Legislature(2023 - 2024)SENATE FINANCE 532
04/30/2024 01:30 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Integrated Railbelt Transmission System | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 307 | TELECONFERENCED | |
| + | SB 217 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
April 30, 2024
1:37 p.m.
1:37:38 PM
CALL TO ORDER
Co-Chair Olson called the Senate Finance Committee meeting
to order at 1:37 p.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Curtis Thayer, Executive Director, Alaska Energy Authority;
Gwen Holdmann, Alaska Center for Energy and Power,
University of Alaska Fairbanks; Angela Rodell, Staff,
Senator Cathy Giessel.
SUMMARY
^PRESENTATION: INTEGRATED RAILBELT TRANSMISSION SYSTEM
1:39:46 PM
CURTIS THAYER, EXECUTIVE DIRECTOR, ALASKA ENERGY AUTHORITY,
(AEA) discussed the presentation, "Modernizing The Railbelt
Grid: Senate Bill 217" (copy on file). He pointed to slide
2, "About AEA":
AEA's mission is to reduce the cost of energy in
Alaska. To achieve this mission, AEA strives to
diversify Alaska's energy portfolio increasing
resiliency, reliability, and redundancy.
Railbelt Energy
AEA owns the Bradley Lake Hydroelectric Project,
the Alaska Intertie, and the Sterling to Quartz
Creek Transmission Line all of which benefit
Railbelt consumers by reducing the cost of power.
Power Cost Equalization (PCE)
PCE reduces the cost of electricity in rural
Alaska for residential customers and community
facilities, which helps ensure the sustainability
of centralized power.
Rural Energy
AEA constructs bulk fuel tank farms, diesel
powerhouses, and electrical distribution grids in
rural villages. AEA supports the operation of
these facilities through circuit rider and
emergency response programs.
Renewable Energy and Energy Efficiency
AEA provides funding, technical assistance, and
analysis on alternative energy technologies to
benefit Alaskans. These include biomass, hydro,
solar, wind, and others.
Grants and Loans
AEA provides loans to local utilities, local
governments, and independent power producers for
the construction or upgrade of power generation
and other energy facilities.
Energy Planning
In collaboration with local and regional
partners, AEA provides economic and engineering
analysis to plan the development of cost-
effective energy infrastructure.
1:43:29 PM
Mr. Thayer addressed slide 3, "AEA Active Projects and
Services." The slide showed a map of Alaska with the
various active projects and services under the authority.
1:44:00 PM
Mr. Thayer discussed slide 5, "Railbelt Opportunities." He
directed committee attention to the last name on the list
at the left-hand side of the slide, Dixion Diversion. He
explained that Dixion Diversion was at Bradly Lake, which
was owned by the state and had been in operation for 32
years. He said that the lake provided the lowest cost
energy on the Railbelt at $0.04 per kilowatt. He added that
it provided 10 percent of the power on the Railbelt. He
shared that the Dixion Diversion had similar glacier lake
river on the Bradly Lake footprint that would be diverted 5
miles into Bradly Lake, which would increase Bradly lake by
50 percent and would displace 1.5 billion cubic feet of
natural gas, or 7.5 percent of the unmet needs in 2023. He
stated that the economics of the project looked to revenue
bonds to pay for the project in addition to applying for an
Environmental Protection Agency (EPA) grant, which did not
require a state grant. He added that tax credits up to 50
percent could be a possibility. He moved up the list to the
Homer system and noted the BESS (Potential AEA Ownership)
listing in the center of the slide. He explained that there
was battery energy storage system in Soldotna that helped
with oscillation of water and could be used at Bradly Lake.
He noted that further north on the map there was another
battery being built by the Matanuska Electric Association.
He said that AEA was exploring whether it would be cost
effective to buy in to that battery. He said that batteries
had varying issues and benefits that were being explored by
the authority. He further detailed the projects listed on
the lines illustrated on the map.
1:51:47 PM
Co-Chair Olson spoke to the projects in rural Alaska, and
wondered who owned the solar panels.
1:52:07 PM
Mr. Thayer asked which solar panels senator Olson was
referring to.
1:52:10 PM
Co-Chair Olson asked who owned the solar panels in Willow.
1:52:19 PM
Mr. Thayer replied that an independent power producer
borrowed money from AEA for the panels.
