Legislature(2015 - 2016)BUTROVICH 205
03/15/2016 01:00 PM Senate SPECIAL CMTE ON ENERGY
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| SB192 | |
| SB193 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 192 | TELECONFERENCED | |
| *+ | SB 193 | TELECONFERENCED | |
SB 192-AIDEA BONDS, LOANS, FUND; AEA LOAN
1:08:16 PM
CO-CHAIR MICCICHE announced the consideration of SB 192.
JESSE LOGAN, Chief of Staff, Senator McGuire, Alaska State
Legislature, Juneau, Alaska, stated that SB 192 does two things:
1. Provides bonding authority to Alaska Industrial Development
and Export Authority (AIDEA) to finance the Sweetheart Lake
Hydroelectric Project (SLHP) up to $120 million.
2. Authorizes Alaska Energy Authority (AEA) to issue a $22
million loan through the Power Project Loan Fund (PPF) for
necessary transmission lines.
MR. LOGAN disclosed that SLHP was seeking alternative funding
and asked that the committee consider removing the AEA portion
from the bill in a future amendment or committee substitute.
He explained that SLHP would encompass the following:
· Provide a maximum capacity of 19.8 megawatts.
· Designed to fully supply power to the Kensington Mine with
year-round power.
· Possibly supply additional power to Alaska Electric Light
and Power Company (AEL&P).
MR. LOGAN provided an overview of SLHP's impact on the
Kensington Mine and Southeast Alaska as follows:
· Major economic driver in the Juneau area.
· SLHP has the potential to lower the cost of the mine.
· SLHP has the potential to extend the life of the mine.
· SLHP could help the mine realize environmental benefits
from switching from diesel to clean hydropower.
· SLHP would run a submarine transmission cable across
Berners Bay in the Lynn Canal to the mine.
· Additional power from the mine could be sold to AEL&P and
utilized for the Greens Creek Mine which currently buys
from AEL&P and is under-supplied.
MR. LOGAN pointed out that with any AIDEA bonding authority, the
state would not be obligated to pay. He added that SB 192 does
not obligate AIDEA to issue bonds until suitability,
feasibility, and due diligence analysis was conducted. He
specified that SB 192 was necessary should AIDEA deem SLHP
suitable for issuing bonds to provide loans. He added that the
issuance of the bonds for sales provides an additional round of
due diligence by the international bond market. He said the
additional due diligence helps protect AIDEA's investment and
ensure a solid return for AIDEA and the State of Alaska.
1:09:27 PM
SENATOR STEDMAN joined the committee.
1:10:39 PM
DUFF MITCHELL, Managing Director, Juneau Hydropower, Inc.,
Juneau, Alaska, stated that he would provide an overview as to
why Juneau Hydropower has asked AIDEA for money. He said the
intent for SLHP was to supply power to both Kensington Mine as
well as the proposed Juneau District Heating Project (JDHP).
MR. MITCHELL provided details on SLHP as follows:
· 19.8 megawatts.
· Located at the very southern tip of the City and Borough of
Juneau.
· Sweetheart Lake is approximately 5-1/2 miles long and 1/2
mile wide.
· Sweetheart Lake was initially studied in 1906 for
hydropower.
· Sweetheart Lake currently has a power-site classification
and a Federal Reserve designation for hydropower.
· Sweetheart Lake has been studied by the Alaska Power
Authority, U.S. Geological Services, and others.
· SLHP construction would start in 2016 and be in production
by 2018.
· Sweetheart Lake is 35 miles from Juneau, but only 8 miles
from the AIDEA Snettisham line.
· SLHP is designed to provide firm-power during the winter
months.
· SLHP will add about 25 percent new generation and capacity
to Juneau.
1:12:46 PM
MR. MITCHELL stated that SLHP would support power for the Juneau
District Heating Project (JDHP). He detailed that JDHP would use
Alaska-based technology that has been developed in Juneau with
the [Ted Stevens Marine Research Institute (TSMRI).] He noted
that the Alaska Sealife Center in Seward uses another generation
of the technology. He summarized that the technology would be
brought full-circle around to provide district-heating in
Juneau.
