04/09/2009 03:00 PM House ENERGY

HB 148-ENERGY EFFICIENCY PLAN AND GRANT FUND                                                                                  
4:12:15 PM                                                                                                                    
                                                                                                                                
CO-CHAIR EDGMON announced that the  final order of business would                                                               
be  HOUSE  BILL NO. 148, "An  Act relating to a  state energy use                                                               
reduction plan  and energy  efficiency improvement  contracts and                                                               
to energy audits of public  buildings conducted by the Department                                                               
of  Transportation  and  Public Facilities;  relating  to  agency                                                               
capital budget requests; establishing  an energy efficiency grant                                                               
fund  in the  Alaska Housing  Finance Corporation;  and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
4:12:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   LES  GARA,   Alaska  State   Legislature,  prime                                                               
sponsor,  introduced HB  148.   He explained  that he  has worked                                                               
with Representative  Thomas to put together  an energy efficiency                                                               
bill.   He pointed out that  most states have a  statewide energy                                                               
plan, but Alaska does not.  He  pointed out an energy plan is not                                                               
just  a piece  of paper.    He recalled  that alternative  energy                                                               
includes solar,  wind, and nuclear power,  which are alternatives                                                               
to fossil  fuels.  However, the  best way to reduce  emissions is                                                               
to  reduce  overall   energy  usage.    He   stated  that  energy                                                               
efficiency is  considered the fifth fuel,  is termed "negawatts,"                                                               
and  saves  money.   He  pointed  out  that  a pilot  project  in                                                               
Anchorage  estimates it  will save  $1 million  per year  through                                                               
energy use  by changing  its lighting.   He pointed  out changing                                                               
lighting is the fastest way to reduce energy costs.                                                                             
                                                                                                                                
REPRESENTATIVE  GARA   explained  that   HB  148  has   two  main                                                               
components.   One  is  to create  a grant  fund,  similar to  the                                                               
Renewable  Energy  Fund,  to  fund  construction  and  renovation                                                               
projects  for non-state  entities, such  as municipalities.   The                                                               
grant fund would be targeted  to those projects that will provide                                                               
the greatest  benefit per dollar  spent.  He also  recognized the                                                               
legislature would  need to decide  the appropriate  funding level                                                               
for  the grant  fund.   Additionally, another  component requires                                                               
the  state  to prepare  and  adopt  an  energy  plan.   The  bill                                                               
requires  departments to  focus  on projects  that  will pay  for                                                               
themselves  within  15  years, and  requires  the  Department  of                                                               
Transportation  & Public  Facilities  (DOT/PF)  to manage  public                                                               
facilities using standards.   He pointed out  that one applicable                                                               
standard is  the International  Energy Conservation  Code (IECC).                                                               
He  offered  that the  bill  encourages  the use  of  performance                                                               
contracting, which  is a way  for state agencies to  realize cost                                                               
savings without having to pay for  them in advance.  He explained                                                               
performance contracting such that the  state would hire a private                                                               
contractor,  who  is then  paid  from  a  portion of  the  energy                                                               
savings.   He provided  an example,  such as has  been done  in a                                                               
pilot program  at the Dimond  Courthouse, as well as  three other                                                               
locations in the state.                                                                                                         
                                                                                                                                
REPRESENTATIVE GARA  opined that  committee members are  aware of                                                               
the need  for a  plan, and  that other side  benefits exist.   He                                                               
highlighted  that  the  construction industry  is  moving  toward                                                               
using the  IECC; AHFC has  adopted the IECC code  for residential                                                               
properties,  although he  admitted this  bill does  not apply  to                                                               
residential properties.   He offered other support  for the IECC,                                                               
such as  the Alaska Homebuilders Association's  support, that the                                                               
Alaska Housing Finance Corporation (AHFC)  is also using the IECC                                                               
on construction it finances.   He reiterated the components:  the                                                               
grant  fund and  the  energy plan  to  require energy  efficiency                                                               
construction and retrofits.   He opined that in the  long run the                                                               
bill's fiscal  note is a  negative.  However, these  changes will                                                               
not happen  without requirements  in statute.   He  suggested the                                                               
legislature's focus  is on the  current cost, while this  bill is                                                               
geared  to look  at the  state's  cost in  10  or 15  years.   He                                                               
remarked  that he  worked closely  with DOT&PF  on the  bill, but                                                               
that he  is unsure who will  administer the grant fund  since the                                                               
state does  not currently have an  energy agency.  He  noted that                                                               
the Alaska Energy Authority (AEA) has  held a limited role but it                                                               
has been expanding  its role, and that AHFC  has performed energy                                                               
efficiencies  in   residences,  but   does  not   perform  energy                                                               
efficiencies in  commercial buildings.   He offered  that several                                                               
knowledgeable agencies have  experts, such as the  DOT/PF, but at                                                               
this time  the key  agency has  not identified.   He  offered his                                                               
view that HB 148 would force the  state to plan and it would save                                                               
money.                                                                                                                          
                                                                                                                                
4:20:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK  asked how the  pilot program  is functioning                                                               
for the Dimond Courthouse.                                                                                                      
                                                                                                                                
