Legislature(2023 - 2024)BUTROVICH 205
03/04/2024 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| SB243 | |
| SB217 | |
| Presentation: the Railbelt Transmission Grid | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 217 | TELECONFERENCED | |
| + | SB 257 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | SB 243 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
March 4, 2024
3:30 p.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Cathy Giessel, Co-Chair
Senator Bill Wielechowski, Vice Chair
Senator Scott Kawasaki
Senator James Kaufman
Senator Forrest Dunbar
Senator Matt Claman
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 243
"An Act relating to the board of directors of the Alaska Energy
Authority."
- MOVED CSSB 243(RES) OUT OF COMMITTEE
SENATE BILL NO. 217
"An Act relating to the taxation of independent power producers;
and increasing the efficiency of integrated transmission system
charges and use for the benefit of ratepayers."
- HEARD & HELD
PRESENTATION: THE RAILBELT TRANSMISSION GRID (NOW AND FUTURE.)
- HEARD
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."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: SB 243
SHORT TITLE: ALASKA ENERGY AUTHORITY GOVERNANCE
SPONSOR(s): RESOURCES
02/19/24 (S) READ THE FIRST TIME - REFERRALS
02/19/24 (S) RES, FIN
02/26/24 (S) RES AT 3:30 PM BUTROVICH 205
02/26/24 (S) Heard & Held
02/26/24 (S) MINUTE(RES)
02/28/24 (S) RES AT 3:30 PM BUTROVICH 205
02/28/24 (S) Heard & Held
02/28/24 (S) MINUTE(RES)
03/04/24 (S) RES AT 3:30 PM BUTROVICH 205
BILL: SB 217
SHORT TITLE: INTEGRATED TRANSMISSION SYSTEMS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/02/24 (S) READ THE FIRST TIME - REFERRALS
02/02/24 (S) RES, L&C, FIN
03/04/24 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
JULIE SANDE, Commissioner
Department of Commerce, Community, and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Presented SB 217 on behalf of the
administration.
CURTIS THAYER, Executive Director
Alaska Energy Authority (AEA)
Anchorage, Alaska
POSITION STATEMENT: Answered questions on SB 217.
ANDREW JENSEN, Policy Advisor
Office of the Governor
Anchorage, Alaska
POSITION STATEMENT: Answered questions on SB 217.
ROBERT DOYLE, Chair
Regulatory Commission of Alaska (RCA)
Anchorage, Alaska
POSITION STATEMENT: Answered questions on SB 217.
GWEN HOLDMANN, Associate Vice Chancellor
Research, Innovation, and Industry Partnerships
University of Alaska Fairbanks (UAF)
Fairbanks, Alaska
POSITION STATEMENT: Presented an update on the Railbelt
Transmission Grid.
TONY IZZO, CEO
Matanuska Electric Association (MEA)
Palmer, Alaska
POSITION STATEMENT: Provided information on the Railbelt
Transmission Grid.
JOHN BURNS, President and CEO
Golden Valley Electric Association (GVEA)
Fairbanks, Alaska
POSITION STATEMENT: Provided information on the Railbelt
Transmission Grid.
ACTION NARRATIVE
3:30:31 PM
CO-CHAIR CLICK BISHOP called the Senate Resources Standing
Committee meeting to order at 3:30 p.m. Present at the call to
order were Senators Wielechowski, Kawasaki, Dunbar, Claman, Co-
Chair Giessel and Co-Chair Bishop. Senator Kaufman arrived
thereafter.
SB 243-ALASKA ENERGY AUTHORITY GOVERNANCE
3:31:18 PM
CO-CHAIR BISHOP announced the consideration of SENATE BILL NO.
243 "An Act relating to the board of directors of the Alaska
Energy Authority."
3:31:28 PM
SENATOR KAUFMAN joined the meeting.
3:31:28 PM
CO-CHAIR BISHOP solicited a motion.
3:31:31 PM
CO-CHAIR GIESSEL moved to adopt Amendment 1, work order 33-
LS1427\A.4, to SB 243.
[Original punctuation provided.]
33-LS1427\A.4
Walsh
2/29/24
AMENDMENT 1
BY SENATOR GIESSEL
TO: SB 243
1 Page 1, line 1, following "Authority":
2 Insert "; and providing for an effective date"
3
4 Page 3, following line 5:
5 Insert a new bill section to read:
6 "* Sec. 5. This Act takes effect July 1, 2024."
3:31:34 PM
CO-CHAIR BISHOP objected for purposes of discussion.
3:31:37 PM
CO-CHAIR GIESSEL explained that Amendment 1 sets an effective
date of July 1, 2024 for SB 243.
3:31:47 PM
CO-CHAIR BISHOP removed his objection; finding no further
objection, Amendment 1 was adopted.
SENATOR CLAMAN said he would not offer Amendment 2.
[Original punctuation provided.]
33-LS1427\A.4
Walsh
2/29/24
AMENDMENT 2
BY SENATOR CLAMAN
TO: SB 243
1 Page 2, line 16, following "terms":
2 Insert "A public member appointed under (a)(3) of
this section may be removed only
3 for cause."
3:31:59 PM
CO-CHAIR BISHOP solicited a motion.
3:32:02 PM
SENATOR CLAMAN moved to adopt Amendment 3, work order 33-
LS1427\A.3, to SB 243.
[Original punctuation provided.]
33-LS1427\A.3
Walsh
2/29/24
AMENDMENT 3
BY SENATOR CLAMAN
TO: SB 243
1 Page 3, lines 2 - 5:
2 Delete all material and insert:
3 "TRANSITION. (a) The terms of the members of the
board of directors of the Alaska
4 Energy Authority under AS 44.83.030, as that statute
read before the effective date of this
5 Act, expire on the effective date of this Act.
6 (b) Notwithstanding AS 44.83.030(c), added by
sec. 2 of this Act, public members of
7 the board of directors of the Alaska Energy
Authority under AS 44.83.030(a)(3) are appointed
8 to initial terms as follows:
9 (1) the member appointed under AS
44.83.030(a)(3)(A), added by sec. 1 of
10 this Act, and one member appointed under AS
44.83.030(a)(3)(E), added by sec. 1 of this Act,
11 serve for terms that expire March 1, 2025;
12 (2) the member appointed under AS
44.83.030(a)(3)(B), added by sec. 1 of
13 this Act, and one member appointed under AS
44.83.030(a)(3)(E), added by sec. 1 of this Act,
14 serve for terms that expire March 1, 2026;
15 (3) the members appointed under AS
44.83.030(a)(3)(C) and (D), added by16 sec. 1 of this
Act, serve for terms that expire March 1, 2027.
