Legislature(2023 - 2024)BELTZ 105 (TSBldg)
04/10/2024 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB219 | |
| SB152 | |
| SB257 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 152 | TELECONFERENCED | |
| += | SB 257 | TELECONFERENCED | |
| += | SB 219 | TELECONFERENCED | |
SB 257-ELECTRIC UTILITY REGULATION
2:00:10 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 257 "An Act relating to the
Regulatory Commission of Alaska; relating to public utilities;
relating to electric reliability organizations; relating to the
Alaska Energy Authority; relating to the Railbelt Transmission
Organization; and providing for an effective date."
2:00:52 PM
SENATOR CATHY GIESSEL, District E, Alaska State Legislature,
Juneau, Alaska, Sponsor of SB 257, gave a recap of SB 257. She
said she has been inspired by Alaskans coming together to solve
the electric transmission and energy issues of the state. She
reported that she and several others traveled to Iceland and
that she was also inspired by what they have done to solve these
issues for themselves. She said they began with separated and
isolated grid utilities, and they came together with the single
goal to unite and create a more efficient system. She said there
are numerous stakeholders that came together to work on SB 257,
including the governor. She expressed sincere and serious hope
that there was a goal that has united the stakeholders. She
emphasized the federal funding made available through the hard
work of Alaska's federal delegation.
SENATOR GIESSEL said the goal of SB 257 was to unite Alaskans,
to integrate the transmission system into an efficient highway
for electrons, to lower the cost of energy and get the
transmission system open to renewable resources and ultimately
[provide] cleaner, lower cost energy for all Alaskans.
2:02:49 PM
CHAIR BJORKMAN announced invited testimony on SB 257.
2:03:06 PM
SARAH LAMBE, Chief Financial Officer, Homer Electric
Association, Homer, Alaska, introduced herself and her colleague
and said they would provide a presentation on SB 257.
2:03:21 PM
KERIANN BAKER, Chief Strategic Officer, Homer Electric
Association, Homer, Alaska, introduced herself and began a
presentation on SB 257. She expressed appreciation for SB 257
and said Homer Electric Association (HEA) shared the goals
expressed by the sponsor. She said HEA would like to see a
unified system with economic dispatch for all. She expressed the
desire to talk through the promises of SB 257 and some concerns
unique to HEA.
2:04:00 PM
MS. BAKER continued to slide 2. She read through the points that
the presentation would address and said SB 257 may not go far
enough. She said HEA has concerns with the manner of the
drafting for SB 257 and she reiterated alignment with the goals
expressed for SB 257.
[Original punctuation provided.]
Overview
SB 257 and its implications
01-
Understanding SB257
• Overview of SB257
02-
Concerns & Impacts
• Potential Impacts of SB257
03-
What's Missing
• Suggestions for Legislative Consideration
04-
Summary
2:05:17 PM
MS. LAMBE continued to slide 3 and expanded on the points
outlined.
[Original punctuation provided.]
Concerns and Impacts
As written, SB 257 may:
07
Potential Member Impact
• Current & future assets investment
• AEEC lost opportunities
• RTO Governance Structure
• Cost Causer vs. Cost Payer
06
Transmission Assets
• Book values & costs will vary based upon age,
debt, etc.
• Consistent valuation methodology needed
05
State: Buying or Leasing
• Refinancing of assets
• Utility LTD rates vs. State LTD rates
• Who is responsible for penalties?
04
Rural/Small Utility Status
• RUS LTD rates
• PACE Program
• USDA NEW ERA Program
• GRIP Topic 1
03
Un-equal Access To Grid
• Islanding of HEA system
• System Constraints
• Bradley Agreement
02
Administrative Burden
• Overlapping & duplicative duties between RRC,
RTO, RCA & AEA
• No clear delineation between duties
• Coordination between 4 entities and 5 utilities
with duplicate duties creates unnecessary
complexity
MS. LAMBE said HEA has invested to reliably serve the generation
and transmission needs of its membership in its own service
territory. She said HEA is the only utility that currently does
not pay any transmission wheeling charges, nor do they receive
transmission wheeling revenues and so HEA is in a unique
position when considering the impact of socializing the cost of
the railbelt transmission system. She described the transmission
system as analogous to a pipe in that only so much water can fit
in it and that the current transmission tie line between Bradley
Lake and Anchorage is only capable of pushing power north. She
said transmission capacity is so restricted that upgrades will
be required if the state and its utility partners invest in the
expansion of Bradley Lake by way of the Dixon Diversion. She
said historically there has not been "room in the pipe" for HEA
to participate in any wholesale sales for resale markets. She
said this has necessitated that HEA right-size projects to fit
their system, prohibiting HEA's ability to take advantage of
economies of scale. To compensate for that, HEA has competed for
and recently received an invitation to apply for a U.S.