Co-Chair Olson asked Mr. Thayer to explain the BESS
acronym.
Mr. Thayer replied that BESS stood for Battery Energy
Storage System. He added that Tesla was the brand used by
Homer, Chugach, and Matanuska.
1:53:15 PM
Co-Chair Olson understood that direct current (DC) power,
put over a fair amount of distance, lost energy as it
traveled. He wondered how the loss of energy would be delt
with.
1:53:34 PM
Mr. Thayer responded that the AC/DC lines were quite
efficient. The line proposed line would be highly
efficient.
1:54:22 PM
Co-Chair Olson wondered about the funding for the north end
of the line.
1:54:26 PM
Mr. Thayer replied that it would be a conversation with the
utility.
1:55:37 PM
Mr. Thayer pointed to slide 6, "Bradley Lake Hydroelectric
Project":
Bradley Lake Hydroelectric Project
.notdef Bradley Lake is Alaska's largest source of renewable
energy. Energized in 1991, the project is situated
27-air miles northeast of Homer on the Kenai Peninsula.
.notdef The 120 MW facility provides low-cost energy to
550,000+ members on the Railbelt.
.notdef Bradley Lake's annual energy production is 10
percent of Railbelt electricity at 4.5 cents/kWh (or
54,400 homes/year) and over $20 million in savings per
year to Railbelt utilities from Bradley Lake versus
natural gas.
.notdef AEA, in partnership with the Railbelt utilities, is
studying the Dixon Diversion Project which would
increase the annual energy production of Bradley Lake
by 50 or the equivalent of 14,000 28,000 homes.
Mr. Thayer addressed slide 7, "Dixon Diversion Project":
AEA is studying the Dixon Diversion Project to
optimize the energy potential of the AEA owned Bradley
Lake Hydroelectric Project. Like the West Fork Upper
Battle Creek Diversion Project, the Dixon Diversion
Project would divert water from Dixon Glacier in order
to increase Bradley Lake's annual energy production by
50 percent.
.notdef Located five miles from Bradley Lake and would
utilize existing powerhouse at Bradley Lake
.notdef Estimated annual energy 100,000 200,000 MWh
(24,000 30,000 homes
.notdef Estimated to offset 1.5 1.6 billion cubic feet of
natural gas per year in Railbelt power generation
(equal to 7.5 percent of Alaska's unmet natural gas
demand projected for 2030)
.notdef Estimated completion is 2030
*Funding will be used for engineering studies
(feasibility, hydrological, geological) and
environmental studies (fisheries, water quality,
geomorphology).
The slide offered a map of the proposed project in the
area.
1:57:03 PM
Co-Chair Stedman looked at the third bullet point on page
6:
• Bradley Lake's annual energy production is ~10% of
Railbelt electricity at 4.5 cents/kWh (or ~54,400
homes/year) and over $20 million in savings per year
to Railbelt utilities from Bradley Lake versus natural
gas.
Co-Chair Stedman assumed that 4 cent const generation would
result in zero debt.
1:57:11 PM
Mr. Thayer replied that that dam had been paid off but the
authority had bonded $166 million against Bradly Lake to
begin transmission upgrades. He stressed that AEA was
proactive in borrowing funds against the dam to fund the
upgrades.
1:57:59 PM
Co-Chair Stedman surmised that the slide reflected the cost
spend rate of debt free hydro asset.
1:58:01 PM
Mr. Thayer affirmed.
1:58:07 PM
Co-Chair Stedman expressed the desire for an updated
heating cost comparison between the states energy sources.
1:58:59 PM
Mr. Thayer agreed to provide the information.
1:59:08 PM
Co-Chair Stedman shared that there were concerns about
running low on Cook Inlet natural gas, with equal concerns
in Fairbanks and Western Alaksa for energy costs. He noted
that some form of methodology to compare costs was needed.
1:59:45 PM
Mr. Thayer agreed to provide the information.
1:59:48 PM
Senator Bishop requested asked that coal energy be included
in the information requested by Co-Chair Stedman.
2:00:02 PM
Co-Chair Hoffman stated that energy costs needed to be
reduced throughout the state. He stressed that energy costs
in rural Alaska were sometimes 10 times higher than in the
Railbelt.