17 (c) Nothing in this section prevents the
appointment of a person whose term expires
18 under (a) of this section as a member of the board
of directors of the Alaska Energy Authority
19 if the person meets the qualifications in AS
44.83.030, as amended by sec. 1 of this Act."
3:32:04 PM
CO-CHAIR BISHOP objected for purposes of discussion.
3:32:08 PM
SENATOR CLAMAN said the purpose of Amendment 3 is to establish
more specific terms for the six public members of the board.
Under AS 39.05.055, boards follow staggered terms upon their
creation. However, due to the inclusion of two commissioners on
this board, there are eight members instead of six, resulting in
a deviation from the standard. The amendment seeks to address
this by aligning the terms of non-commissioner board members
with the existing statute and ensuring those terms track
existing statute.
3:33:26 PM
CO-CHAIR GIESSEL voiced opposition to Amendment 3. She expressed
concerns that while the idea behind it might not be bad, it is
highly prescriptive. She emphasized the importance of the Alaska
Energy Authority (AEA) having its own regulatory board.
Currently, the AEA Board is combined with AIDEA, despite their
distinct missions. She highlighted energy issues as top
priorities for the state and suggested the need for an
independent AEA capable of managing potentially substantial
federal funds. She urged the committee to refrain from adding
elements that could make SB 243 objectionable as it proceeds
towards final passage.
3:35:03 PM
CO-CHAIR BISHOP maintained his objection.
3:35:10 PM
At ease
3:36:24 PM
CO-CHAIR BISHOP reconvened the meeting.
3:36:26 PM
SENATOR DUNBAR requested further clarification and expressed
difficulty in understanding whether Amendment 3 would stagger
the terms of the board members, potentially leading to earlier
expiration dates in some cases. He suggested that the governor
would retain the authority to promptly make all initial
appointments under this amendment.
3:36:52 PM
SENATOR CLAMAN said that under Amendment 3, the governor would
make immediate appointments of six individuals to the board. Two
of these appointees would serve a one-year term, while the other
two would serve a three-year term. After the initial term, all
appointments would be for three-year terms. Additionally, the
appointments would be rotated to ensure that not all six members
join the board simultaneously.
3:37:16 PM
SENATOR DUNBAR suggested that the amendment could potentially
increase the governor's authority, so he could reappoint board
members and extend their terms that would follow into the
subsequent gubernatorial term. He queried why the governor might
find fault with an amendment that effectively enhances their
control over the board and extends their influence into the
succeeding administration.
3:37:58 PM
CO-CHAIR GIESSEL said while that could be prescribed, the
governor would retain the discretion to determine the length of
terms.
3:38:20 PM
SENATOR CLAMAN noted that one aspect to consider regarding
staggered appointments to the board is that the executive branch
might experience confusion when interpreting AS 39.05.055. Given
that two board members would not be public members, there would
be a clash between the provisions of SB 243 and the existing
statute, which assigns a four-year term. Amendment 3 serves to
clarify the interpretation of terms.
3:39:27 PM
CO-CHAIR GIESSEL said she is not an attorney, so could not speak
at length on this amendment, however, she agreed with Senator
Claman so SB 243 could move forward.
3:39:45 PM
CO-CHAIR BISHOP acknowledged that SB 243 is moving to the
Finance Committee and requested a Venn diagram to illustrate how
Amendment 3 would work. He said the committee could consult with
the Department of Law (DOL) as it moves forward.
3:39:58 PM
CO-CHAIR BISHOP removed his objection and Amendment 3 was
adopted.
3:40:13 PM
CO-CHAIR BISHOP solicited the will of the committee.
3:40:37 PM
CO-CHAIR GIESSEL moved to report SB 243, work order 33-LS1427\A,
as amended, from committee with individual recommendations and
attached fiscal note(s).
3:40:50 PM
CO-CHAIR BISHOP found no objection and CSSB 234(RES) was
reported from the Senate Resources Standing Committee.
3:40:57 PM
At ease
SB 217-INTEGRATED TRANSMISSION SYSTEMS
3:43:22 PM
CO-CHAIR GIESSEL reconvened the meeting and announced the
consideration of SENATE BILL NO. 217 "An Act relating to the
taxation of independent power producers; and increasing the
efficiency of integrated transmission system charges and use for
the benefit of ratepayers."
3:44:22 PM
JULIE SANDE, Commissioner, Alaska Department of Commerce,
Community, and Economic Development, Anchorage, Alaska,
presented SB 217 on behalf of the administration.
3:44:51 PM
MS. SANDE moved to slide 2 of the presentation and spoke to a
map depicting the Railbelt Electrical Grid. She explained that
Railbelt comprises an interconnected grid and is approximately
700 miles long. This system provides electricity to
approximately 75 to 80 percent of Alaska's population of around
550,000 individuals.
3:45:43 PM
MS. SANDE moved to slide 3 and spoke to the legend depicting the
Railbelt Transmission Line and the corresponding service areas.
She said while the Railbelt Transmission System is
interconnected, it is not an integrated system. Ownership of the
transmission lines is shared between AEA and the Railbelt
utilities listed on the slide. Due to limited alternative
pathways, much of the Railbelt lacks redundancy. Although the
Copper Valley Electrical Association is connected by road, it is
not connected by the transmission line. The Railbelt
Transmission combines the Railbelt system and the transmission
lines connecting Matanuska, Valley Glenn Allen, and North to
Delta Junction. The current transmission system in Alaska as
inefficient, owned by a utility cooperative that imposes a per
mW/hr charge, also known as a "wheeling rate" or "pancaking."
Several of those tariffs or wheeling rates are stacked onto one
another and resemble an "extension cord." However, she argued
that comparing Alaska's grid to that of the lower 48 states is
inappropriate. She referenced an analogy likening it to a toll
road rather than a public highway. Wheeling tariffs primarily
serve as a revenue mechanism rather than facilitating true cost
recovery, which poses challenges and barriers within the system.
These costs are passed down to ratepayers and can hinder access
to purchasing the cheapest power available, therefore limiting
wholesale rates. She asserted that a grid the size of the Alaska
Railbelt does not necessitate multiple wheeling rates. If SB 217
becomes law, the RCA would be required to establish a gradual
transition process from the current transmission cost recovery
system to a new mechanism. This transition would entail the
elimination of wheeling rates, which limit access to wholesale
power transactions and prevent independent power producers
(IPPs) from engaging in power purchase agreements with
utilities.
3:48:36 PM
MS. SANDE moved to slide 4 and said SB 217 would amend AS
10.25.540(b), the statute related to taxation cooperations to
extend tax relief provisions to independent power producers
(IPPs) who sell their power to non-profit electric utilities.
