Legislature(2021 - 2022)SENATE FINANCE 532
04/20/2022 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB121 | |
| SB199 | |
| SB243 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 199 | TELECONFERENCED | |
| += | SB 121 | TELECONFERENCED | |
| *+ | SB 243 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 243
"An Act relating to power cost equalization; and
providing for an effective date."
10:29:29 AM
Co-Chair Bishop relayed that it was the first hearing of SB
243. It was the committee's intention to hear a bill
introduction, consider public testimony, and set the bill
aside.
10:29:52 AM
ERIN SHINE, STAFF, SENATOR CLICK BISHOP, read a bill
introduction:
SB 243 proposes to raise the maximum kilowatt-hours
available to residential customers for Power Cost
Equalization relief?from 500 kilowatt-hours a month to
700 kilowatt-hours.
In your bill file you will find an analysis provided
by the Alaska Energy Authority assumes that all
residential customers can utilize?the additional 250
kilowatt-hours, SB 243?will add approximately $16
million?to the yearly PCE payment.
Alaska's PCE program was established in 1984 and
provides?economic?assistance?to communities?and residents
of rural electric utilities where the cost of
electricity?can be three to five times higher than for
customers in more urban areas of the state.
The PCE program was further established?to assist rural
residents at the same time state funds were used to
construct major energy projects to assist more urban
areas.? As most urban and road connected communities
benefit from major state-subsidized energy projects.
Rural communities? not on the road system that are
dependent on diesel fuel do not benefit from the
large, subsidized energy projects, and PCE is a cost-
effective alternative to provide comparable rate
relief to rural residents. ?The program reimburses the
utility for credits it extends to its customers.
The PCE program?is funded by earnings of the PCE
Endowment Fund, which the last Market Value as of
March 31st, 2022, was $1.1B, provides that five
percent of the fund's three-year monthly average
market value may be appropriated to the PCE Program.
As you may be aware the percent of market value draw
on the PCE Endowment Fund not only funds PCE but also
Community revenue sharing or community assistance, the
renewable energy grant fund, the bulk fuel revolving
loan fund or the rural power system upgrades.
Ms. Shine noted that bill packets contained a document from
the Alaska Energy Authority (copy on file), which was an
analysis that assumed if adding $16 million to the yearly
PCE payment if all residential customers could utilize the
additional 250 kilowatt hours. She reminded that the POMV
draw on the Power Cost Equalization (PCE) Endowment Fund
not only funded PCE but also the Community Assistance
Program and the Rural Energy Grant Fund. According to the
calculations done by LFD, it would take approximately a
$320 million appropriation to capitalize the PCE Endowment
Fund to continue funding the waterfall programs from the
draw.
10:32:14 AM
Senator von Imhof asked if more money went towards the PCE
program, less funding would go towards Community
Assistance.
Ms. Shine stated there was still a statutory formula that
would be followed that was outlined in AS 42.45.085. There
were certain triggers in the fund. She stated that the
money that would go to the PCE Fund would fund the
residential program first, after which the waterfall
programs would be funded. The fund would need to be
capitalized with some additional funds for the payments.
Senator von Imhof understood that the residential program
would be the first item paid from the fund. She thought
there was a consequence in that the trigger and other items
mentioned in statute might not have adequate funding.
Ms. Shine noted that the executive director of the Alaska
Energy Authority (AEA) was available for questions. She
believed that the fund would be fine for the next couple of
years.
Senator Hoffman stated that he had asked the LFD director
to come up with a number to keep the fund intact. The
number that Ms. Shine had mentioned in her presentation to
achieve no changes in the programs would be $320 million.
Senator von Imhof asked if the funding would be an
additional $320 million in a grant to the PCE Fund.
Senator Hoffman stated that the funds would be directed to
the endowment.
Co-Chair Bishop relayed that the fund had a current balance
of $1.1 billion, and the $320 million would be added to the
endowment for a rough total of $1.4 billion.
Senator von Imhof understood that others were looking at
adding funds to other endowments like the Higher Education
Trust Fund. She mentioned a homeless trust fund and a
deferred maintenance fund. She thought there were many
competing priorities.
10:35:52 AM
CURTIS THAYER, EXECUTIVE DIRECTOR, ALASKA ENERGY AUTHORITY
(via teleconference), noted that the information provided
by Ms. Shine was correct. It was estimated that the program
would cost an additional $15.7 million per year by going
from 500 to 700 kilowatts. There would be no additional
administrative costs on the part of AEA. He offered that
the last five years, the Endowment Fund earnings had ranged
from $48 million to $155 million. The first bucket of money
was the PCE Program, which was budgeted at roughly $32
million, but there was budget language that allowed for the
amount to increase based on the true cost.