1:13:19 PM
SENATOR HOFFMAN joined the committee.
MR. MITCHELL detailed JDHP as follows:
· Designed to harvest heat from the Gastineau Channel.
· Emerson Climate Technologies (ECT), subsidiary of Emerson
Company with $22 billion in sales, has developed and
patented the technology that produces 180 to 190 degree
heat from seawater.
· ECT has deployed their technology-suite in Drammen, Norway
since 2011.
· The technology is 300-percent efficient where one unit of
electricity going in produces three kilowatts units of
heat.
· JDHP would circulate heat around Juneau from 180 to 190
degrees through a pipe-distribution network that contains a
non-volatile fluid.
· JDHP's pipe-distribution network would use directional
drilling from basement-to-basement to minimize the
installation's impact on city streets.
· JDHP could provide all of Juneau with low-cost heating.
· JDHP's technology can be transferred to other locations in
Southeast Alaska.
CO-CHAIR MICCICHE asked if TSMRI was currently using the heating
technology.
MR. MITCHELL answered yes. He detailed that TSMRI broke ground
and "Treaded where nobody else had treaded before." He said the
Seward SeaLife Center added on to the technology-suite that
TSMRI started. He summarized as follows:
We are really proud that this is an Alaska-based
technology that we are bringing around full-circle and
it's neat to see Alaskans developing this technology.
CO-CHAIR BISHOP asked if JDHP would use seawater.
MR. MITCHELL answered that JDHP would take seawater out of the
channel at a depth of 100 feet.
CO-CHAIR BISHOP asked if the piping used for JDHP would be
stainless steel or incorporate a corrosion inhibitor.
MR. MITCHELL explained that JDHP would use a pipeline-pig for
internal cleaning. He added that filter systems would keep the
"big stuff" from coming in. He noted that the system would draw
seawater at low velocity so a vacuum was not created. He
detailed that the seawater would be brought in for the heat pump
system and circulated back out. He specified that the seawater's
heat would be transferred to freshwater that would be circulated
through the pipe-distribution network to buildings.
CO-CHAIR MICCICHE remarked that the system Mr. Mitchell
described was similar to a reverse of the refrigerant process.
SENATOR HOFFMAN asked what would happen to salmon and other
ocean sea life swimming near the system's intake.
MR. MITCHELL explained that TSMRI and the SeaLife Center use
filters to stop all of the fish and octopus from coming in, but
microscopic things like barnacles are not stopped.
1:18:17 PM
MR. MITCHELL presented a video to the committee on JDHP. He
divulged that John Cooper and his team from TSMRI received a
federal renewable energy award from the White House for the cost
savings from their work on the seawater heat pump system.
CO-CHAIR BISHOP asked what the seawater intake pipe was made out
of.
MR. MITCHELL replied that the pipe was metal with some high
density polyethylene (HDP) parts within it.
CO-CHAIR MICCICHE noted that the introduction to the video
touted an anti-hydrocarbon message.
MR. MITCHELL replied that the heating system did not use
hydrocarbons and saved money.
1:22:46 PM
CO-CHAIR MICCICHE asked how the heat taken from the seawater was
condensed.
MR. MITCHELL answered that the heat pump technology condenses
the heat. He noted that the technology has been around for over
100 years. He specified that the heat pump would take about 4 or
5 degrees out of the saltwater and return it back to the ocean.
SENATOR HOFFMAN asked how far north the heat pump technology
could be utilized.
MR. MITCHELL replied that the technology was dependent on the
water temperature, not the latitude. He noted that the seawater
heat pump system was used in Drammen, Norway, which was located
118 miles [latitudinally] north of Juneau.
SENATOR HOFFMAN asked if the heat-pump technology has to use
seawater.
1:25:04 PM
MR. MITCHELL answered no. He explained that the heat pump
technology can use any water source.