Currently, taxes represent a significant portion of overhead for
IPPs, often delaying or halting the development of IPP projects.
Extending tax treatment to IPPs that non-profit utilities
already receive would benefit taxpayers by treating all sources
of power generation equally.
3:49:26 PM
MS. SANDE moved to slide 5 and explained the intent of SB 217:
[Original punctuation provided.]
What Does Senate Bill 217 Do?
• Senate Bill 217 aims to:
• Increase competition and efficiency within
Alaska's transmission system
• Reduce costs to the rate payer
• Encourage the development of new power projects
It aims to do this by:
• Requiring the Regulatory Commission of Alaska
(RCA) to change the current mechanism of
transmission cost recovery in the Railbelt
• Eliminating transmission "wheeling" rates for
inter-utility movement of electricity
• Extending tax relief provisions enjoyed by
Electric Co-ops to Independent Power Producers
(IPPs)
MS. SANDE said both measures reduce artificial barriers to the
economic dispatch of the lowest-cost power and to new power
generation projects that could otherwise deliver benefits to
consumers in Alaska.
3:50:45 PM
SENATOR WIELECHOWSKI asked for an explanation of wheeling rates.
3:50:59 PM
MS. SANDE invited Curtis Thayer, Executive Director of AEA,
to respond.
3:51:19 PM
CURTIS THAYER, Executive Director, Alaska Energy Authority,
Anchorage, Alaska, responded to questions on SB 217. He
explained that wheeling rates vary depending on the origin and
destination of the power, noting the importance of having
discussions on the matter. He cited an example where power
generated in Bradley is transported to Fairbanks, so it goes
through multiple utility load servicing areas. He noted
instances where power saved in Fairbanks originates from
generation in Anchorage and shipped North through the system. He
offered to follow up with the committee with analyses of
hypothetical scenarios.
3:52:15 PM
SENATOR DUNBAR noted that SB 257 was recently heard in the Labor
and Commerce Committee and would also eliminate wheeling fees.
He wondered whether provisions under SB 217 comprise functional
or legal differences between how this objective is accomplished
under the two bills.
3:53:07 PM
MR. THAYER replied that in principle, there are no differences
between the two bills. He indicated that both SB 217 and SB 257
aim to eliminate the wheeling rate and accomplish the same
objective. He invited Andrew Jensen, Policy Advisor for the
Office of the Governor, to provide further insight.
3:53:36 PM
ANDREW JENSEN, Policy Advisor, Office of the Governor,
Anchorage, Alaska, answered questions on SB 217. He stated that
although the Governor's Office is still in the process of
reviewing SB 257, there is a general consensus that a new method
of rate recovery for transmission costs needs to be established,
as wheeling rates impact decisions related to power purchases
and the development and location of independent power projects.
Both bills aim to achieve the same objective using RCA's
mechanism.
3:54:29 PM
SENATOR KAWASAKI asked whether independent power producers are
privately or publicly owned and whether they fall under
regulation by the RCA.
3:55:01 PM
MR. JENSEN invited Robert Doyle, Chair of RCA, to respond.
3:55:20 PM
ROBERT DOYLE, Chair, Regulatory Commission of Alaska (RCA),
Anchorage, Alaska, answered questions on SB 217. He said IPPs
are regulated under RCA and are generally private companies. As
an example, he mentioned Alaska Renewables, a private company
that initiated a project subject to RCA approval.
3:56:05 PM
SENATOR KAWASAKI asked whether the RCA would mandate IPPs to
transfer any savings from a lower tax rate to consumers through
the Electric Cooperative if the IPPs themselves pay a reduced
tax rate.
3:56:26 PM
MR. DOYLE responded that normally, the power purchase agreements
undergo review, and RCA would consider various factors. He noted
that the Department of Revenue would be responsible for
examining tax credit matters. Akin to income taxes, RCA would
incorporate this information into its assessment when
establishing rates based on revenue requirements.
3:56:57 PM
SENATOR KAUFMAN sought clarification on term definitions.
3:57:29 PM
MR. DOYLE clarified that similar to a toll system, a wheeling
tariff is imposed to allow electrons to pass through a system
owned by another entity. In states where this is practiced and
power predominantly originates from another state, power
purchase agreements are established. Therefore, the concept of a
toll serves as the most apt analogy, illustrating the notion of
a fee for crossing between systems.
3:58:06 PM
SENATOR KAUFMAN asked for the definition of "pancake rates."
3:58:10 PM
MR. JENSEN clarified that pancake rates occur when rates
accumulate and are added up over time, similar to paying
multiple tolls while driving from Homer to Fairbanks.
3:58:33 PM
SENATOR CLAMAN presented a hypothetical scenario regarding toll
rates and inquired whether the utility rate would decrease if
the wheeling rate were collected from other systems that cross
over the Chugach grid.
3:59:26 PM
MR. JENSEN replied that to the extent that wheeling rate could
be used as a revenue mechanism, the cost for a Chugach ratepayer
might be lower if it were then incorporated into the revenue
requirement from a transaction that traverses the system.
3:59:44 PM
SENATOR CLAMAN inquired whether, under the current structure,
Chugach consumers would experience any benefits from the
collection of wheeling rates imposed on other utilities
transmitting electricity across the Chugach grid.
4:00:14 PM
MR. JENSEN responded that all grids necessitate a revenue
requirement. If the revenue requirement is decreased by
collecting revenue from an alternative source, such as wheeling
rates from another utility, there is a potential for Chugach
ratepayers to benefit slightly because the total system
requirement is offset by ratepayers in another area.
4:00:39 PM
SENATOR CLAMAN asked if that is actually happening today.
4:00:54 PM
MR. JENSEN deferred to RCA for a detailed response to the
question. He said the current rate case involving Chugach
anticipates a significant increase in the tariff for power
transmitted north to Golden Valley Electric, with a cost
estimate of approximately $700,000.
4:01:32 PM
MR. DOYLE replied that any revenue generated, whether from
economic energy sales or power production at lower costs,
contributes to the comprehensive rate, benefiting Chugach
ratepayers. He explained that all revenues are factored into
their tariff, which could have both positive and negative
implications for ratepayers. Transmission costs, among other
expenses, are always considered. He expressed his belief that SB
217 aims to establish a single flat rate for the backbone. Under
this system, debt covenants would be paid for, resulting in no
winners or losers. There would be one uniform rate from
Fairbanks to Homer.
4:02:58 PM
SENATOR CLAMAN asked whether, if the legislation successfully
implements a flat rate, this could potentially lead to higher
rates in certain areas because utilities would no longer be able
to collect higher fees for transmission passing through their
systems.