Department of Agriculture (USDA) grant under the Power and Clean
Affordable Energy (PACE) program for a battery system necessary
to support HEA achieving a renewable energy level of 60 percent.
She said the PACE program is part of the inflation reduction act
which represents the largest investment in rural electrification
since Franklin D. Roosevelt signed the Rural Electrification Act
in 1936. If HEA proceeds under the application, they would
receive 60 percent loan forgiveness of a $100 million investment
with the remaining $40 million recaptured under the IRS direct
pay program.
2:07:14 PM
MS. LAMBE said HEA has diligently been working towards
leveraging its rural electric utility status to diversify its
energy resources, reduce dependence on carbon-based fuel and
reduce the upward pressure on rates. She said HEA's ability to
proceed with the application and to secure these federal funds
amidst SB 257 is relatively unclear and it is not a benefit she
would lightly relinquish.
MS. LAMBE noted the items bulleted under Items 05 and 06 on
slide 3 and said she did not know whether it was the dividing up
of the current pool of transmission costs that was the greatest
concern to HEA, but certainly future plans for replacement and
expansion has HEA looking at it from a return-on-investment
perspective. She said the railbelt modernization and resiliency
plan contemplates an investment close to $3 billion. HEA's
contribution to the plan would gain them access to but would not
provide for the most economic dispatching of generation
resources to HEA's membership. Until the system is unconstrained
and system islanding events contemplated, HEA's service
territory would not be an ideal location for IPPs to invest in
since the greater railbelt resale market is unavailable to HEA.
In addition, HEA's attractiveness as an off-taker for IPP
projects developed in the interior has diminished since system
islanding prevents delivery to HEA for up to three months of the
year for the next five to ten years.
MS. LAMBE concluded that SB 257 provides a path to, but stops
short of delivery of the most economically dispatched [energy]
generation on the railbelt. It may not be the right addition to
the plethora of organizations existing or being set up to
administer these assets on the railbelt.
2:08:58 PM
MS. BAKER continued to slide 4 and said HEA had concerns about
unintended consequences and the unknown.
[Original punctuation provided.]
Concerns and Impacts
The #1 Concern to HEA
01 the Unknown & Unintended Consequences
MS. BAKER noted HEA also sent representatives to Iceland and one
of the things they learned was it took 20 years for Iceland to
accomplish their system. She said HEA does not think it would
take 20 years to accomplish what Alaska needs, but she advocated
for full understanding. She said the railbelt managers set up a
transmission committee, composed of a team of experts and hired
two experts as consultants, one of whom will focus on the
governance model to ensure that it makes sense for Alaska and
the other will focus on inter-regional transfers from a
technical perspective and from a tariff-based perspective.
2:10:18 PM fix
MS. BAKER advanced to slide 5 and expanded on the points
outlined.
[Original punctuation provided.]
What's Missing
A Careful Approach to a Unified Railbelt System
Suggestions for Legislative Consideration
01
Does not reduce prices for utilities or members.
02
Does not resolve the fuel issue.
03
Creates socialized transmission costs without equal
access.
04
Does not increase capacity or re-allocate capacity
05
Transmission Wheeling not based on demand.
06
Does not remove system constraints prior to effective
date.
MS. BAKER said SB 257 would not reduce prices for utility
members and would not resolve the issue of fuel. She said it
would socialize transmission cost but does not create access.
She suggested that, for the Kenai, this is equivalent to putting
out an all-you-can-eat buffet, and charging for a ticket, though
one party has already eaten and can't go through the buffet
line. She acknowledged the over-simplification [of her metaphor]
but maintained the concept and said the importance of an
effective date for the system to be constrained is critically
important for equal access to the market for all. She emphasized
that she refers to access not only for the utilities, but also
for IPPs. She said HEA looks forward to the time when there is a
free, open and competitive market which means energy would be
produced by utilities with free access to the market without
physical or other constraints. She said the IPPs also would
compete with the idea that the lowest cost electrons wins. She
said that is what HEA's members really want; she opined they
don't really care where the electricity comes from as long as it
is the lowest price and HEA is committed to providing that. She
said SB 257 would not increase capacity and it wouldn't
reallocate the capacity. Other concerns HEA would like to
carefully work through with the transmission group are that
transmission wheeling charges would not be based on demand or
use and the system constraints would not be removed prior to the
effective date.