He summarized that Juneau Hydropower's projects would lower
Juneau's electricity costs. He pointed out that the Regulatory
Commission of Alaska (RCA) recently passed regulations
specifying that any purchases by a local utility must be just-
and-reasonable where the local utility cannot discriminate
against the qualifying facility as long as consumers are not
adversely effected. He added that the power transmission from
JDHP would add additional revenue for both the AIDEA Snettisham
and AEL&P. He remarked that SLHP is not getting its power
transmission for free, a fee would be paid that ultimately may
pressure rates to go down. He set forth that the SLHP business
model improves competitiveness and noted that "Firm hydropower
always beats diesel."
SENATOR EGAN noted that he was told that the power transmission
outbound from Lena Cove to Kensington Mine would have to be
upgraded. He asked who would pay for the upgrade from Lena Cove
on out.
MR. MITCHELL replied that the upgrade would be Juneau Hydropower
through the Lynn Canal Transmission Corporation.
SENATOR EGAN asked him to verify that Juneau Hydropower would
take care of the cost for the whole thing.
MR. MITCHELL answered yes. He specified that the upgrade's cost
ultimately would be paid for by customers like Kensington Mine,
but the cost would be prorated over 30 years to keep rates as
low as possible.
He reiterated that Juneau's heating costs would go down with
JDHP. He remarked that he has nothing against fossil fuels, but
noted that JDHP would advantage of a local resource as well as
helping Juneau deal with fossil-fuel price volatility. He
asserted that adding another fuel or heating source into Juneau
was just competition in a free market that ultimately drives
prices down.
He pointed out that SLHP would benefit Juneau with a $125
million private capital investment that would create 85
construction jobs and 35 indirect jobs. He added that JDHP would
create another $25 million investment with additional
construction and indirect jobs. He said the Lynn Canal
transmission upgrades would also provide benefits from a $22
million investment of private capital. He summarized that the
projects he noted would provide economic development in Juneau
during a period of decline in the state.
1:29:51 PM
CO-CHAIR MICCICHE asked why the number of SLHP's construction
jobs were so low.
MR. MITCHELL explained that the 85 construction jobs would be
for a 2-year project. He noted that the dam at Sweetheart Lake
was only 111-feet high and 278-feet across, but the project's
tunnel and some other things created the jobs. He added that the
dam-construction stage could be done in one-construction season.
MR. MITCHELL set forth that Juneau Hydropower's team was looking
forward to making their proposal happen and having AIDEA
participate in its financing. He specified that Juneau
Hydropower was not looking at AIDEA to fully take on the
projects' full load, equity and private capital investment was
part of the plan. He summarized that Juneau Hydropower was
excited to bring the technology forward and provide Alaskan
leadership to make the projects happen with the local community,
its players, and its local-labor force.
CO-CHAIR BISHOP asked how much has been invested in the Juneau
hydro-project to date.
MR. MITCHELL answered that approximately $4 million in hard-
dollars in addition to soft-dollars have been invested.
CO-CHAIR MICCICHE opened public testimony.
1:31:51 PM
MARY BECKER, Mayor, City and Borough of Juneau, Juneau, Alaska,
disclosed that the City and Borough of Juneau Assembly
unanimously voted for a letter of support for SLHP and JDHP.
1:32:59 PM
PAUL GROSSI, lobbyist; Alaska State Pipe Trades, Alaska
Ironworkers, and Juneau Building Trades; Juneau, Alaska, stated
that the unions support the projects because of the added jobs
and positive impact on Juneau's economy. He estimated that the
three projects would create 100 construction jobs with 5 to 10
permanent fulltime positions. He pointed out that Juneau has a
skilled construction force that will have leave the state if
there are no jobs. He specified that SB 192 was permissive
language that does not require AIDEA to loan money until
additional analysis determines viability. He opined that $120
million in loans from AIDEA could allow the agency and the state
to make as much as $120 million. He set forth that SB 192 would
allow a value-added industry to happen. He remarked that the
project will not happen if said AIDEA determines that the
project is not viable.
1:39:17 PM
ROBERT GRIMM, Alaska Power and Telephone Company, Skagway,
Alaska, said the proposed project was innovative and worth the
effort. He concurred with Mr. Grossi that SB 192 was just
permissive language and AIDEA still had a lot of due diligence
to conduct.
