Legislature(2009 - 2010)BUTROVICH 205
02/04/2010 11:30 AM Senate ENERGY
| Audio | Topic |
|---|---|
| Start | |
| SB223 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 223 | TELECONFERENCED | |
SB 223-ENERGY EFFICIENCY BONDS; LOANS; FUND
11:36:33 AM
CHAIR MCGUIRE said the first order of business to come before
the committee was SB 223.
DAN FAUSKE, CEO of Alaska Housing Finance Corporation (AHFC),
said SB 223 would establish an energy efficiency revolving loan
fund in AHFC and authorize AHFC to sell up to $250 million in
bonds to fund the program. As a part of the American Recovery
and Reinvestment Act (ARRA,) the state received $28.323 million
in federal stimulus money. He reported that $18 million was
designated for the Alaska Department of Transportation and
Public Facilities (DOT/PF,) was divided into $10 million for
state facilities energy efficiency projects and $8 million for
energy efficacy projects for schools and municipal facilities
managed under AHFC.
MR. FAUSKE said AHFC recommended that a contract performance
mechanism be utilized, leveraging $18 million into $250 million
in bonds. Energy savings produced through building retrofits,
developed and guaranteed by the contractor, are sufficient
enough to pay the debt service on the bonds. Arizona has
utilized this system and DOT/PF has utilized performance-based
contracting in some of their facilities already.
BRYAN BUTCHER, Director, Public Affairs, Alaska Housing Finance
Corporation (AHFC), said the US Department of Energy (DOE)
approved the plan a couple of weeks ago and said turning this
part of the ARRA funds into something long-term would be
beneficial.
MR. FAUSKE said the DOE is very impressed with Alaska's
weatherization rebate program and this program.
11:41:16 AM
CHAIR MCGUIRE said Alaskans are looking for ways to improve
energy efficiency in their buildings. Every cent that a school
saves can go into the classroom; every cent saved on a building
can go into other government functions like fire and rescue. She
said it is innovative and her intent is to make it part of the
Omnibus Energy Package.
CHAIR MCGUIRE asked if Mr. Butcher and Mr. Fauske are confident
that $10 million and $8 million are the right amounts for state
facilities energy efficiency projects and schools and municipal
facilities energy efficacy projects, respectively.
MR. BUTCHER replied yes, $18 million can be leveraged in up to
$250 million because it is a revolving loan fund; it should go
in perpetuity. He explained that when the legislature overrode
former Governor Palin's veto and the $28 million became
available, municipalities worried that only a few of them would
get anything done before the money was gone. A lot of people
have been calmed knowing that the money will go farther.
11:43:42 AM
CHAIR MCGUIRE agreed and said she saw the same situation and
heard the same feedback from those who applied for an Alaska
Energy Authority (AEA) Renewable Energy Grant.
SENATOR WIELECHOWSKI agreed and asked how a $250 million program
can come out of $18 million.
MR. FAUSKE said that it is similar to the tobacco settlement
money which came in annual payments of $20 or $22 million that
were leveraged into $300 million for building rural schools.
Rather than annual payments, however, this plan would utilize
annual savings, generated by contracting, that would go to
service the debt.
JOE DUBLER, CFO and Finance Director, AHFC, said this revolving
loan fund would be structured similarly to mortgage bond deals:
the $18 million would represent a small debt service reserve
fund, and the rest would rely on the corporation's general
obligation pledge. Loans, made to municipalities to make
repairs, would pay 100 percent of the debt service on the bonds.
The contractor guarantees an energy savings which equates to
cash savings every year. The cash saved would be used to pay off
the loan that AHFC used to pay the contractor.
11:46:25 AM
SENATOR WIELECHOWSKI proposed an example for clarification: a
school in Angoon wants to get weatherized and retrofitted and
applies to AHFC. He asked what happens next.
MR. DUBLER said an initial assessment would be done on the
building to determine if savings would be achieved.
SENATOR WIELECHOWSKI asked who pays for the assessment.
MR. BUTCHER replied that the program would pay for an energy
performance contractor to do the initial audit. For example, a
contractor determines that $100,000 worth of work would create a
20 percent energy savings. The school district would borrow the
$100,000 from the program and pay the contractor. If the
weatherization saved $20,000 per year, the school would then pay
the loan back with that $20,000 per year. Once the loan was
repaid, the school could use that energy savings of $20,000 per
year as it saw fit.
MR. BUTCHER explained that energy performance contractors assure
a savings amount, 20 percent in this example, and if the work
does not save this amount, the contractor pays the difference.
This system assures that the loan will be paid back and has been
working in many states, such as Washington. The Department of
Transportation (DOT) has used it in eight buildings over the
last decade.
11:48:36 AM
SENATOR WIELECHOWSKI asked who pays if Angoon takes out the loan
and defaults. He asked if the loan for $100,000, taken out by
the school, is paid to the construction firm.
MR. DUBLER replied yes, the school would take out a loan with
AHFC for $100,000 and AHFC would pay the contractor directly.
The annual energy savings money would come directly to AHFC. It
is assumed that the school would pay but if not, AHFC would have
some sort of mortgage on the property and could take the
property back.
MR. BUTCHER said the contracting mechanism is in place and is
similar to AHFC's involvement with teacher housing. The energy
revolving loan plan is based on the energy savings; the money
saved by the resulting reduced utility costs is earmarked to
service the debt on the loan until the loan is paid off.
11:51:06 AM
CHAIR MCGUIRE asked if energy auditors are licensed and bonded.
SENATOR KOOKESH asked the difference between a performance
contractor and an energy auditor.
MR. BUTCHER said that an energy performance contractor is an
employee of that contractor; it is all one company.