4:03:53 PM
MR. DOYLE replied yes and noted a slight potential for higher
rates in certain areas. However, he emphasized the Regulatory
Commission of Alaska's commitment to maintaining rates at
reasonable and equitable levels. He reiterated that there would
still be transmission costs, but the objective is to establish a
single flat rate and adjust the mechanism accordingly. Mr. Doyle
suggested exploring the coincidence peak under SB 257 and ratio
sharing under SB 217 as potential avenues. The goal is to
establish a fair rate and promote equity across the board. He
encouraged the committee to assess whether utilities are
charging more than the rates for wheeling transmission or if the
costs remain consistent, factoring in the expenses associated
with constructing and maintaining transmission infrastructure.
4:05:18 PM
MR. JENSEN presented the sectional analysis for SB 217:
[Original punctuation provided.]
SECTIONAL ANALYSIS
SB 217: Integrated Transmission Systems
Version A
Section 1 - Updates the uncodified law of the State of
Alaska by setting forth the purpose of the
legislation: to eliminate pancaked rates and increase
efficiency of integrated transmission systems of the
state.
Section 2 - The bill amends AS 10.25.540related to
the taxation of electric cooperativesto include
independent power producers. Under the bill,
independent power producers would pay a "sales" tax on
the kilowatt hours of electricity in lieu of any state
or local ad valorem, income, or excise tax. The bill
defines an independent power producer as a utility
that only sells wholesale power to cooperative or
municipal utilities.
Section 3 - The bill creates a new article in AS 42.05
relating to integrated transmission system cost
recovery (AS 42.05.900 - 42.05.915).
Proposed AS 42.05.900 states the legislative findings
for increasing the efficiency of providing electricity
service to consumers.
Proposed AS 42.05.905 requires the Regulatory
Commission of Alaska ("RCA") to establish a
transmission cost recovery mechanism and to provide a
process where the electric utilities will transition
from recovering transmission costs in utility rates to
a transmission cost recovery mechanism. More
specifically, this section requires the RCA to develop
a cost recovery mechanism that achieves the
legislative findings and allocates transmission costs
in a way that recognizes a load-serving entity's local
consumption compared with the total consumption on the
system as a whole. The section further requires the
RCA to establish a process whereby the transmission
owning utilities will gradually transition from the
current cost recovery mechanism, in which transmission
costs are recovered in base rates and wheeling
charges, to the new transmission cost recovery
mechanism.
Proposed AS 42.05.910 provides that the RCA will
require all transmission-owning utilities to form an
association whose only purpose is to have a tariff
setting out how the transmission cost recovery
mechanism is collected and disbursed, and to collect
and disburse the transmission costs through the new
recovery mechanism. The association will be regulated
as a public utility.
Proposed AS 42.05.915 provides definitions for the new
article. The section clarifies what sort of electric
utility assets are deemed to be "transmission assets,"
subject to the cost-recovery mechanism of the new
article. These include AEA's contractual charges for
transmission to the Railbelt utilities, but would
exclude radial transmission lines that are built to
connect independent power producers who sell their
power to utilities under wholesale contracts. The cost
of such radial lines will instead continue to be
recovered in the cost of power provided, as is
customary. This ensures that a load-serving entity
that is not buying power from the independent power
producer is not forced to shoulder the cost of
connecting that power to the grid. The section also
provides definitions for the terms "electric
reliability organization" and "load-serving entity."
4:08:47 PM
SENATOR CLAMAN asked him for his perspective on the implications
of Senate Bill 123, regarding the electric reliability
organization, that was passed a few years ago, in relation to SB
217. He stated that he had anticipated a faster moving outcome
in establishing a new transmission entity.
4:09:19 PM
MR. THAYER replied that the Railbelt Reliability Council is
still organizing the electric reliability entity and is working
to establish a president or CEO, with interviews scheduled this
week. He mentioned that the Railbelt Reliability Council has
held meetings, has adopted regulations, and is working towards
establishing an organization with a president or CEO, with
interviews scheduled for this week. He noted that utilities
collectively support the concept of having a mechanism to assist
in eliminating tariffs and pancaking rates for consumers. While
he agrees with Senator Claman that it is taking longer than
expected, the delays are not intentional and are simply the
result of unexpected complications, especially in finding and
hiring candidates for the positions. He said AEA owns a 40-mile
transmission line along with the Alaska Intertie, both of which
do not charge wheeling rates. The state's ownership of the
transmission line between Willow and Healey saves the Fairbanks
economy approximately $37 million, as they can purchase power
more affordably from the Railbelt and ship it North. That is not
due to the power being shipped but the power is cheaper, and one
advantage of state ownership over that line is the absence of a
wheeling rate or tariff.
4:11:39 PM
SENATOR CLAMAN asked if the committee could view SB 257 and SB
217 as measures to accelerate the process of establishing a
unified rate for transmission on the Railbelt.
4:12:11 PM
MR. DOYLE replied yes.
4:12:17 PM
MR. JENSEN added that the statutory responsibilities of the
Electric Reliability Organization (ERO) do not involve setting a
transmission rate or addressing the wheeling issue. Its
responsibilities include electric reliability standards,
integrated resource planning, and open access provisions. These
provisions were not included under SB 123 and are complementary
rather than altering or detracting from the ERO's duties.
4:13:25 PM
SENATOR KAUFMAN referred to the term "pancake" mentioned on page
2 of SB 217 and questioned whether such informal terms should be
further defined.
4:13:56 PM
MR. JENSEN responded that the bill is currently in the hands of
the committee, so it falls under its purview to make that
decision.
4:14:12 PM
SENATOR DUNBAR referenced page 2 of SB 217 and noted potential
contrasts with SB 257, which envisions transitioning planning
responsibilities from the Electric Reliability Organization
(ERO) to the transmission systems operator. He wondered whether
inconsistencies exist between the two bills.
4:14:55 PM
SENATOR GIESSEL advised that members could not compare other
bills that are absent from the committee agenda.
4:15:15 PM
SENATOR DUNBAR said some people have envisioned the Alaska
Energy Authority (AEA) owning multiple assets. He questioned
whether this differs from the provisions outlined in Section
42.05.910 regarding integrated transmission association.
4:15:39 PM
MR. DOYLE replied that ownership is not specifically defined in
SB 217. He mentioned that AEA currently owns approximately one
third of the transmission lines, totaling around 210 miles.
While AEA owns a significant portion of the transmission
infrastructure on the Railbelt, SB 217 does not detail
ownership. He mentioned that RCA is not classified as a public
utility.
4:16:34 PM
CO-CHAIR GIESSEL held SB 217 in committee.