1:40:21 PM
MIKE CRAFT, President/CEO, Delta Wind Farm, Delta Junction,
Alaska, stated that he supported the project. He disclosed that
he has been involved with renewable energy development in Alaska
for the last eight years and admitted that the battle has been
tough to bring projects forward. He pointed out that the state
wanted 50 percent of energy sources to be renewable with the
intent to attract private-sector capital. He said Alaska's
independent power producers heard the state's message to find
renewable resources to take advantage of. He opined that Mr.
Mitchell's project had a lot of attributes to it with respect to
economic development, public benefit, and jobs.
1:41:41 PM
RODNEY HESSON, International Brotherhood of Electrical Workers
(IBEW) Local 1547 and Juneau Building Trades, Juneau, Alaska,
stated that the project was good because jobs would be created
and the succession plan for a trained workforce can continue.
1:43:07 PM
MAX MIELKE, Business Manager, Plumbers and Pipefitters Local
262, Juneau, Alaska, stated that he represented 100 members in
Southeast Alaska. He said his union has 15 apprentices in its
program with the intent to keep the program going. He revealed
that all of the building and construction trades in Southeast
Alaska has 950 members with 80 apprentices. He set forth that SB
192 was about jobs and the project was very important to its
members.
1:44:44 PM
COREY BAXTER, Representative-Local 302, International Union of
Operating Engineers (IUOE), Juneau, Alaska, said the union
supported SHLP. He set forth that SHLP was a project that would
impact and benefit Juneau and Southeast Alaska by creating
direct and indirect family-wages jobs.
CO-CHAIR BISHOP asked if IUOE supported the use of apprentices
for SHLP.
MR. BAXTER answered yes.
CO-CHAIR BISHOP stated that he wanted to make sure that the
contractor utilized apprentices in the project.
1:47:14 PM
WAYNE ZAGARLICK, Vice President and General Manager, Coeur
Alaska-Kensington Mine, Juneau, Alaska, disclosed that Coeur
Alaska was the owner and operator of the Kensington Mine. He
detailed that the mine employed 340 employees and provided
employment opportunities for 30 contractors. He revealed that
labor was the mine's largest operating expense, followed by the
cost for electricity from diesel fuel. He admitted that
providing sustainable employment for Juneau's local economy was
dependent on the mine managing and reducing its costs. He stated
that competitively priced hydroelectricity could be a
significant contributor towards the mine's sustainable
viability. He opined that Alaska's economy has greatly benefited
from its significant energy supply through its vast oil and
natural resources. He set forth that Southeast Alaska's
hydroelectric resource had extensive potential for generation
and exportation. He stated that SLHP was a true step towards
diversification.
CO-CHAIR BISHOP asked how long the mine's life might be extended
by the lowered operating costs from SLHP.
MR. ZAGARLICK replied that quantifying the mine's life was
difficult. He admitted that metal prices played a big role in a
mine's viability. He said reducing operating costs made
extending the mine's life more likely.
1:50:22 PM
JOHN SPRINGSTEEN, Executive Director, AIDEA, Anchorage, Alaska,
stated that the preliminary review has indicated that the
project may be suitable for AIDEA to issue bonds for. He said
AIDEA would still need to go through its feasibility and due
diligence analysis. He specified that SB 192 would allow AIDEA
to issue bonds in excess of its $25 million limit without prior
legislative approval.
1:51:35 PM
GENE THERRIAULT, Team Leader, Interior Energy Project, Alaska
Industrial Development and Export Authority (AIDEA), Anchorage,
Alaska, stated that he was available to address questions
regarding a possible Alaska Energy Authority (AEA) loan for $22
million through the Power Project Loan Fund (PPF) for necessary
transmission lines. He noted that had been part of the Power
Project Loan Committee at AEA. He pointed out that Jesse Logan's
testimony indicated that dropping the AEA section from the bill
would make the issue moot.
CO-CHAIR MICCICHE announced he would hold SB 192 in committee.