2:11:51 PM
MS. BAKER advanced to slide 6 which depicted a group of people
standing together in an outdoor setting and a paper napkin with
a pencil sketch of a hand poised to draw on the napkin. She said
the slide was meant to suggest "the napkin" drafted in Iceland
by the railbelt managers. She said the managers were very
excited by what they saw in Iceland, and one of the things that
is included [on the napkin sketch] is unified rates when
capacity constraints are removed. She said that is very
important to HEA. She emphasized that HEA is a partner [in the
railbelt transmission system] and advocated for the idea of a
unified system with true economic dispatch. She expressed a
desire to get it right and consider all the issues on the fore-
front so future legislatures are not asking for fixes. She
concurred with the motives and objectives of the bill sponsor
and suggested that SB 257 may not be the vehicle to accomplish
the desired goals.
2:13:38 PM
CHAIR BJORKMAN asked for examples of energy constraint to and
from the HEA service area and what causes the constraint.
2:14:05 PM
MS. BAKER answered the current constraint is the limited
capacity of the transmission system. She said HEA is also
constrained by the Bradley Project Management agreement and
settlement, which designated a priority list: 1) Chugach
Electric Association (CEA) native load and Cooper Lake Hydro 2)
Bradley Energy production 3) Bradley Spinning Reserve. She
explained that any remaining capacity after those priorities are
satisfied theoretically could be sold by HEA. However, she said,
there simply would not be enough capacity. She further explained
that when the additional [transmission] line is built the
physical constraint will be removed, so the transfer and
receiving concerns would be removed. She noted that when power
is sent to HEA, called an "off-setting flow", it reduces the
pressure and allows more energy to flow through. It isn't an
equivalent because it offsets what is being sent north.
2:15:39 PM
CHAIR BJORKMAN summarized the testimony and said, under the RTO,
as SB 257 is currently written, HEA members would be responsible
to pay for transmission assets as well as any ancillary services
connected to those assets without the benefit of the option to
purchase low-cost power or selling lower cost power to other
areas of the grid. He asked whether this summary was correct.
2:16:10 PM
MS. BAKER confirmed the summary and noted HEA members would also
still be responsible for producing and paying for their own
power and they would have to upgrade their system because they
don't have the access; they would also be responsible for paying
for the [indisc] without equal access to the similar value that
would be provided to other people on the grid. She emphasized
this would be true for IPPs in addition to HEA. She further
opined the IPPs would be reluctant to locate in the HEA area,
even if it made sense from a science or technology perspective,
for the same reason.
2:16:54 PM
CHAIR BJORKMAN described the two-line system envisioned after
the Grid Resilience and Innovation Program (GRIP) is completed
and asked whether HEA anticipated truly open access due to the
lifting of constraints on the transmission system with the two
lines.
2:17:20 PM
MS. BAKER confirmed that a second line off the Kenai would
remove the physical constraints [to energy transmission] and
there would be equal access to the market for all parties,
whether utilities or IPPs and regardless of their location.
2:17:41 PM
CHAIR BJORKMAN referred to a financial analysis report produced
by Steve Colt [Research Professor of Energy Economics and Policy
at Alaska Center for Energy and Power, University of Alaska]. He
highlighted data in the report regarding potential costs and
benefits for HEA. He asked whether Ms. Baker had seen the
report.