2:00:58 PM
Co-Chair Olson spoke of pennies per kilowatt hour in urban
areas versus over a dollar per kilowatt hour in rural areas
of the state that produced the resources used for energy.
2:01:40 PM
Mr. Thayer displayed slide 8, "Why are Transmission
Upgrades Needed?"
Many of the transmission lines and associated
equipment serving Alaska were constructed more than 40
years ago. Transmission upgrades are needed to improve
Alaska's resilience and energy security, diversify its
energy portfolio, and accelerate the effective future
integration of renewable and clean power.
Energy Security
Reliable transmission infrastructure ensures that
those projects will be able to connect to the
grid and provide energy anywhere it is needed
along the Railbelt.
Energy Diversity
As Cook Inlet natural gas supplies decline, new
energy projects, including renewable energy, will
become increasingly important to our energy
security.
Reliable Energy
A second transmission line from the Southern
region (Kenai Peninsula) of the Railbelt to the
Central region (Anchorage) will ensure power in
the event of an emergency shutdown along existing
lines.
Mr. Thayer lamented that the states electrical system was
not up to federal standards.
2:01:54 PM
Co-Chair Stedman asked about background on Bradly Lake and
the proposed tunnel and expansion. He wondered whether
there would be any impact or upgrades needed to the
penstock or turbines.
2:02:30 PM
Mr. Thayer replied that the advantage of the project was
that nothing additional needed to be done to the
powerhouse. He said that the project would allow for more
efficient usage of the 2 existing 60-megawatt generators.
He said that the current constraint of Brady Lake was the
lack of transmission lines. He said that 17 percent of the
power from Bradly went to Fairbanks. He said that a third
generator could be put in at Bradly lake but that the plant
would run fine with the existing two.
2:03:59 PM
Co-Chair Stedman asked about the third generator. He
thought that a spare generator would be beneficial so that
two were always running even in times of maintenance.
2:04:13 PM
Mr. Thayer replied that the issue was one of cost. He
shared that Bradly had been designed to have three, 40-
megawatt generators, but that two, 60 megawatt generators
had been constructed, which had resulted in oscillation
issues. He said that the third pit for the original design
remained and could possibly hold the 40-megawatt generator
originally considered. He offered to provide additional
information on the issue.
2:05:16 PM
Senator Kiehl asked about the two-line minimum under
Federal Energy Regulatory Commission (FERC) regulations. He
understood that Regulatory Commission of Alaska (RCA) in
some areas of the state required onsite backup generation.
He wondered whether the backup generation was required at
Bradly Lake.
2:05:32 PM
Mr. Thayer responded in the affirmative. He explained that
the BESS system made a battery available that could be
operated on for a period in the event of the necessity for
a backup generator.
2:06:04 PM
Co-Chair Olson asked about the price of power from Bradly
Lake to Fairbanks wheeling rates.
2:06:16 PM
Mr. Thayer responded that he could get back to the
committee with the information.
2:06:47 PM
Mr. Thayer highlighted slide 9, "Grid Resilience and
Innovation Partnerships (GRIP): HVDC Line":
.notdef Increases transfer capacity between regions that
enables higher renewable energy integration into the
electricity system.
.notdef Improves resilience and reliability for tribal and
disadvantaged communities in the Railbelt region, and
a reduction in reliance on fossil fuel generation and
associated emissions.
.notdef Supports the retention of high quality jobs in the
region, including 650 highly paid jobs with
competitive employer sponsored benefits.
.notdef Creates apprenticeship and internship programs to
train a new generation of line workers and wireworkers
to reinvigorate Alaska's energy workforce.
AEA secured $206.5 million for GRIP Topic Area 3: Grid
Innovation through the United States Department of
Energy's Grid Deployment Office. A cost share of 100
percent, or $206.5 million, is required for a total
project amount of $413 million. The Railbelt
Innovation Resiliency project will construct a high
voltage direct current (HVDC) submarine cable to serve
as a parallel transmission route from the Kenai
Peninsula to Anchorage, creating a much needed
redundant system in case of disruptive events
2:08:41 PM
Mr. Thayer looked at slide 10, "HVDC Subsea Cable from
Kenai to Beluga":
The RIR project encompasses several projects one of
them being the installation of a new subsea high
voltage direct current (HVDC) transmission line from
the Kenai Peninsula across Cook Inlet to the existing
Beluga Power Plant and, if feasible, one or two
battery energy storage systems (BESS) in the Central
(Anchorage) and Northern Fairbanks) regions.