SENATOR KOOKESH said he knows that an energy auditor goes and
audits homes. He is not familiar with an energy performance
contractor.
11:52:45 AM
MR. FAUSKE said the energy rater does the pre-audit on a home
but does not do the work. The homeowner hires a contractor to do
the work based on the energy rater's study of the house. A post-
audit examines what was done and assesses the home's increased
energy rating, verified by utility bills. Mr. Fauske explained
that the difference in this program for state and municipal
buildings is that the energy auditor is doing the assessment and
energy savings forecast which determine the loan amount and debt
service repayment.
SENATOR KOOKESH asked if such people are in the state already.
JOEL ST. AUBIN, Chief, Statewide Public Facilities, DOTPF, said
the licensing and bonding of energy auditors is covered under
the Alaska State Procurement Code, AS 36.30. Those requirements
are part of the energy performance contracts. The state has at
least four contractors that do energy savings performance
contracting and interest will also come from Washington. An
energy savings performance contractor has energy engineers on
staff who are trained and experienced in energy audits and
investigating the facility to create a project and a project
cost.
11:55:17 AM
SENATOR WIELECHOWSKI said he sees SB 223 potentially creating
hundreds of jobs across Alaska. He is concerned that Alaska has
only four contractors and asked if the work force can be ramped
up quickly to ensure most or all jobs would go to Alaskans.
MR. ST. AUBIN said the four main contractors subcontract out the
bulk of the physical work to mechanical, electrical and
specialty contractors. He felt the work force is in place in
Alaska.
CHAIR MCGUIRE asked if a weight increase for Alaskan-owned
businesses is still in place under the Procurement Code.
MR. ST. AUBIN believed there is a 5 percent preference.
MR. FAUSKE said Alaska had 25 energy raters when the energy
weatherization and rebate program began; Alaska now has 130. He
expressed the opinion that once the legislature takes makes the
funding available, the private sector will see it as an
opportunity to expand business. The weatherization rebate
program created approximately 2,500 jobs. He said this new
program would generate interest from the private sector and
create good, high paying and long-term work with a good funding
source.
11:57:50 AM
CHAIR MCGUIRE said that in light of the Omnibus and its
incentives, perhaps the committee should bring in Associated
General Contractors (AGC), plumbers, pipefitters, mechanical
engineers, and other groups for a two hour summit to increase
awareness about the kinds of jobs that will come out of these
bills. She said it would be great to get the information to
Alaskans early.
MR. FAUSKE suggested that some ramp up time be allowed, ensuring
that an adequate work force is available when the money and work
are introduced, to prevent people from getting frustrated.
11:59:47 AM
CHAIR MCGUIRE said hers and Senator Wielechowski's main goal is
to create and foster a new energy economy. Conservation
efficiency and renewable energy were previously seen as
antithetical to oil and gas hydrocarbon development. She said it
is good to have some synergy now and she would like to see
growth and increased Alaskan jobs in renewable energy, energy
efficiency and conservation technology. She said AHFC could be
involved in a hearing on jobs and job training, ensuring that
relevant agencies are ready.
MR. FAUSKE said weatherizing one school can accomplish the same
amount of energy savings as 20 to 25 houses in a village. The
two types of projects together greatly impact a community's
overall energy usage and the associated costs.
12:02:15 PM
SENATOR MCGUIRE said giving handouts to the private sector
causes some discomfort, however, if the overhead is reduced,
especially in a small market, the benefit goes on to the
consumer. A lot of Alaskan businesses are competing with outside
groups and a reduced overhead makes them more competitive.
CHAIR MCGUIRE said Bob Brean, Director for Research and Rural
Development, AHFC and Scott Waterman, Energy Specialist, AHFC,
were on line for questions.
CHAIR MCGUIRE asked Mr. Fauske and Mr. Butcher to come back and
do a presentation to help educate Alaskans about what they can
do.
MR. FAUSKE said that AHFC has been sharing data with Enstar
[Natural Gas Company] and other energy suppliers and the
predicted energy bill reductions are proving to be accurate. He
said the system is working and this plan is just on a larger
scale.
12:04:41 PM
SENATOR KOOKESH said a lack of energy auditors is one of the
biggest problems with weatherization in rural Alaska. He has
asked the Denali Commission if they can put energy auditors into
the housing authorities or train existing housing authority
employees. Most rural Alaskans do not participate in state
energy programs because they cannot get an energy auditor out
there.
MR. BUTCHER said that AHFC will pay energy raters to go to rural
Alaska and this is improving now that the urban areas no longer
have waiting lists. He explained that the energy rater that does
the rating for the home energy rebate program and the energy
auditor that works on the weatherization program have previously
been separate. AHFC is working to train them together so every
regional housing authority and weatherization provider in rural
Alaska will also be qualified to work for the weatherization
company and to do energy rebates in rural Alaska.
SENATOR KOOKESH said the message is not out there yet and that
must be the next step.
12:07:02 PM
MR. FAUSKE said the legislature will soon need to discuss and
determine if the program will continue and at what level. He
said 7200 homes are scheduled for weatherization next year. The
rebate side is fully encumbered. He said he would hesitate to do
large scale advertising without funding to support ongoing work.
He said he has met with the Association of Housing Authorities
(AHA) and delivering the message is a priority.
MR. BUTCHER explained that the first group to have received
ratings is nearing the end of the process; 70 percent used the
program and received a rebate by the end of 18 months. AHFC is
contacting people who signed up but did not use the program to
find out why. AHFC is also tracking the program by community to
determine which communities should be targeted with a second
wave of information.
[SB 223 was held in committee.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 223 Bill Packet.pdf |
SENE 2/4/2010 11:30:00 AM |
SB 223 |