2:18:08 PM
MS. LAMBE answered that there were a number of points in the
document that she opined reflected the complexities that
utilities encounter particularly with regard to ratemaking. She
suggested that, on paper, it would appear HEA is the only winner
in the re-allocation of transmission costs. She suggested the
report did not represent an "apples to apples" comparison of the
utilities and the findings were the result of annual filings HEA
submits to the Regulatory Commission of Alaska (RCA). She said
Alaska Electric & Energy Cooperative (AAEC) and Homer Electric
Association (HEA) have a unique relationship in that they are a
wholly owned subsidiary for Railbelt Generation and Transmission
(RG&T) and the rest of the railbelt utilities are a consolidated
entity. She suggested distinctions could be made regarding the
required tier or margin on the distribution cooperative versus
the transmission and generation cooperative. She referred to the
allocations of costs and what is included in the reporting of
costs and acknowledged the incentive to report costs as
transmission costs with the understanding that the pool of
transmission costs will be shared. She said it is important to
consider the competing priorities the individual utilities have
in representing their transmission costs to be shared. She
recalled specific revenues and costs from the referenced report
and argued that the amount of margins did not accurately reflect
the costs and revenues. She said the report is an example of
taking all the data, throwing it together and creating a
narrative with some of the numbers that support what you want to
report.
2:21:09 PM
CHAIR BJORKMAN summarized that the cost analysis report by Colt
and the Alaska Center for Energy and Power did not accurately
reflect HEA's real, on-the ground situation financially and
asked whether that was the view of HEA.
2:21:21 PM
MS. LAMBE replied that the report was an understandable
outsider's perspective on the utility's finances, but she did
not agree with the final analysis.
2:21:32 PM
CHAIR BJORKMAN asked how SB 257 would impact grants or other
rural financing HEA receives.
2:21:40 PM
MS. LAMBE said she was not sure. She noted HEA is in the process
of applying for the afore-mentioned PACE grant. She noted the
$100 million loan forgiveness [at 60 percent] provided by the
grant would be applicable to HEA because of its rural and tribal
and energy community status. She said without those attributes,
it becomes a straight loan and so what may be at risk is the 60
percent subsidy.
2:22:40 PM
CHAIR BJORKMAN referred to islanding events due to wildfire or
planned maintenance and the perception that HEA has access to
electricity from Bradley Lake when other utilities do not. He
asked for an explanation of what happens in those events from
HEA's perspective. He described the public perception that HEA
can enjoy all the free power they want from Bradley Lake while
the other utilities are disconnected.
2:23:15 PM
MS. BAKER said she wished it worked that way, but it doesn't.
She said one of the Bradley units must be shut down to preserve
the system's stability. HEA is unable to maintain consistent
frequency with those units when they are islanded. She said HEA
does have full use of the water within Bradley, but that it is
their water, their fuel that is stored there and they can't take
another utility's water. She said during islanding events they
then bring on other [energy generation] units. She noted the
additional generating unit required during the Swan Lake
wildfire cost an additional $25,000 per day for fuel. She
explained that the Bradly project is not a regulating source [of
energy] and the extra unit is required to control the electrical
frequency. She said the acquisition of battery storage was
critical for HEA to cut out the extra cost of fuel.
2:24:53 PM
CHAIR BJORKMAN asked for confirmation of his understanding that
the battery serves as the spinning reserve and eliminates the
need to start up a new generation set.
2:25:04 PM
MS. BAKER concurred.
2:25:11 PM
CHAIR BJORKMAN referred to the suggestion in the presentation
that an RTO may not go far enough from HEA's perspective and
asked for clarification. Specifically, he asked what would
better meet the needs of the railbelt.
2:25:34 PM
MS. BAKER answered that HEA is committed to the agreement made
by the railbelt [utility] managers in Iceland. She said HEA
wonders if a Generation and Transmission (G&T) model would be a
more appropriate vehicle. She also said HEA does not think it is
necessary to pass legislation this year and would prefer to take
more time for the transmission group of experts to consider
various models. She restated the goals shared by HEA with the
sponsors of the legislation and the managers who met in Iceland:
economic dispatch across the railbelt, and the vision of a time
when everyone served by the railbelt energy system would pay the
same price. She noted that the system in Iceland was not
developed overnight and is a system worth looking at. She
considered the possibility of two systems with Bradley under one
big G&T. She said there are numerous things that could be done,
and she advocated for taking time to consider possibilities and
to get it right. She noted that considering the whole system and
how to move forward is very complicated.
2:27:31 PM
CHAIR BJORKMAN noted discussions about the Electric Reliability
Organization (ERO) and its board and the success of deliverables
from the ERO. He asked for reflection about the role and
function of the ERO in generation and transmission planning for
the future from the perspective of HEA.
