Transmission and Supply Development Fund (SETS) money.
CHAIR KITO asked for an explanation of the ultimate ownership of
the project. He shared his concern that the state of Alaska is
paying to capitalize a purchase of a utility.
MR. THERRIAULT gave some history of the funding. He described
the AIDEA revolving loan fund. He said AIDEA would oversee the
SETS loans.
3:50:07 PM
CHAIR KITO suggested Mr. Therriault was saying that the money
being used for the utility will be paid back. He said he was
trying to understand what capital the state is putting into the
project and what the benefit to the state is.
MR. THERRIAULT said when AIDEA stepped in, it did not use IEP
funds, but revolving load funds. It was agreed there would be
temporary ownership while an agreement was negotiated with a
local entity. He said the original purchase price came with an
interest rate of 5.06 percent while the funds were deployed. He
said at the end of May the original purchase price plus interest
would be repaid and the revolving loan fund would be made whole.
He explained that as those funds come back, they will be made
available for AIDEA to relend under the terms of the SETS fund.
CHAIR KITO asked how much state General Fund (GF) money is going
into this utility.
MR. THERRIAULT answered that at closing the deal at the end of
May, the full $57.5 million of GF will have been expended to
consolidate the utilities under local control.
CHAIR KITO asked whether the state was purchasing a utility or a
part of the utility.
MR. THERRIAULT answered the funds were provided to the project
to consolidate the project under local control.
CHAIR KITO suggested the money is being given to the utility
directly from AIDEA.
MR. THERRIAULT answered in the affirmative.
3:53:57 PM
JOMO STEWART, Interior Gas Utility, testified in support of SB
125. He stated the plan calls for the use of over $40 million
of the $57 million for bonding authority. He added that the
remaining amount of the funds in the SETs fund would be quite
small.
3:55:11 PM
CHAIR KITO opened public testimony on SB 125.
3:55:24 PM
JON COOK, CFO, Airport Equipment Rentals, testified in support
of SB 125. He stated he was affiliated with a number of
entities in Fairbanks, Alaska, which own the largest retail
properties in the area. He said the lack of an uninterruptable
supply of gas has meant they could not bring new box stores to
town, as all major box stores use natural gas for heating and
cooling. He said having the supply will mean major retailers can
come to town and keep the costs low in the cities and villages.
3:56:59 PM
ELIZABETH WARLICK, Greater Fairbanks Chambers of Commerce,
testified in support of SB 125. She said the extension of AIDEA
bonding would be an essential financing component for the
project.
3:57:36 PM
JIM WILLIAMS, Chief of Staff, Fairbanks North Star Borough
Mayor, Testified in support of SB 125. He said the Interior Gas
Utility (IGU) project is a priority for consistency in pricing.
He said it is believed natural gas is a solution to the area's
air quality problem. He said there was an expectation that the
price of diesel fuel could go up another .43 per gallon due to
new regulations. He urged support of the proposed bill.
3:59:51 PM
CHAIR KITO held over SB 125.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB262 Amendment J.1.pdf |
HL&C 4/4/2018 3:15:00 PM |
HB 262 |
| HB264 Supporting Document - Soldotna Resolution.pdf |
HL&C 4/4/2018 3:15:00 PM |
HB 264 |
| HB264 Opposition Letters 3.10.18.pdf |
HL&C 4/4/2018 3:15:00 PM |
HB 264 |
| SB125 Supporting Document-Letter from DEC Div. of Air Quality (Mar. 21, 2018).pdf |
HL&C 4/4/2018 3:15:00 PM |
SB 125 |