Project Highlights:
Location: The project involves connecting the
Railbelt's Southern region (Kenai Peninsula) to the
Central region (Anchorage, Matanuska Susitna Valley)
via Beluga with an HVDC submarine circuit.
Cable length: Approximately 65 miles total length,
37.5 mile subsea cable/2.5 miles from the landing to
Beluga, and 25 miles from the Southern landing to
Soldotna.
Cable size: The cable is approximately 8" in diameter
with roughly 250 megawatt transfer capability.
Cable depth to be buried in the seabed: About 4-6 feet
deep. Landings may be installed using horizontal
directional drilling.
2:09:25 PM
Co-Chair Olson asked whether there were existing
transmission lines across Cook Inlet.
2:09:30 PM
Mr. Thayer replied in the affirmative. He said they were
natural gas and oil pipelines.
2:09:36 PM
Co-Chair Olson asked whether the lines were protected from
seismic activity.
2:09:39 PM
Mr. Thayer agreed to provide that information.
Mr. Thayer pointed to slide 11, "Schedule":
.notdef The statutory period for the project is eight (8)
years and the construction schedule below is based on
a design bid build process a traditional project
delivery method that consists of three distinct phases
in sequence:
- Second Quarter 2024 Award
- Summer 2024 Preliminary Engineering
- December 2024 Complete Preliminary Design
- July 2027 Complete National Environmental Policy Act
(NEPA) Process
- December 2027 Contractor Selection
- January 2028 to December 2029 Long Lead Items
- January 2030 to December 2031 Construction
2:11:12 PM
Co-Chair Hoffman asked how similar laying the cable for the
project was when compared to laying broadband cable in
western Alaska.
2:11:21 PM
Mr. Thayer replied that he did not know, and agreed to
provide the information.
Mr. Thayer addressed slide 12, " GRIP 3, Round 2: Beluga to
Healy Overhead HVDC":
Scope-The Railbelt Innovative Resiliency Project,
Round 2 is a crucial initiative to build a clean,
smart, and affordable grid in Alaska. This project
involves building a 250 mile high voltage direct
current (HVDC) overhead transmission line from Beluga
(west of Cook Inlet) to Healy
Benefits-Increased resilience and redundancy of the
Alaska Intertie, an additional conduit for power to
transmit between regions, reduced line losses, and
allows for more energy to be delivered to consumers.
Status and Schedule-On April 17, 2024, AEA submitted
an application to the Department of Energy, and we
expect notification in early third quarter.
- 2025 2026 Initial design, permitting
- 2026 2027 Engineering, NEPA process
- 2027 2031 Construction
Budget Estimated total cost is up to $730 million
Mr. Thayer pointed to slide 13, "Sterling to Quartz (SSQ)
and Soldotna to Sterling Transmission Lines":
In 2020, AEA acquired the SSQ Transmission
Line, a critical component of the interconnected
Railbelt transmission system on the Kenai Peninsula,
as part of the Bradley Lake Hydroelectric Project.
.notdef Location 39.4 miles of 115 kilovolt (kV)
transmission and out of use 69 kV transmission from
Sterling to Quartz substation (Kenai Lake).
.notdefBenefits AEA ownership ensures better cost alignment,
increase reliability, and more timely repairs and
upgrades.
.notdefStatus 69 kV line decommissioned and removed.
Engineers are designing and are procuring equipment
for the upgrade of the existing 115 kV line to 230 kV.
Upgrade will reduce line losses, increase line
reliability and system resiliency.
.notdef Cost Estimated cost to upgrade line to 230 kV
standards is $90 million for the transmission line
between Sterling Substation and the Quartz Creek
Substation on Kenai Lake.
2:13:41 PM
Co-Chair Stedman asked about the ownership and why the
state would own the inner tie system and not the local
utilities. He did not believe that the state owned the
inner tie system in Southeast Alaska.
2:14:17 PM
Mr. Thayer understood that the bill put all of the
transmission assets into an Railbelt Transmission
Organization (RGO) which would mean AEA and utilities would
govern the assets. He agreed that the conversation needed
to continue.