2:28:04 PM
MS. BAKER reflected that the ERO was developed with the best
intent and that it was charged with a lot of responsibility. The
cost of the ERO for HEA is $20,000 monthly; under the new tariff
which will go into effect in August, she said the cost will
increase 116 percent to $43,000 per month. She said ERO's total
budget for 2024 will be $5 million and that is concerning to
HEA. She said HEA would prefer a more streamlined approach with
clearly delineated responsibilities, for example having the ERO
operate as a standards-based organization, developing standards
for safe operation of the grid and how interconnections
function, etc; and the RTO would be the market. She suggested
that it is complicated for the entity that has created the
standards to then function competitively in the market. She said
there is a separation between those duties in other states and
that separation and clearly delineated powers provides a cleaner
way of doing it and would be beneficial for the board members
who, she opined, all have the best intentions.
2:30:27 PM
CHAIR BJORKMAN opened public testimony on SB 257.
2:31:06 PM
MIKE CRAFT, representing self, Fairbanks, Alaska, testified in
support of SB 257. He said he is a home builder, the gravel pit
operator in Fairbanks, the owner and operator of the Delta Wind
Farm, and that he put the first two wind farms on the railbelt
grid in 2008. He served on the Railbelt Reliability Council
(RRC) formation committee. He said he considers his testimony to
be part of an intervention in that the same conversations about
the railbelt grid, utilities working better together etc. have
been happening for over 14 years. Meanwhile there are hundreds
of millions of dollars spent through the Alaska Energy Authority
to develop renewable energy technology in Alaska, which he said
has been very successful. He noted the energy goal [50 percent
of Alaska's power from renewables by 2025] set out by Sarah
Palin in 2010. He noted that the situation now in 2024 is not
enough fuel to power the capacity in the major cities in Alaska.
He detailed recent fuel consumption and shortfalls and the level
of power consumption in cities on the railbelt system. He
expressed frustration with the lack of progress and said there
are a dozen or so [renewable energy] projects that have been
allowed to "die on the vine" in the meantime. He noted that fuel
was at its highest cost and possibly not even available. He said
the utilities are forced to burn fuel in Fairbanks during an air
quality alert which means poor air quality will be exacerbated
and high cost. He said his local utility had a 21 percent
increase in rates in the last 60 days. He concluded saying that
he supported all three energy bills that are currently on the
table, SB 152, SB 257 and the one addressing wheeling rates [SB
217]. He supported any efforts to open the railbelt grid to
competition.
2:34:25 PM
KEN HUCKEBA, representing self, Wasilla, Alaska, testified in
opposition to SB 257. He said he had experience working in the
power producers' world in California and, in his experience,
there were many precautions to be taken to prevent opportunists
and grifters and to save ratepayers and taxpayers money. He said
those precautions needed to be set in place before enacting
legislation. He opposed SB 257 and the comparison to Iceland,
which he characterized as a nationalist grid. He said he is
opposed to any kind of centralized government planning and
consolidation of private assets. He said the entire premise of
SB 257 is to set up to beg for and further legitimize going
after inflationary and damaging federal funds. It stands up yet
another state-owned enterprise at a time when federal and state
spending is wildly out of control. He said the sponsor statement
claims SB 257 lays the groundwork for an electric system that is
more affordable, more sustainable and more equitable. He asked
how that could be true when it requires so much money from
ratepayers and taxpayers. He asked for whom the proposed system
would be more equitable. He claimed SB 257 would be taxation
without representation. He said central planning is government
free-market interference, yet all the invited testimony by
unelected bureaucrats and technocrats tells a different story.
He noted the claims that SB 257 was needed for IPPs, that it
would provide energy security and would result in affordable
energy and would allow free and open access to the grid by
removing barriers. He said, if all that were true, why would
[there be] subsidies and the infrastructure charges just to get
renewables on there. He said he did not see an alternative
analysis for the natural gas pipeline and yet the position is
that's the only way to go forward. He noted invited testimony
points to [experience of] Texas and Hawaii and that they have
adopted this framework yet do not talk about what the
detrimental energy transition policies have done to their grid.
He said he read that the North American Reliability Corporation
consider energy policy as a top risk to grid reliability. He
said SB 257 is a great example of exactly that energy policy. He
urged that SB 257 be tabled until is more formed to protect
Alaskans.
