Legislature(2007 - 2008)BUTROVICH 205
02/27/2008 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB214 | |
| SB246 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 214 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 246 | TELECONFERENCED | |
SB 246-SUSITNA HYDRO WORKING GROUP; REPORT
4:29:57 PM
CHAIR HUGGINS announced SB 246 to be up for consideration.
SENATOR JOE THOMAS, sponsor of SB 246, commented that absent
reviewing Susitna and other hydro-electric potential in the
state, they are allowing themselves to slip back to where the
state was in 1984 and expect that gas and oil will somehow be
the cheapest source of fuel for energy and power production.
He elaborated:
In the early 1980s gas was $.21 - $.25/tcf; diesel was
about $1/gallon and river water was free. The Susitna
dam was about a $5.2 billion project at that time.
Today Cook Inlet natural gas to the electrical
production facilities is about $5.57/Mmbtu and diesel
is $3 - $3.85/gallon on the road system and as much as
$8/gallon in the villages. Oil is selling for
$100/barrel and natural gas outside Alaska is
$9.22/Mmbtu - and river water is still free.
Recent news stories had highlighted the decision of
several electric utilities to construct a new 260
megawatt natural gas power plant in Anchorage.
Contrast this announcement with the recent news that
Texas has passed California as our nation's largest
producer of wind energy with nearly 3,000 megawatts of
wind power generating capacity. We may be entirely too
focused on how we have always done things instead of
considering new more efficient more beneficial courses
of action. Norway is an oil producer; however I
believe that 90 percent of their power is hydro-
electric. They use the most efficient, sustainable
resource that they have.
Nothing indicates that natural gas prices will
stabilize and certainly no one believes the price will
ever go down other than for short periods of time
before increasing beyond its previous high. This is
and will be the trend as natural gas and oil become
more scarce. Oil and gas exploration and development
costs continue to rise; a quick look at capital and
operating expenses at Prudhoe Bay and the cost of
drilling confirms these facts. These costs will
continue to increase.
Gas-fired electrical turbines are not the solution nor
are they the best and most efficient use of our gas.
Our gas will no doubt command the highest price when
and if it is sold outside of Alaska and it should be
to maximize its benefit to Alaska and her citizens.
Some will be used in existing infrastructure for
heating purposes or to bolster industrial efforts in
Alaska. This is a reasonable and efficient use of gas
in-state. However, gas is not the most efficient power
generating fuel. The top of the line next generation
natural gas turbines only achieve an efficiency of 60
percent and even this modest level of efficiency was
thought impossible as recently as the early 1990s.
No plan to date suggests in-state use of gas is the
highest and best use of our resource. I personally see
it as a great potential for industrial use in heating,
but not power generation. Trans-Canada and all of the
AGIA proposals are export proposals other than the
bullet line to Southcentral Alaska. Our resources are
stretched to the point that Agrium closes down and we
have to negotiate with Cook Inlet producers over
exporting LNG, which Nikiski has done for 30 years
versus consumer use in Southcentral Alaska. We are
still on the road. Let's learn from the past; let's do
it differently; let's do our best to change our ways
and see some different and better results....
He said $2-$3 million study is roughly the same amount of money
we expend as a state every two-three hours of every day of the
year under the state's current budget.
4:34:40 PM
GRIER HOPKINS, staff to Senator Thomas, said he was available to
answer questions.
SARAH FISHER-GOAD, Acting Executive Director, Alaska Energy
Authority (AEA), said the Palin administration supported the
analysis of the Susitna project and the additional regional
planning that is required in SB 246. Last week there was some
discussion on whether this project could be addressed as a
capital project and that is technically correct, but the
administration is not taking a position with respect to which
vehicle the legislature chooses to address it. On a broader
note, the governor and the AEA board of directors will soon be
announcing the appointment of an energy coordinator that will
also be the AEA executive director. This person will be the one
that will direct this Railbelt regional planning and a statewide
comprehensive planning effort.
CHAIR HUGGINS asked her to review what they could anticipate the
AEA will bring back to the body as a product.
MS. GOAD replied that the product is detailed in the fiscal
note. SB 246 addresses 13 objectives and those have been grouped
into specific work tasks. For example work task one would be the
feasibility study and the estimate of the plant and of the
generated power costs; work task two would be an environmental
and the socio-economic impact study; work task three would be
the cost of power for selected alternatives. This issue would be
to look at Susitna not as itself in a vacuum, but with other
energy sources and other potential Railbelt projects. Work task
four is the financial options for the project. There is an
integrated systems energy plan for the Railbelt as work task
five and creation of a project advisory group. Limited field
work has been suggested. If SB 246 passes, they have suggested
that those be capital appropriations of $2.8 million in FY2009
and in FY2010 of $1.5 million.
4:39:10 PM
SENATOR STEDMAN agreed with broader scope, especially objective
four, and asked if this wasn't more of a broader energy study
than a concentration on just the Susitna dam.
MS. GOAD replied that they interpreted SB 246 to include the
previous study of the Susitna project as an important part of
the entire Railbelt study. There is no idea to not pursue or
analyze those other projects; Susitna needs a second look.
SENATOR STEDMAN said it appears that Susitna creates its own
wake because of its size. He asked if this isn't more of an
energy analysis of the Railbelt population centers in relation
to more comprehensive planning.
MS. GOAD answered yes.
CHAIR HUGGINS clarified that Susitna power could reach to Homer
and Fairbanks. He asked about the difference in the version E
fiscal note.
MS. GOAD answered that the tasks are the same, but they would
not necessarily need the project advisory group. Other projects
have been conducted this way, including the Railbelt Electrical
Grid Authority Study.