He recognized a testifier who voiced his support for SB 192.
KIRK PERISICH, Representative, Pacific Northwest Regional
Council of Carpenters (PNWRCC) Local 1281, Juneau, Alaska, noted
that he also represented millwrights and pile drivers. He
explained that the projects in SB 192 would provide short term
and long term jobs. He added that the "Alaska Hire" provision
would assure that the majority of labor money would stay in the
state.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB192 Version A.pdf |
SNRG 3/15/2016 1:00:00 PM |
SB 192 |
| SB 192 Sponsor Statement.pdf |
SNRG 3/15/2016 1:00:00 PM |
SB 192 |
| SB192 Fiscal Note-DCCED-AEA-3-11-16.pdf |
SNRG 3/15/2016 1:00:00 PM |
SB 192 |
| SB192 Fiscal Note-DCCED-AIDEA-3-11-16.pdf |
SNRG 3/15/2016 1:00:00 PM |
SB 192 |
| SB 192 and HB143 Letter of Support-Duff Mitchell-Juneau Hydropower-3-4-16.pdf |
SNRG 3/15/2016 1:00:00 PM |
HB 143 SB 192 |
| SB192 and HB143 Letters of Support Packet.pdf |
SNRG 3/15/2016 1:00:00 PM |
HB 143 SB 192 |
| SB192 and HB 143 Resolutions of Support CBJ, SEC, ANBC.pdf |
SNRG 3/15/2016 1:00:00 PM |
HB 143 SB 192 |
| SB192 and HB 143 Letter of Support- AIDEA Leonard 3-11-15.pdf |
SNRG 3/15/2016 1:00:00 PM SNRG 3/31/2016 3:30:00 PM |
HB 143 SB 192 |
| SB192 and HB 143 Letter of Support-AEA SFG 3-16-15.pdf |
SNRG 3/15/2016 1:00:00 PM SNRG 3/31/2016 3:30:00 PM |
HB 143 SB 192 |
| SB 192 Letter of Support- AIDEA JohnSpringsteen 3-11-16.pdf |
SNRG 3/15/2016 1:00:00 PM |
SB 192 |
| SB 192 Juneau Hydro Project Presentation 3-15-16.pdf |
SNRG 3/15/2016 1:00:00 PM |
SB 192 |
| SB 193 Version A.pdf |
SNRG 3/15/2016 1:00:00 PM |
SB 193 |
| SB193 Sponsor Statement.pdf |
SNRG 3/15/2016 1:00:00 PM SNRG 3/31/2016 3:30:00 PM |
SB 193 |
| SB 193 Fiscal Note-DCCED-RCA-3-11-16.pdf |
SNRG 3/15/2016 1:00:00 PM SNRG 3/31/2016 3:30:00 PM |
SB 193 |
| SB 193 SB277 Supporting Documents Letter CIRI Response to APA letter 3-19-10.pdf |
SNRG 3/15/2016 1:00:00 PM SNRG 3/31/2016 3:30:00 PM |
SB 193 SB 277 |
| SB 193 Supporting Document letter APA 2-29-16.pdf |
SNRG 3/15/2016 1:00:00 PM SNRG 3/31/2016 3:30:00 PM |
SB 193 |
| SB 193 Leg Research Report on Regulation Sb277 3-5-10.pdf |
SNRG 3/15/2016 1:00:00 PM SNRG 3/31/2016 3:30:00 PM |
SB 193 SB 277 |
| SB 193 Letter of Support- AIPPA 3-4-16.pdf |
SNRG 3/15/2016 1:00:00 PM SNRG 3/31/2016 3:30:00 PM |
SB 193 |
| SB 193 APT Letter of Support 3-11-16.pdf |
SNRG 3/15/2016 1:00:00 PM SNRG 3/31/2016 3:30:00 PM |
SB 193 |
| SB 193 Letter of Support- CIRI 3-4-16.pdf |
SNRG 3/15/2016 1:00:00 PM SNRG 3/31/2016 3:30:00 PM |
SB 193 |