^Presentation: The Railbelt Transmission Grid
PRESENTATION: THE RAILBELT TRANSMISSION GRID
4:16:47 PM
CO-CHAIR GIESSEL announced the consideration of a presentation
on the Railbelt Transmission Grid
4:17:36 PM
GWEN HOLDMANN, Associate Vice Chancellor for Research,
Innovation, and Industry Partnerships, University of Alaska
Fairbanks (UAF), Fairbanks, Alaska, presented an update on the
Railbelt Transmission Grid. She mentioned that the Alaska Center
for Energy and Power (ACEP) has been engaged in research focused
on effective energy market design and energy planning.
4:18:04 PM
MS. HOLDMANN moved to slide 2 and shared the vision for the
Railbelt:
[Original punctuation provided.]
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.
MS. HOLDMANN explained that the Railbelt grid initially
consisted of independent utilities that were gradually
interconnected through transmission assets over time. She cited
reasons why these interconnections have been advantageous for
consumers, emphasizing that improvements to the Railbelt would
enhance energy costs for consumers and the reliability of the
entire system. She emphasized that this concept is gnostic of a
particular technology and ensures power is reliable and secure.
She noted that clean energy projects could also include local
energy solutions.
4:19:24 PM
MS. HOLDMANN moved to slide 3 and provided an update on the
Railbelt:
[Original punctuation provided.]
Realities of the Railbelt Today
• Railbelt politics are inherently local
• Our energy sources are becoming more diverse
• Projects are more economical when built at scale
• The Railbelt transmission system needs to be
upgraded. We have an opportunity for federal
funding to help defray those costs.
• Alaska has avoided transmission deregulation
because we are not grid connected (thus not
subject to FERC)
• Finding analogous correlatives to Alaska can be
challenging
MS. HOLDMANN stated that due to the existence of individual
utility cooperative facilities managed locally by local boards,
politics can become localized. This situation can pose
challenges because there is no requirement for collaboration
across the system to serve the best interests of the whole
system. Local politics sometimes hinder decision-making and the
development of structures that benefit the entire region. She
stressed the importance of legislation to propel the state
forward and ensure that Alaska develops the energy system of the
future, allowing consumers to benefit. She suggested that future
energy sources will be more diverse. There is an economic
advantage of constructing a single 150mW wind farm over three
separate 50mW wind farms within the system. The objective is to
see projects developed at scale to deliver the best energy
resources to consumers, regardless of their location. She
mentioned that AEA's system is anticipated to be upgraded to own
a larger portion of the transmission system, so the development
of a management plan is essential. While most markets are
regulated, Alaska's power does not cross state lines. She
referenced Iceland as a comparable example due to its similar
population size, serving as a useful analog.
4:22:40 PM
CO-CHAIR GIESSEL asked her to define the terms "distribution"
and "transmission."
4:22:50 PM
MS. HOLDMANN explained that transmission lines move bulk power
back and forth across the system. These are typically high
voltage lines and are not the lines that houses connect to.
However, sometimes large industrial customers may be directly
coupled to the transmission grid. Generally, when power is
transported across the U.S., individual utilities at the
distribution level draw power from the grid and distribute it to
individual residents. The distribution system is what is seen
when driving down the street and facilitates power to homes.
Those are very clear definitions that have been accepted by the
utility industry and the Federal Energy Regulatory Commission
(FERC) and establish the difference between distribution,
transmission, radial transmission, and backbone transmission.
Some transmission lines may connect to a mine, which does not
involve moving power back and forth between service territories.
Whereas a backbone transmission system moves power North and
South.
4:24:07 PM
MS. HOLDMANN moved to slide 4 and spoke to a chart depicting
power flow between regions. She noted that the chart on this
slide was developed from a study that ACEP conducted in
considering potential future scenarios for power generation and
distribution across the entire network for 2050. It illustrates
an expectation that there is likely to be more power flow
between different regions on the Railbelt. That is why it is
important to address not only technical constraints, but also
management and governance.
4:24:50 PM
SENATOR CLAMAN asked for clarification of his understanding that
not being connected to the grid refers to not being linked to an
interstate grid, rather than not being connected to a grid
shared with other utilities in Alaska.
4:25:06 PM
MS. HOLDMANN replied that is correct.
4:25:14 PM
SENATOR CLAMAN asked what would happen if Alaska received power
from Canada and whether it would integrate into the grid or an
international network.
4:25:31 PM
MS. HOLDMANN replied that she has pondered the same question and
stated her belief that receiving power from Canada would likely
tie Alaska into the North American grid, as Canada, the U.S.,
and Mexico share that broader grid. While there could be
potential implications, it would not involve the movement of
power between two states.
4:25:59 PM
SENATOR CLAMAN asked for confirmation of his understanding that
it would be different if Alaska attempted to connect to Canada
should it be a non-issue.
4:26:04 PM
MS. HOLDMANN replies yes.
4:26:11 PM
MS. HOLDMANN moved to slide 5 and listed three goals under
SB 217:
[Original punctuation provided.]
Three 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 that is
subject to appropriate regulation
3. Re-imagining a planning process that uses a
whole-system approach (transmission, generation,
and distribution)
MS. HOLDMANN opined that SB 217 would effectively achieve the
first goal by directing the commission to establish the rate for
rate recovery. Another approach could involve requesting the
commission to approve a rate designed by an organization,
thereby shifting the responsibility from the RCA. There is also
an intent to address transmission congestion. She stated that
there is broad consensus that eliminating wheeling rates
represents a positive effort, noting that this idea has been
under consideration for several years. However, she acknowledged
that there are reasons this approach has been unsuccessful thus
far. Legislation would provide a solution to addressing these
challenges.
4:28:11 PM
MS. HOLDMANN moved to slide 6 and explained the intent of
removing pancaking wheeling rates:
[Original punctuation provided.]
Goal # 1: Remove pancaking wheeling rates
Decisions about investment in projects or economic
dispatch should not be inhibited by the cost of
transmission, or the need to move power across
transmission lines with different ownership
MS. HOLDMANN cited an example of a project built at scale that
would benefit from the removal of wheeling rates. She explained
that additional tariffs across different service territories
could increase the cost of power. For instance, what could have
been seven- or eight-cent power on the southern end of the
transmission system might end up costing 11 cents, making it
uneconomical. This system has led to the development of local
projects benefiting local consumers, which has been demonstrated
on the Railbelt over the past 20 years. The goal is to
transition away from this type of system by establishing more
economies of scale to provide consumers with the cheapest cost
of power.
4:29:26 PM
CO-CHAIR BISHOP referenced her analogy and wondered if the goal
is to bring in private capital to build transmission
infrastructure, so entities know they have open access.