Co-Chair Olson asked where AEA stood on the matter.
Mr. Thayer replied that he could not speak for the board.
2:15:16 PM
Co-Chair Stedman thought that knowing how long the state
would need to hold the grants before they were divested to
utilities would be helpful to the conversation. He worried
about inadvertent cost to the state.
2:16:35 PM
Senator Bishop asked about the award date on Grip 3.
2:16:37 PM
Mr. Thayer replied August-September 2024.
2:16:45 PM
Co-Chair Stedman asked whether there were commitments
within the grants that would disallow divestiture over a
period of time or could the state divest ownership at its
own discretion.
2:17:18 PM
Mr. Thayer replied that he would need to research the
matter.
2:17:24 PM
Mr. Thayer addressed slide 14, "Battery Energy Storage
Systems for Grid Stabilization":
.notdef Scope-The BESS projects consist of an upgrade to the
existing BESS system in the North, and also new BESS
systems in the Southern, and Central regions of the
grid. The Northern BESS is located at Fairbanks, the
Southern BESS is located in Kenai, the Central Region
BESS will be located at Anchorage. BESS will be needed
to fully realize the benefits of a 230 kV bulk power
supply system, regulate energy from various
generation, and increase resilience.
.notdef Benefits-Increase system resilience, transfer
capability, more efficient use of system, and lowers
impediments to additional renewable generation
development
.notdef Schedule-Estimated completion date is 2026:
- Southern (Kenai) In service
- Central (Anchorage) October 2024
- Northern (Fairbanks) To be determined
.notdef Budget Estimated total cost is $168 million
(depending on technology and capacity needs)
Mr. Thayer pointed to slide 15, "HB 307: What does it do?"
House Bill 307 aims to:
.notdef Reduce barriers for new power projects
.notdef Transform system into a public highway rather than a
toll road
.notdef Allow for lowest cost power to move regardless of
generation source
It aims to do this by:
.notdef Requiring the Regulatory Commission of Alaska to
establish a new mechanism of transmission cost
recovery in the Railbelt
.notdef Eliminating transmission "wheeling" rates for inter
utility movement of electricity
.notdef Extending tax relief provisions enjoyed by Electric
Coops to Independent Power Producers
Mr. Thayer shared that the budget for the project had grown
by 2,600 percent. He sited the work of the AEA team for the
funds.
2:23:32 PM
Co-Chair Olson interjected that 2,600 percent was a lot of
money.
2:23:42 PM
Co-Chair Stedman joked that the team should be in charge of
the Alaska Marine Highway System (AMHS).
Senator Olson thanks Mr. Thayer for the presentation.
2:24:22 PM
GWEN HOLDMANN, ALASKA CENTER FOR ENERGY AND POWER,
UNIVERSITY OF ALASKA FAIRBANKS, discussed the presentation,
"The Railbelt Transmission Grid (now and future)" (copy on
file). She looked at slide 2, "A Vision for our Railbelt":
We want a system that:
• Allows cheapest cost power to get to end-users
wherever it is produced, whatever the source is, and
wherever that generation is located.
• Facilitates clean energy projects at scale for
energy security and diversification.
• Maintains and improves reliability
She stressed that it was in the interest of the entire
state to lower energy costs in the Railbelt.
2:27:17 PM
Ms. Holdmann pointed to slide 3, "Why Restructure and What
Does That Mean?"
• Historically, utilities have been structured as
regulated natural monopolies.
• This is due to economies of scale and scope (1 set
of wires, not 20)
• In more recent times, technological advancements
mean that consumers can benefit from opening up
portions of this market to competition.
2:29:05 PM
Ms. Holdmann looked at slide 4, "Why Restructure and What
Does That Mean?"
• Historically, utilities have been structured as
regulated natural monopolies.
• This is due to economies of scale and scope (1 set
of wires, not 20)
• In more recent times, technological advancements
mean that consumers can benefit from opening up
portions of this market to competition.
2:30:00 PM
Ms. Holdmann pointed to slide 5, which discussed energy
news. The slide showed headlines from various news sources
announcing negative impacts in other markets. She thought
Alaska could learn from other states' mistakes.
2:30:42 PM
Ms. Holdmann addressed slide 6, "Realities of the Railbelt
Today":
• The Railbelt transmission system needs to be
upgraded. We have an opportunity for federal funding
to help defray those costs.