CHAIR HUGGINS asked Senator Thomas his thoughts on the advisory
group.
4:43:41 PM
SENATOR THOMAS said he was concerned about creating an unruly
study, so he changed incorporating various departments and
stakeholder groups into a working group into simply consulting
with those groups.
MS. GOAD said she supported the change.
4:45:22 PM
SENATOR STEDMAN moved to adopt version E of SB 246 as the
working document. There were no objections and it was so
ordered.
SENATOR MCGUIRE asked if they intended to include fisheries in
the term "wildlife" on page 3, line 6.
4:46:05 PM
SENATOR THOMAS answered the original study realized concerns
about a dam project impacting fish and wildlife. Although those
impacts would be negligible with the Susitna dam because it is
so far up the river, other impacts need to be reevaluated. For
instance, as the dam backs up water, some areas will be
inundated.
SENATOR MCGUIRE said the committee might want to consider more
specific language about the impacts, either positive or
negative, on fisheries and she moved a conceptual amendment to
specifically include "fish, wildlife, and land use" on line 6.
SENATOR THOMAS responded that he had no problem with adding
"fish and wildlife" and assumed that study would take place.
There were no objections and the conceptual amendment was
adopted.
SENATOR WAGONER asked how many acres the Susitna reservoir would
cover.
SENATOR THOMAS didn't know because there are several different
plans for the river. The Devils Canyon is a relatively small
footprint; the up-river Watana project is quite a bit larger.
4:49:40 PM
MS. GOAD said she didn't have any comments on the amendment, but
she mentioned he had wanted to know last week about AEA's
accomplishments and she wanted to mention specifically their
efforts in alternative energy, in particular they just completed
an alternative energy solicitation in partnership with the
Denali Commission. This is the first time AEA has done one of
these studies. At the same time they did a fifth energy cost
reduction solicitation.
To give the committee an idea of how many proposals and what
kinds of projects are out there, Ms. Goad said they had 96
proposals requesting $118 million for total project costs of
over $1 billion. Of those 96 proposals, 71 were feasibility
analysis of alternative energy projects or roughly $12.3
million. She said it is an important part of their work to look
at objective ways to analyze projects and do feasibility
analyses. She said the energy cost solicitation has been very
successful. The four solicitations have had cost/benefit ratios
of 2:1 and have realized over $40 million of fuel cost life-
cycle savings of projects that have been funded through that.
4:51:37 PM
EARLE AUSMAN, President, Fullerton Consultants, said he was a
hydro-engineer representing himself and his firm in the process
of developing 4 megawatts of hydro for the MEA system; the firm
also sells power to MEA. He said they are developing a paradigm
shift in technology by developing a DC transmission project that
promises to reduce energy costs for Alaska's rural communities.
He said a small fraction of his previous hydro experience was
working with the Corps of Engineers with the Snettisham, Rampart
and Bradley dams as well as doing reconnaissance work of many
other potential hydro plants throughout Alaska.
MR. AUSMAN explained that he was approached by some people last
year who wanted an alternative to the MEA coal plan. There are
more than 50 megawatts of under-the-river hydro potential in the
Matanuska Valley as well as wind sites. To be effective, they
need to be combined with a peaking system and hydro is perfect
for this. For instance, hydro is what makes the 300-megawatt
Columbia River state line wind system feasible. He said that
system sells its wind power for $.4/kWh on a long-term contract.
His first thought was that a full-sized Susitna project, because
of its possible cost and environmental opposition, would not be
an acceptable candidate and that a reduced-size Devils Canyon
portion of this project may be economical and would be more
acceptable. So he proposed the dam at Devils Canyon that was
one-half the height of the existing proposal to reduce costs. A
50-percent reduction in height on one of these dams can reduce
the volume of concrete to 20 percent or so. This dam would be
equipped with extra turbines to provide the peak power and
although the reservoir is smaller, it would have some storage.
If more power would be needed, it could be augmented by the
upper Watana part of the project, which could also be scaled
back if necessary.
He strongly recommended that Alaska look at renewables as is
proposed in these bills. They should include both Susitna and
Chakachamna because they could work together to provide peaking
power and would be key in replacement of new gas turbines or a
coal plant proposed to power the Railbelt. He also believed that
the power from the Railbelt system could be shared with rural
localities by using DC transmission.
MR. AUSMAN said wind or water energy not used is lost forever,
but the fossil fuel that is replaced by renewable energy sources
can be reserved and used or sold to the people outside of
Alaska, like Norway is doing. The Department of Energy indicates
that the State of Alaska has 45,000 megawatts of developable
hydro.
4:57:03 PM
He advised that an initial analysis of the economics of Susitna
and Chakachamna as well as other renewable energy resources
should be done to determine if any of those projects or a
combination of them appears fruitful. The work should be done by
a group that includes two hydro-plant constructors, one should
be Norwegian because that is where the expertise comes from and
the second should be from the U.S. It should also include an
engineering firm that knows Alaska and its special position, and
an economist and report writer. The report should make
recommendations on the best course of action provided a project
appears to be feasible, and a more detailed study could be
performed.
4:59:09 PM
JIM HEMSATH, AEA, explained that the fiscal note is organized
specifically to focus around the Susitna project and to look for
fatal flaws in the engineering and cost of power that may
prohibit the project from moving ahead. The bottom of the fiscal
note indicates that at any time during the course of the project
from the Susitna perspective that they find it is not feasible
all the work on it will stop and efforts would be directed
elsewhere. He said there is never a guarantee that a study will
get the answer you would like to have.
5:00:32 PM
SENATOR STEDMAN moved to report CSSB 246 (RES) from committee
with individual recommendations and attached fiscal note. There
were no objections and it was so ordered.
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