4:29:57 PM
MS. HOLDMANN replied that the state is crippled by the small
size of the market. It can be difficult convincing developers
that Alaska is a market worth investing in. However, if larger
projects are developed that multiple utilities can participate
in without barriers such as transmission costs, it would attract
far more interest from private capital and investors compared to
the current market conditions.
4:30:32 PM
SENATOR WIELECHOWSKI asked if she is aware of wheeling rates in
the lower 48.
4:30:39 PM
MS. HOLDMANN replied no and said in most markets, transmission
assets have been separated from both generation and distribution
utilities. While generation has become a competitive market in
the lower 48, transmission remains a monopoly, so the goal is to
maintain open access. Alaska is essentially looking at how
things were done in the rest of the country 20-40 years ago and
is striving to catch up with global standards. However, Alaska's
unique circumstances mean that it cannot replicate the same
approach as other regions.
4:31:40 PM
SENATOR WIELECHOWSKI sought clarification of his understanding
that at each step of the way, a wheeling fee is collected to
recover utility costs. He inquired about the changes that would
result from establishing a transmission authority, and whether
there would be any winners or losers. He also wondered whether
certain consumers might experience fluctuations in their utility
costs.
4:32:29 PM
MS. HOLDMANN moved to slide 7 and explained that the change
would decouple the cost of transmission from the flow of energy
up and down the system. While costs for transmission would still
need to be recovered, the intention is to remove decisions about
cost recovery based on moving electrons back and forth. This
separation would ensure that the cost of transmission is
separate from the actual movement of power. She stated that
wholesale power to a utility would remain consistent regardless
of their location in the system.
[Original punctuation provided.]
Goal # 1: Remove pancaking wheeling rates ? and
establish a framework for how costs will be recovered
and allocated
Transmission lines (like highways) are typically built
for peak demand, not how much energy (traffic) flows
through the system.
Texas operates as an electrical "island" and because
power generated in Texas is not sent outside of the
state, Texas is exempt from federal FERC regulation
(like Alaska and Hawaii)
"pool backbone transmission system costs and allocate
those costs based on a coincident peak or load share
ratio basis" - Adapted from Texas Substantive Rule
25.192
Coincident peak demand - period when electricity usage
(demand) is at its highest across the entire system
Load share ratio - considers users' overall energy
consumption over a specific period
MS. HOLDMANN said wholesale power to a utility would be the same
regardless of location in the state. No decisions are made about
which generation source to bring online first based on the cost
of running it through the transmission system.
4:33:41 PM
SENATOR WIELECHOWSKI presented a hypothetical scenario and
sought confirmation of his understanding that if everything is
leveled, one entity would end up paying more while another would
pay less. He inquired how this would not be the case.
4:34:05 PM
MS. HOLDMANN replied that Bradley Lake has a distinct setup. She
cited the Fire Island Wind Farm as an example, which was planned
for a second development phase. At the time, Golden Valley
expressed interest in investing in the project. However, this
would involve not only wheeling power through different
territories but also constraints on the system's capacity to
transmit power across the line. There are technical,
governmental, and cost-recovery constraints on the current
system, so the goal is to move away from this approach to
achieve modernization on management and operation of the system.
4:35:37 PM
SENATOR CLAMAN asked for insight into why this effort has been
unsuccessful for the past 20 years.
4:35:50 PM
MS. HOLDMANN explained that several attempts have been made to
establish a transmission organization, with the most recent
being a for-profit entity. One of the primary challenges stems
from the localized politics of all utilities, wherein a single
entity's reluctance to participate can undermine the entire
initiative. In a voluntary approach, genuine willingness is
required from all parties to be part of the solution. While
there may be some reallocation of costs to individual consumers
on the grid, overall costs would decrease. However, she
acknowledged the presence of uncertainty in this process. She
suggested two methods for reallocating costs: determining the
proportion of energy used relative to the entire grid and
identifying peak demand periods when new transmission assets
need investment. This approach, successfully implemented in
Texas, is based on coincident peak demand. By identifying
periods of congestion, it becomes possible to ascertain which
entities are utilizing power during these congested times. She
suggested reviewing a similar model to Texas in allocating
costs, which has effectively implemented a simple cost recovery
mechanism that benefits consumers.
4:39:11 PM
SENATOR CLAMAN asked for confirmation of his understanding that
when considering energy transmission from Homer to Fairbanks,
energy carried over a longer stretch tends to be more expensive.
4:39:37 PM
MS. HOLDMANN replied that unlike a highway, the cost to deliver
power, if the infrastructure is in place, is not significantly
more expensive over longer distances.
4:40:14 PM
SENATOR CLAMAN asked whether the purpose of these discussions is
to address an unequal transmission grid infrastructure.
4:40:26 PM
MS. HOLDMANN replied there are many reasons the Railbelt Grid is
not nearly as robust as what is expected in other locations in
the U.S. Unlike elsewhere in the country, Alaska's transmission
system is notably weak. The objective is to enhance assets to
facilitate the free flow of power. However, one of the
challenges lies in Alaska's restrictions in moving inexpensive
power due to physical, organizational, and management
constraints.
4:41:18 PM
CO-CHAIR GIESSEL asked for clarification on her characterization
of the state transmission grid as "weak" and the constraints
limiting the movement of power. She requested quantitative
details on how much power can be moved over various segments of
the line.
4:41:42 PM
MS. HOLDMANN replied that vulnerabilities arise from several
points in Alaska where there is only a single transmission line,
such as the Alaska Intertie, which increase the risk of system
disruptions. When a line goes down, it can significantly impact
the economic movement of power across the system. For example, a
single line outage can have profound effects on the flow of
power, particularly benefiting areas like Fairbanks. However,
during interruptions in power service, power may need to be
redirected south from Fairbanks to compensate for the lack of
power in other areas such as the Matanuska Energy Association
(MEA) and Chugach territories. Any reliance on a single
transmission line poses significant vulnerabilities. While there
was once an intention to build a stronger transmission backbone
tied to the Susitna Dam, this plan did not materialize,
resulting in constraints in moving power across the state. She
mentioned that while she did not have specific data, utilities
may be able to provide information.
4:43:00 PM
CO-CHAIR GIESSEL commented that Tony Izzo, CEO of MEA, may be
able to provide specific data later in the meeting.
4:43:08 PM
SENATOR CLAMAN asked for confirmation of his understanding that
regardless of what is done on rates, one of the structural
issues seems to be that certain points along the transmission
line have reached their maximum power capacities.
4:43:29 PM
MS. HOLDMANN replied yes and moved to slide 8 and explained
the second goal:
[Original punctuation provided.]