• Alaska is dominated by public power ? one of only
two states in the U.S.
• Railbelt politics are inherently local
2:32:49 PM
Senator Kiehl asked for further clarification about savings
to the consumer in cooperative power associations. He
understood that monetary savings did not always go back to
the consumer from which they were generated.
2:33:23 PM
Ms. Holdman queried whether Senator Kiehl was asking about
an individual service territory or going between different
service territories.
2:33:36 PM
Senator Kiehl understood that cooperative power
associations did not cooperate with one another and
wondered if energy savings were shared across associations.
2:33:56 PM
Ms. Holdmann replied that utilities often disagreed because
the entities represented local interests, which could be
addressed by having an overarching transmission
organization.
2:35:27 PM
Ms. Holdmann continued with slide 6:
• Alaska has avoided transmission deregulation because
we are not grid connected (thus not subject to FERC)
• Finding helpful examples relevant to Alaska can be
challenging
2:36:18 PM
Ms. Holdmann looked at slide 7, "Constraints on the
Railbelt Grid":
Technical Constraints
Inadequate physical infrastructure for our long,
strung-out system
Economic Constraints
a) Economic dispatch is difficult -- Wheeling, gas
contracts
b) Small market -- Lack of economies of scale, less
room for competing suppliers
Institutional Constraints
Currently, it is hard to manage and operate assets for
the benefit of the whole region
2:38:06 PM
Ms. Holdmann pointed to slide 8, "These are not new issues
or ideas." The slide illustrated that the state had been
working on the energy issue since as far back as 1952.
2:39:19 PM
Ms. Holdmann addressed slide 9, "Historically, transmission
has not been prioritized":
Railbelt utilities solved reliability issues with
local and regional generation rather than investing in
interregional high-voltage transmission due to long
distances with few members to pay the cost.
The history of the Railbelt has been compared to an
Alaskan "Prisoner's Dilemma" - prioritizing individual
utilities' needs has resulted in a suboptimal system
for everyone.
There has never been single unified operator who was
concerned about the grid as a whole.
Prisoners Dilemma:
A paradox in decision analysis in which two
individuals acting in their own self-interests do not
produce the optimal outcome.
2:40:07 PM
Senator Wilson thought that care should be taken not to
categorize all utilities as suboptimal when commenting on
power utilities in the state.
2:40:27 PM
Ms. Holdmann agreed. She thought that utilities in the
state were doing a fine job looking at the big picture and
believed that utilities would agree that partner
collaboration has not always been prioritized.
2:41:50 PM
Senator Bishop thought that if utilities were more
cooperative the problem would not be under discussion.
2:41:58 PM
Ms. Holdmann discussed slide 10, "Shared opportunities
create incentives for cooperation":
Effective Railbelt cooperation most often occurred
when state entities (legislature or AEA) provided
capital for generation and transmission (Bradley Lake
and Alaska Intertie).
To operate these joint assets, Railbelt utilities had
to find a way to work together.
Federal Funding (GRIP) creates that incentive today.
2:42:33 PM
Ms. Holdmann pointed to slide 11, "The location of
generation will change in the future." She noted that the
details of the slide represented only one study. She said
that the location of where generation assets would be
located was changeable. She said that the amount of use of
the transmission system would change over time as well.
2:43:48 PM
Ms. Holdmann addressed slide 12, "Two Goals":
1. Eliminate pancaking wheeling rates and establish a
framework for how transmission costs will be recovered
and allocated
2. Create an organization that can oversee, manage and
develop backbone transmission assets and that is
subject to appropriate regulation
2:44:24 PM
Ms. Holdmann pointed to slide 13, "Goal 1: Remove pancaking
wheeling rates."
2:44:35 PM
Ms. Holdmann addressed slide 14, "Why does eliminating
wheeling matter?"
Investments should not be impeded by prices for moving
power that bear no relation to actual marginal cost.
(Costs must be recovered?. but not by using artificial
per-unit prices)
Get rid of the toll road, create an open access
highway that does not discriminate in terms of who
generates the power, or what form of generation is
used.
2:47:30 PM
Ms. Holdmann said that the goal was to find a different way
of allocating fixed costs to end users.