2:37:03 PM
JOEL GROVES, Board Chair, Railbelt Reliability Council,
Anchorage, Alaska, gave a timeline and an overview of the RRC's
history, current work and future direction in order to provide a
better understanding of the RRC and suggest implications for the
potential roll-out of SB 257 if the bill passes. He said the
Railbelt Reliability Council (RRC) spent over three years
jumping through the various regulatory hoops in order to obtain
the regulatory approvals needed to function as the Electric
Reliability Organization (ERO). He described the efforts to hire
a CEO and reported that appears to be nearly complete. RRC/ERO
have also retained a chief administrative officer and chief
technical officer as stop-gap measures to get on with the work
of the organization.
MR. GROVES said, with the potential rollout of SB 257, he would
expect a timeline similar to that of the RRC, with a three-year
Senate approval window for the RTO. He summarized by urging the
committee and the legislature at large to consider the realistic
timeframes for the roll-out of SB 257 and the implications for
potential outcomes for the RRC, including the possibility of
sending the RRC back to redo some of the regulatory approvals
due to the reforms implemented.
2:40:24 PM
CHAIR BJORKMAN asked what the total revenue after the ERO tariff
was implemented for 2024 and what is expected for 2025.
2:40:33 PM
MR. GROVES answered the total revenue for 2024 under the
currently approved tariff was approximately $2.4 million for
2024.
2:41:01 PM
CHAIR BJORKMAN asked whether the amount was expected to increase
for 2025.
2:41:07 PM
MR. GROVES said RRC filed a request with the commission for an
increase to support product development, basically the
initiation of reliability standards and that is to support the
chief technical officer referred to earlier. He said RRC does
expect a higher budget for 2025 and estimated it would be around
$5 million with the expectation of having hired a CEO and the
key staff that will begin and lead the work of the organization.
2:42:00 PM
NATALIE KILEY-BERGEN, Energy Lead, Alaska Public Interest
Research Group, Anchorage, Alaska, said Alaska Public Interest
Research Group (AKPIRG) is a 501(c)(3) non-profit and the only
non-partisan, non-governmental consumer advocacy and research
organization in Alaska. AKPIRG serves in the small consumer seat
on the RRC. She said her comments represent the views of AKPIRG
and not necessarily the RRC. She said AKPIRG strongly supports
the inclusion of diverse voices in the legislatures efforts to
improve transmission legislation. Although AKPIRG supports the
creation of a regional transmission entity, she said there are
concerns about sections of SB 257 that repeal the statutory
authority for Electric Reliability Organizations (EROs) to
conduct integrated resource planning. She said the railbelt ERO
is governed by a board that includes representation from
providers of electric energy, transmission and distribution
along with consumer voices. She said RRC board members have a
fiduciary duty to act independently and exercise first loyalty
to the mission of the RRC to achieve what is best for the
railbelt. She said railbelt ratepayers are best served by the
wholistic planning process and the inside approach the RRC
already embodies. She said AKPIRG opposes the notion that the
RRC has been operating for four years with little progress. She
said the RRC has been a certified ERO since September 2022, and
in that time has undertaken substantial effort to create a
framework for RRC planning and has gone through public processes
to create rules and bylaws to insure robust technical excellence
and substantial public participation. She said AKPIRG supports
that the proposed RTO would oversee and manage the railbelt's
key transmission assets and the Regulatory Commission of Alaska
would oversee its management. AKPIRG would like an RTO that
operates a transmission system for economic dispatch of energy
across the railbelt system. This would best serve the collective
interest of ratepayers. Regardless of framework, AKPIRG will
continue to push for robust transparency and stakeholder
engagement within any structure and can provide specific
suggestions in this direction as legislation evolves.
2:44:32 PM
CHRIS ROSE, Director, Renewable Alaska Energy Project, Sutton,
Alaska, said Renewable Alaska Energy Project (REAP) has been
working with electric industry professionals and experts around
the country on issues related to energy efficiency and renewable
energy across the state for the past 20 years. He commended the
Senate Resources Committee for its commitment to reforms in the
railbelt region of Alaska and the Senate Labor and Commerce
Committee for hearing SB 257. He noted that energy in the
railbelt region of Alaska is 60 percent more expensive than the
national average, which makes the need for reform more urgent
than ever. He said REAP supports elements of SB 257 but has
grave concerns about the provision to move planning out of the
Railbelt Reliability Council (RRC). REAP supports SB 257's
intent to eliminate transmission wheeling charges in the
railbelt, while they may prefer language in another bill
currently under consideration. He said they believe eliminating
wheeling is an important reform that has been discussed for
decades. He said REAP also supports enhanced qualifications for
the commissioners on the Regulatory Commission of Alaska (RCA).