Goal # 2: Create an organization that can oversee,
manage and develop backbone transmission assets that
is subject to appropriate regulation
MS. HOLDMANN said there is no need for a pancake system to
contain costs and manage the system. She explained that Iceland,
with a population and grid size akin to Alaska, has effectively
addressed many of these issues over the past three decades.
Iceland organized its transmission assets within an entity held
by the state government while maintaining an open-access and
competitive energy market in other sectors. The monopoly over
transmission assets remained within the state government, with
the opportunity for other asset owners to opt in and lease their
shares. Over time, most ownership migrated to Landsnet, but the
system was structured to emulate many of the same principles
applicable to Alaska. She suggested that this extensively
studied example represents a best practice for containing costs
and ensuring access to the cheapest power, regardless of
location.
4:45:28 PM
MS. HOLDMANN moved to slide 9 and explained the second
goal:
[Original punctuation provided.]
Goal # 2: Create an organization that can oversee,
manage and develop backbone transmission assets that
is subject to appropriate regulation
Borrow from a simple governance structure that has
passed the test of time (in Alaska)
MS. HOLDMANN noted that the Bradley Project Management Committee
(BPMC) has stood the test of time in dispute resolution and
managing an essential asset for the Railbelt. She acknowledged
slow progress with the Railbelt Reliability Council and the ERO
serving the Railbelt. Establishing a new organization and
efforts to bring a large number of stakeholders together can be
time-consuming. Although it is not a perfect analogy, the BPMC
model has proven effective for dispute resolution and other
issues. It represents a starting point for Alaska's
consideration similar to what Iceland has done. There is a need
for legislative action to address whether entities like the BPMC
and the Bradley Project, along with their transmission assets,
state regulation. With the state expected to own more
transmission assets, it becomes important for the legislature to
decide whether these assets should be subject to regulation by
RCA.
4:47:26 PM
CO-CHAIR GIESSEL asked her to articulate who makes up the BPMC
and who would be disputed.
4:47:40 PM
MS. HOLDMANN replied that it represents all of the five
utilities served by the Railbelt, along with the city of Seward
and the Alaska Energy Authority (AEA). AEA holds veto authority
over certain decisions concerning their assets. The committee
operates with a chair position, held by a different utility
member on a rotating basis.
4:48:15 PM
MS. HOLDMANN moved to slide 10 and explained the third
goal:
Goal # 3: Design a planning process that uses a whole-
system approach
MS. HOLDMANN emphasized the importance of a robust planning
process for the state's energy infrastructure. She pointed to
Hawaii as an example of best practices in integrated, holistic
grid planning, which encompasses transmission, resource, and
distribution planning. As electrification of loads increases,
upgrades to the distribution system become necessary. She
highlighted that research was done on Hawaii's best practices
and noted that some other states are also starting to adopt
similar approaches.
4:49:16 PM
SENATOR DUNBAR asked if the ERO is currently engaged in that
kind of work.
4:49:28 PM
MS. HOLDMANN replied that currently, the Railbelt Reliability
Council has been tasked statutorily with developing an
integrated grid plan, but progress has been slow despite the
efforts of many stakeholders. She noted that this plan may not
be as integrative as desired. Additionally, she mentioned that
the Alaska Energy Authority (AEA) is involved in transmission
planning efforts. In most jurisdictions, electricity reliability
organizations are not typically responsible for planning.
4:50:20 PM
SENATOR DUNBAR asked how utilities could maintain their
voice in the planning process if Alaska were to establish a
transmission systems operator (TSO), potentially through
AEA.
4:50:42 PM
MS. HOLDMANN expressed her belief that, similar to the BPMC
structure, if AEA were to serve as the TSO, it could involve
other voices in the planning process. For instance, the chair of
the ERO could participate as a member of that committee. The
goal is to ensure a diverse set of voices at the table
overseeing the best decisions for the future of the state.
4:51:30 PM
SENATOR DUNBAR inquired about considerations for the relative
size of utilities and customers served, such as the city of
Seward and Chugach Electric relative to the number of customers
served and assets they hold. He wondered whether there would be
a voting mechanism or other means to address this discrepancy in
decision-making power.
4:52:01 PM
MS. HOLDMANN replied that is not the way it is done with BPMC,
there is an equal voice at the table. However, this is a model
that is a starting point rather than an end point. She opined
that a transmission organization should be subject to regulation
and a public, open, and transparent process. The BPMC model
could be a starting point but not an end point for setting up a
government structure.
4:52:42 PM
SENATOR DUNBAR expressed his hope that Chugach Electric's
shareholders consistently align with local interests.
4:52:52 PM
MS. HOLDMANN moved to slide 11 and explained the three
goals:
[Original punctuation provided.]
Three Goals:
• Eliminate pancaking wheeling rates and establish
a framework for how transmission costs will be
recovered and allocated
• Create an organization that can oversee, manage
and develop backbone transmission assets and that
is subject to appropriate regulation
• Re-imagining a planning process that uses a
whole-system approach (transmission, generation,
and distribution)
MS. HOLDMANN added that while there may be alignment on goals,
the question lies in determining how the state can effectively
achieve them. She noted she could offer insight on what other
markets have done to inform Alaska's best practices.
4:53:38 PM
TONY IZZO, CEO, Matanuska Electric Association (MEA), Palmer,
Alaska, spoke to the Railbelt Transmission Grid. He said he is
also speaking as former Co-Chair of the Railbelt Subcommittee of
the governor's Energy Security Task Force. When considering
goals for a transmission organization, this was a top priority
that unanimously moved out of the Railbelt Subcommittee. He
noted that the Co-Chair was Jen Miller of Renewable IPP. She is
the developer of the Houston and Willow solar farms. The number
one recommendation was to unify and upgrade transmission assets.
A lot of things have changed since 2020 when the ERO was passed,
primarily grid funding. As co-ops, there are systems in place
that are built based on what members can afford. The association
does not have shareholders who invest dollars for strategic
purposes, it is members who want reliable, safe, and affordable
power. The employees at various utility companies do a good job
of keeping the lights on day-to-day. The task force did a
tremendous amount of work on this. An ideal transmission
organization would reduce transmission constraints on the grid
while allowing for quicker integration of additional clean
energy generation. MEA has a generation facility in its service
area. However, utility companies' customers do not pay a
wheeling charge. They pay for the transmission and the system
that delivers it to their home including the meter. The goal of
the task force is to get rid of wheeling. Wheeling charges are
for other utilities that seek to move power through the system.
He said it was almost as if four or five utilities each owned a
piece of land and there was a mutual driveway or dirt road that
went through. Due to the small size and scale, if one wanted to
use another's section of the road to get to different services
areas, a fee would be charged.