Mr. Thayer mentioned community assistance at a cost of $30
million. The only year that the Community Assistance
program was not fully funded was in FY 20, when the
earnings from the PCE Endowment Fund were only $48 million.
There was a cascading waterfall of funding for one of three
items: rural power houses, the Rural Energy Fund, and
capitalization of the Revolving Loan Fund. He discussed
AEAs recommendation to the legislature about using $25
million in funds. He could not comment on the $320 million
identified by LFD.
Co-Chair Bishop asked if bumping up the kilowatts to 750
was a new idea.
Senator Hoffman stated that the 750 kilowatts was the
original amount that was utilized when the program was
initially contemplated.
10:38:23 AM
AT EASE
10:38:29 AM
RECONVENED
Co-Chair Bishop OPENED public testimony.
Mr. Thayer stated he was available for questions. He stated
that it would be easy for AEA to enact the change proposed
in the bill. He noted that the fiscal note assumed that
everyone in the program would use the 750 kilowatts, which
meant the fiscal note was a very conservative estimate of
what the additional cost would be.
Co-Chair Stedman asked for Mr. Thayer to discuss the
community portion for non-residential homes and whether the
amount was capped.
Mr. Thayer explained that the PCE Program was for
residential customers only in the PCE-eligible community,
and for community buildings up to a certain kilowatt. The
program was not for commercial buildings or for commercial
enterprises.
Co-Chair Stedman had heard a concern that one of the choke
points was the community buildings, which seemed to consume
more power and need more relief versus homes. He asked if
Mr. Thayer could shed light on the issue.
Mr. Thayer stated that the issue had been of concern to
AEA. He continued that AEA was currently undertaking an
audit of all 193 communities in order to better understand
what community buildings had been built since the last
audit.
Co-Chair Stedman asked if the topic of community buildings
should be a component of the legislation. He wondered if
the legislature was ignoring part of the problem in rural
Alaska by not accounting for rural buildings.
Mr. Thayer noted that the program did account for community
buildings. He emphasized that AEA needed to work with
communities to identify new or additional community
buildings that were not currently in the PCE program
system. He acknowledged that some community buildings were
missing, and emphasized that AEA was reaching out to every
community for the information, which would take most of the
summer.
10:42:35 AM
BERT HOUGHTALING, SELF, BIG LAKE (via teleconference),
spoke in opposition to the bill. He did not agree with
adding funds to the PCE program. He thought the state was
catering to certain individuals. He wished that legislature
would address those that had suffered during the pandemic.
He was against increasing any funding for the PCE Program.
He mentioned federal funds.
10:44:22 AM
Co-Chair Bishop CLOSED public testimony.
Senator Wilson asked for more information regarding the
five-year plan of increase to the PCE Program and how it
would affect the endowment. He asked how the increase would
be funded.
Co-Chair Stedman thought that the committee could consider
building the endowment up over time if the bill were to
become law. He mentioned the option of having a trigger
based on the price of oil. He thought there could be
flexibility in funding the proposed increase to the
program. He acknowledged that $300 million was a
significant amount of money.
Senator Wilson wondered how the other waterfall programs
would be affected if there was not an increase.
Senator Hoffman preferred to fully fund the endowment so
that the Community Assistance Program and other programs
were fully funded. He thought there was merit to Co-Chair
Stedman's comments but considered that delaying the fund
increase would cause a loss of focus. He reminded that the
33rd legislature and the future governor was unknown. He
thought the committee should give serious consideration to
fully funding the endowment to at least $300 million.
10:48:04 AM
AT EASE
10:50:34 AM
RECONVENED
Co-Chair Bishop set an amendment deadline for Friday, April
22, at five oclock.
SB 243 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 121 Support Szczepanski PFAS.pdf |
SFIN 4/20/2022 9:00:00 AM |
SB 121 |
| SB 121 Support Sylvester PFAS.pdf |
SFIN 4/20/2022 9:00:00 AM |
SB 121 |
| SB 121 Support Miller.pdf |
SFIN 4/20/2022 9:00:00 AM |
SB 121 |
| SB 121 ACC testimony on SB 121 - April 12.pdf |
SFIN 4/20/2022 9:00:00 AM |
SB 121 |
| SB 121 Support PWSRCAC.pdf |
SFIN 4/20/2022 9:00:00 AM |
SB 121 |
| SB 243 Sectional Analysis ver. B 4.19.22.pdf |
SFIN 4/20/2022 9:00:00 AM |
SB 243 |
| SB 243 Supporting Document - AEA PCE Analysis from 500 to750.pdf |
SFIN 4/20/2022 9:00:00 AM |
SB 243 |
| SB 199 SFIN Fiscal Modeling Presentation 4-20-22 UPDATED.pdf |
SFIN 4/20/2022 9:00:00 AM |
SB 199 |