However, REAP does not support language in SB 257 that would
take away either generation or transmission planning from the
RRC.
2:45:52 PM
MR. ROSE said in the lower 48, there are seven Regional
Transmission Organizations (RTOs), and all of them with the
exception of Electric Reliability Council of Texas (ERCOT) is
governed by a board that is independent of the owners and users
of the transmission system. He said RTO's with independent
governance in the lower 48 do conduct transmission planning and
much of the latest thinking in the field is that conducting
transmission and generation or resource adequacy planning may be
better done by the same body. In addition, RTO's in the lower 48
also act to dispatch generation resources on the system in the
most economical way to benefit consumers. In contrast, he said
REAP believes it's important to note that the governance of the
RTO as contemplated in SB 257 within the co-ops and Alaska
Energy Authority (AEA) is not independent. There is independent
industry literature and precedent from the Federal Energy
Regulatory Commission (FERC) that explains why independence is
so important, but the essential point is that the owners of the
transmission system all have inherent biases and economic
interest, and putting those owner's interest in charge of
planning the system or dispatching generation resources sets up
the real danger that the interest of one or more of those owners
will dominate the decision-making. He said that it is highly
important that the decision to build transmission be made by
decision-makers that do not have any local or parochial
interest.
MR. ROSE concluded that REAP is not confident the RTO's
governance as described in SB 257 will protect consumers. He
said most of the litigation between the railbelt utilities of
Alaska over the past several decades has been over the issue of
transmission. He said it is not reasonable to think that an RTO
composed of the transmission owners would be able to effectively
plan for the transmission system without major disputes arising.
2:47:57 PM
ALEX PETKANAS, Climate and Clean Energy Program Manager, The
Alaska Center, Anchorage, Alaska, said SB 257 would have some
very positive impacts including increased requirements for
future RCA commissioners and allowing additional considerations
like diversity of supply and the determination of utility areas.
However, he said the Climate and Clean Energy Program was
concerned that removing some or all planning authority from the
existing Electric Reliability Organization (ERO) would create a
slower and less efficient process with less public input and
transparency. He said the ERO represents a wide range of
stakeholders that establish clear methods for engagement to take
significant steps toward developing wholistic standards for
power generation. He said requiring the Alaska Energy Authority
to begin an initial plan and an RTO to take over long-term
planning at this point would undermine work that has already
been done and would complicate and slow down the process.
Establishing a new organization takes time and planning work
would not start immediately. Additionally, he said debates over
exactly who gets to make certain transmission and planning
decisions would further slow the process. He said SB 257 as
written requires the EROs to work with the RTO on planning, but
it is not clear exactly who gets final say over each aspect of
transmission. He said there is no evidence at this point that
creating a new organization would be more efficient than
allowing the existing ERO to continue its work to create a
wholistic plan for the railbelt energy system. He concluded that
the Climate Clean Energy Program strongly opposes removing
planning authority from the ERO.
2:49:40 PM
ANTONY SCOTT, representing self, Anchorage, Alaska, said he was
testifying from his perspective as a former commissioner of the
Regulatory Commission of Alaska. He said SB 257 in it's intent
to create a Regional Railbelt Transmission organization is well-
meaning, but that there are important technical flaws in the
bill. He said the source of the defects have to do with
overlapping jurisdictional authority and concerns about property
rights. He said he had three areas of concern, not with policy,
but concerns with the construction of the authority of the RTO.
MR. SCOTT said, though there is intent that the entity [RTO]
would be regulated by the RCA, there would still be
jurisdictional and non-jurisdictional portions of the
transmission system as is the case today. He noted the portions
of the transmission system that are currently governed under
certain Bradley Lake agreements and the exemption of those
Bradley Lake agreements are under AS 42.05.431(c) and not
addressed in the language [of SB 257].
2:51:14 PM
MR. SCOTT said the concept of "backbone" transmission assets is
a more significant concern. He said that concept does not self-
execute, and he is concerned that it will create significant
litigation and future conflict. The fact that it doesn't self-
execute is called out by the need for new regulations under SB
257 defining that, but he said it is not clear what is
contemplated by "backbone". He pointed out that ten years ago
there was very extensive and expensive litigation over whether
the transmission lines connecting Chugach's generation assets
west of the grid were "backbone" or instead were "radial". The
RCA came up with one answer, but it is unclear what the drafters
of SB 257 had in mind. He said this is a very significant issue
for local utilities which have transmission assets to
potentially being able to meet their Certificate of Public
Convenience and Necessity (CPCN) obligations when management of
certain assets may be handed over to the RTO.