Ms. Holdmann discussed slide 15, Why does eliminating
wheeling matter?:
Investments should not be impeded by prices for moving
power that bear no relation to actual marginal cost.
(Costs must be recovered but not by using artificial
per-unit prices.)
Ms. Holdmann offered a hypothetical using $30 million in
transmission costs and a consumer cost of $1 per unit. She
noted that the goal of the projects was to allocate the
cost of transmission directly to end users without tying
the cost to the source of generation.
2:49:31 PM
Co-Chair Olson asked how the end user could be assured
parity if they were a coop owned member.
Ms. Holdmann believed that many co-ops and their members
had felt that things had not been fair in the past; the
actions of one utility had been known to unfairly impact
users in another part of the system. She offered that
fairness was a priority for the projects.
2:50:37 PM
Co-Chair Olson wondered whether Ms. Holdmann envisioned a
future where everyone in the state paid the same rate for
electric transmission regardless of geographic location.
2:51:05 PM
Ms. Holdmann replied in the affirmative and expressed her
excitement for the possibilities.
2:51:31 PM
Co-Chair Olson asked about international rates; could the
state transmit to, or purchase power from, Cananda.
2:51:51 PM
Ms. Holdmann replied that Hyer, Alaska bought power from
Cananda. She could not speak to the specifics of
international purchases or sales.
2:52:42 PM
Ms. Holdmann pointed to slide 16, " Goal 2: Create an
organization that can oversee, manage and develop backbone
transmission assets and that is subject to appropriate
regulation":
Iceland provides an interesting analog to Alaska's
Railbelt due to similar transmission length,
population served, and high prevalence of public
power.
Iceland has a competitive energy market, with Landsnet
as the national transmission system operator,
overseeing the country's transmission infrastructure.
Examining Iceland's governance and asset management
strategies, particularly their evolution over the past
three decades, presents an invaluable learning
opportunity for Alaska.
Icelands electricity sector most distribution
utilities also operate generation assets, like the
Railbelt utilities.
2:53:32 PM
Ms. Holdmann displayed slide 17, " Goal 2: Create an
organization that can oversee, manage and develop backbone
transmission assets and that is subject to appropriate
regulation":
Borrow from a simple governance structure that has
passed the test of time (in Alaska)
The Bradley Lake Project Management Committee
governance structure can be used as a starting point
to design a Railbelt Transmission Organization
The transmission tariff that establishes the rate that
consumers pay should be subject to regulation (the
Bradley Project is exempt)
2:54:36 PM
Ms. Holdmann pointed to slide 18, "Why Now? Urgency of the
Moment":
1. Unique/generational opportunity to build new assets
? we need to get our house in order first.
• GRIP Projects
• Private sector investment (IPPs)
2. Addressing the high cost of power for consumers
• Eliminate wheeling
• Economies of scale in project development
• Economic dispatch (future)
2:55:16 PM
Senator Merrick noted that only 3 members of the committee
represented the Railbelt. She asked about balancing
responsibilities to all Alaskan constituents when looking
at Railbelt energy plans.
2:55:43 PM
Ms. Holdmann replied that lowering energy costs in the
Railbelt would benefit the entire state. She thought that
additional work could be done to address the high cost of
energy in rural Alaska.
2:57:15 PM
Co-Chair Olson surmised that Ms. Holdmann was optimistic
about transforming energy issues to the benefit of the
state.
2:57:20 PM
Ms. Holdmann responded in the affirmative.
2:58:15 PM
Co-Chair Olson invited Angell Rodell to testify on the
matter.
2:58:29 PM
ANGELA RODELL, STAFF, SENATOR CATHY GIESSEL, stated that
the legislation reflected a significant amount of work by
stakeholders. She stressed that compromise would be key to
fix transmission issues in the Railbelt which would
ultimately benefit the entire state.
Co-Chair Olson discussed housekeeping.
ADJOURNMENT
3:00:26 PM
The meeting was adjourned at 3:00 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 217 2024.04.29 AEA Modernizing the Railbelt Grid Presentation to Senate Finance Committee (Final).pdf |
SFIN 4/30/2024 1:30:00 PM |
SB 217 |
| 043024 Senate Finance 4-30-24 v3.pdf |
SFIN 4/30/2024 1:30:00 PM |