4:57:12 PM
MR. IZZO said MEA proposes to get rid of that requirement.
Wheeling is not paid at the MEA station since it has economic
dispatch and there are no constraints between utilities or
single transmission lines that are unreliable and not sized
large enough. The capacity constraints are about 75 to 80 mW.
Bradley Lake is 120 mW power plant. Southern Intertie has a
limit of 75 to 80 mW. All the water is used, but energy is not
obtained when it is most efficient. The Northern Intertie
requires the burning of fuel to maintain operations and ensure
excess spending reserve in case something goes offline. If
constraints on the line are eliminated by building transmission,
and double circuiting the entire system, that creates a backbone
or electron highway and ensures a level playing field. 75
percent of the state population could take advantage of economic
dispatch, which is the lowest cost generation on the overall
system. If that does not meet demand, the second or third lowest
costs are achieved. With a backbone that does not have
constraints, opportunities are made available for larger scale
renewables without wheeling charges. He said the overall revenue
requirement for transmission on the system is approximately $50
million annually. MEA's revenue is between $165 to 166 million
of which almost $50 million is from natural gas. That equates to
20 cents per kWh for the growing membership at MEA.
4:59:48 PM
MR. IZZO said the task force was specific in its objective, as a
result of testimonies, that there would be no losers. Assets
would not be taken away and it would not create a situation that
violates debt covenants. He asked the committee to imagine that
the overall rate may go down, but the bill would remain the same
with a new line item named "transmission" that simply breaks out
this cost.
5:00:51 PM
MR. IZZO stated that 104 miles of backbone were identified by
MEA. If something were to go wrong, the MEA system could be
utilized. However, there is a point-to-point tariff in place. SB
217 would address the transmission organization since it puts it
under one umbrella, and benefits could be seen in the overall
system rather than just within the bordered area. The revenue
requirement, meaning the amount the RCA allows to be recovered,
including some of it through wheeling, could be uplifted on a
per kWh basis to the membership. When beginning the process,
there may be some constraints. He urged a rate that not be
determined where other utilities are cross-subsidizing each
other. Once the entire transmission backbone is built, it would
mitigate that problem. MEA would collect its revenue requirement
through the backbone on 104 miles. It would collect the rest of
its system, including dead-end transmission, from the
membership. However, at the end of the day, it would be whole.
The task force's goal is to shift the paradigm and from what has
previously worked. With grip dollars coming in, there is an
opportunity to build the system with matching funds to build a
system that allows lower costs by allowing large-scale
renewables to come online. If MEA's power went down, it would be
able to move power from the valley south. This would also
increase reliability and set up a foundation for lower cost
rates in the future.
5:03:44 PM
CO-CHAIR GIESSEL asked if the $206.5 million in grip funding is
intended to modernize the backbone transmission system.
5:04:07 PM
MR. IZZO replied that is correct in that it prioritizes building
a high voltage DC line from the Kenai Peninsula to the
Southcentral area. It is a critical part of eliminating one of
the two constraints. Utilities are working on applying for the
second tranche to get to Healy, which would level the playing
field. That is a significant portion of the backbone.
5:04:44 PM
SENATOR CLAMAN asked if grip funding would allow the state to do
the construction work that has been unfunded.
5:05:06 PM
MR. IZZO replied yes.
5:05:13 PM
SENATOR CLAMAN asked for confirmation of his understanding that
the goal of the structure is to develop a flat rate for the
transmission for the whole Railbelt utility regardless of
location.
5:05:30 PM
MR. IZZO replied that the goal is to eliminate wheeling to
facilitate a level playing field for all forms of power
generation in order to provide the lowest cost of power to move
across the system without constraint.
5:05:59 PM
JOHN BURNS, President and CEO, Golden Valley Electric
Association (GVEA), Fairbanks, Alaska, provided background on
the Railbelt Transmission Grid. He emphasized that the Railbelt
is at a critical point and there is a critical need for
transformative change. The vision is to ensure the lowest cost
electron could be transferred wherever it is generated from any
source, regardless of the type of energy, to any location across
the Railbelt without constraint and as the lowest transmission
rate possible. To do this, the Railbelt must mature from
provincial attitudes from the past. He opined that the only way
to achieve that is by passing SB 217 and SB 257. While difficult
and time consuming, Iceland achieved this over several years
through its commitment to a change. In Iceland, youth have
remained, business is booming, and economic development is
prospering. He opined that Alaska must take a holistic approach
across the Railbelt, or it could not maximize benefits. A
generation facility could be sized but an economic benefit would
not be received. A larger project, such as one comprising 100-
150 mW of power, could ensure that the state could maximize the
benefit across the Railbelt by lowering costs as long as energy
could be transported south. The state should be agnostic as to
where generation sources are located and where the greatest
rewards are reaped. The Northern Intertie would be the backbone
of the Railbelt or the primary "electronic freeway" rather than
the ancillary transmission facilities. The objective is to
narrow the cost on the backbone alone. Even though utilities
have oftentimes been challenged to working together, the Bradley
Lake Project Management Committee (BPMC) has worked well for
many years of its existence.
5:09:52 PM
CO-CHAIR GIESSEL concluded invited testimony.
5:10:00 PM
CO-CHAIR GIESSEL held SB 217 in committee.
5:10:30 PM
There being no further business to come before the committee,
Co-Chair Giessel adjourned the Senate Resources Standing
Committee meeting at 5:10 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 217 Sponsor Statement.pdf |
SFIN 5/2/2024 9:00:00 AM SRES 3/4/2024 3:30:00 PM |
SB 217 |
| SB 217, version A.pdf |
SRES 3/4/2024 3:30:00 PM |
SB 217 |
| SB 217 Sectional Analysis, version A.pdf |
SRES 3/4/2024 3:30:00 PM |
SB 217 |
| SB 217 Fiscal Note RCA 2.2.24.pdf |
SRES 3/4/2024 3:30:00 PM |
SB 217 |
| SB 217 Fiscal Note AEA 2.2.24.pdf |
SRES 3/4/2024 3:30:00 PM |
SB 217 |
| Presentation_AK Railbelt Transmission Issues_Holdmann SRES 03.04.24.pdf |
SRES 3/4/2024 3:30:00 PM |
|
| SB 217 SRES Presentation 03.04.24.pdf |
SRES 3/4/2024 3:30:00 PM |
SB 217 |
| SB 243 Amendment #1.pdf |
SRES 3/4/2024 3:30:00 PM |
SB 243 |
| SB 243 Amendment #2.pdf |
SRES 3/4/2024 3:30:00 PM |
SB 243 |
| SB 243 Amendment #3.pdf |
SRES 3/4/2024 3:30:00 PM |
SB 243 |