MR SCOTT sought to address issues over overlapping jurisdictions
and the prospects of litigation that are created by that. He
summarized that he has significant concerns with several
provisions of SB 257 regarding the powers and duties of the RTO
that have been enumerated and overlapping authority with the
RCAs' jurisdiction.
2:53:06 PM
DAVID NEWMAN, representing self, Fairbanks, Alaska said he was a
faculty member at UAF in physics and that he had studied power
transmission, blackouts and resource adequacy issues for the
last 30 years. He said he had worked at the academic level and
at the practical level, doing projects for entities such as
California Independent System Operator (ISO), which he said
operates basically like an RTO. He noted the "I" in ISO which
stands for "Independent". He said the sponsor's goal for SB 257
is fabulous and he offered full support for those goals. He said
independent, but unified planning is critical. He said the
planning organization must do both resource planning and
transmission planning to maximize economic dispatch and achieve
system reliability. He said one without the other is a real
problem and has been experienced across the country. He said
Regenerative Fuel Call (RFC) is just getting started now, but he
said its mission is the same as that of SB 257 in the
organization of an RTO. He said IRPs in particular need
integrated planning with cost and reliability included and he
opined that the proposed entity would be reinventing the wheel,
but worse. He said the flaw is that it would no longer be
independent. He said one of the things that contributed to the
development of the RRC board is that though it is not
independent, it is balanced among the stakeholders.
MR. NEWMAN concluded that he supported the establishment of the
RTO in SB 257, but did not support the bill in total because he
said it would make costs higher, reduce reliability and violate
the principles of equal representation.
2:56:20 PM
MARYLEE GUTHRIE, representing self, Fairbanks, Alaska, said she
was a resident with old electric heaters in her house and that
she had been paying electric bills and watching things going on
in Golden Valley Electric Association (GVEA) in particular. She
said she was very happy a few years ago when the integrated,
independent and transparent processes of the board to integrate
the various pieces of our railbelt came into existence and very
hopeful that it would be a way to help all move forward in the
new energy situation. She said she was concerned that those
features [integrated, independent and transparent] are not a
robust part of SB 257.
2:57:39 PM
CHAIR BJORKMAN noted that changes are coming and are in the
works that will protect utilities like Homer [Electric
Association] and others from islanding issues and making sure
that de-constraining the system is prioritized prior to any
costs being assessed to utilities that may not be served by a
system under constraint.
2:58:20 PM
[CHAIR BJORKMAN held SB 257 in committee.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB152 Public Testimony-Emily Cohen 02.14.24.pdf |
SL&C 4/10/2024 1:30:00 PM |
SB 152 |
| SB152 Public Testimony-Katy Smith 02.14.24.pdf |
SL&C 4/10/2024 1:30:00 PM |
SB 152 |
| SB152 Public Testimony-Maya Kaup 04.09.24.pdf |
SL&C 4/10/2024 1:30:00 PM |
SB 152 |
| SB152 Public Testimony-Paul Seaton 03.27.24.pdf |
SL&C 4/10/2024 1:30:00 PM |
SB 152 |
| SB152 Public Testimony-Received as of 01.29.24.pdf |
SL&C 4/10/2024 1:30:00 PM |
SB 152 |
| SB152 Blank Draft Proposed CS ver U.pdf |
SL&C 4/10/2024 1:30:00 PM |
SB 152 |
| SB152 Summary of Changes B to U.pdf |
SL&C 4/10/2024 1:30:00 PM |
SB 152 |
| SB152 Sectional Analysis ver U.pdf |
SL&C 4/10/2024 1:30:00 PM |
SB 152 |
| SB219 Public Testimony-Letter_Aetna 04.08.24.pdf |
SL&C 4/10/2024 1:30:00 PM |
SB 219 |
| SB219 Public Testimony-Dr. Kristin Mitchell 04.07.24.pdf |
SL&C 4/10/2024 1:30:00 PM |
SB 219 |
| SB257 Presentation by HEA to SLAC 04.10.24.pdf |
SL&C 4/10/2024 1:30:00 PM |
SB 257 |