REPRESENTATIVE  GARA deferred  to  DOT/PF to  address the  Dimond                                                               
Courthouse.   However,  he explained  that part  of the  proposed                                                               
energy plan will ask the  state to use performance contracting if                                                               
cost-effective.                                                                                                                 
                                                                                                                                
4:21:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS inquired as  to whether Representative Gara                                                               
is also working with co-chairs  of the House Special Committee on                                                               
Energy.                                                                                                                         
                                                                                                                                
REPRESENTATIVE  GARA  answered  that  he has  been  working  with                                                               
Representative Thomas and with Senator Wielechowski's office.                                                                   
                                                                                                                                
4:21:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN  referred to  page 3,  lines 4-5,  of the                                                               
bill  which  would  give  a   priority  to  projects  that  serve                                                               
municipalities  or unincorporated  communities with  a population                                                               
of  less than  15,000.   He  asked whether  greater cost  savings                                                               
could be had in larger communities.                                                                                             
                                                                                                                                
REPRESENTATIVE GARA offered  that the grants would  be awarded by                                                               
considering three factors:  the  highest level of energy savings,                                                               
priority  to  small  communities  since the  cost  of  energy  is                                                               
generally much  higher than in  large communities,  and encourage                                                               
communities to  seek funding from  other sources.   He elaborated                                                               
that larger communities  also have larger tax  bases than smaller                                                               
communities.                                                                                                                    
                                                                                                                                
4:24:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN referred  to page 2, lines  27-28, and to                                                               
page 4,  line 18, of  the bill which  lists standards.   He asked                                                               
for clarification on the various standards in HB 148.                                                                           
                                                                                                                                
REPRESENTATIVE GARA referred  to the first option on  page 2, for                                                               
new construction projects to qualify  lists an option to the IECC                                                               
or to  the Leadership in  Energy and Environmental  Design (LEED)                                                               
standards.  He explained that  both building standards are listed                                                               
because some agencies, such as  the university, or municipalities                                                               
currently use  one or the  other standard.   He opined  that both                                                               
standards are highly regarded energy  efficiency standards and if                                                               
a local government  has already adopted one, that  the bill would                                                               
recognize that standard  can be used.  However, the  IECC is only                                                               
mentioned in proposed section 44.42.067  which is the energy plan                                                               
portion of  the bill.   Thus, if the  state will undergo  a large                                                               
construction project, it  must pick one or the other.   He opined                                                               
that the IECC is the more widely accepted.                                                                                      
                                                                                                                                
4:25:59 PM                                                                                                                    
                                                                                                                                
JOEL   ST.   AUBIN,   Engineer,  Chief,   Statewide   Facilities,                                                               
Department of Transportation &  Public Facilities (DOT/PF, stated                                                               
he was available for questions.                                                                                                 
                                                                                                                                
4:26:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS  asked how  much  more  it would  cost  to                                                               
construct  a  building using  LEED  standards  and if  this  bill                                                               
requires the LEED standard be used to retrofit a building.                                                                      
                                                                                                                                
MR. ST. AUBIN  answered that he would need to  look at a specific                                                               
project to  determine the  cost estimate.   However, to  meet the                                                               
LEED certification  on a current  project in Bethel,  Alaska will                                                               
cost the DOT&PF an additional $250,000.   He stated that the cost                                                               
is less than a 1 percent increase.                                                                                              
                                                                                                                                
4:27:17 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  EDGMON  asked for  the  size  of  the building  in  the                                                               
specified project.                                                                                                              
                                                                                                                                
MR. ST. AUBIN  responded that it the project is  roughly a 20,000                                                               
square foot building, with a budget of $16 million.                                                                             
                                                                                                                                
REPRESENTATIVE GARA  reiterated that the  bill does not  apply to                                                               
private  buildings.   He  added that  unless  a municipality  has                                                               
preferred the LEED  over the IECC standard that it  can choose to                                                               
follow LEED.   He  added that  it would be  a local  decision and                                                               
that retrofitting is  not covered under HB 148,  except for state                                                               
buildings  that  estimate  cost  savings  over  15  years  garner                                                               
savings more than the cost of the retrofit.                                                                                     
                                                                                                                                
4:28:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PETERSEN  asked for the  average pay back  time if                                                               
standards are increased to LEED standards.                                                                                      
                                                                                                                                
REPRESENTATIVE GARA  stated he  was unsure  of the  average cost.                                                               
He opined that  often LEED considers insulation  such as windows.                                                               
However, he  remarked that the  lighting efficiency  is generally                                                               
about two  years.  Thus, the  bill is important just  in terms of                                                               
lighting.                                                                                                                       
                                                                                                                                
4:30:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA,  in response  to Co-Chair  Edgmon, suggested                                                               
that during an expanded hearing that  it would be useful to bring                                                               
in cold  climate experts  for future testimony.   He  offered his                                                               
belief that they  do support IECC standards.   However, he agreed                                                               
some minor elements  of the codes do not make  sense, such as the                                                               
preference for  white, which is  more energy efficient  in warmer                                                               
climates, but it does not make  sense.  He remarked that the bill                                                               
addresses aspects of the code that do not make sense.                                                                           
                                                                                                                                
4:30:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA concluded  that the bill represents  a lot of                                                               
work, but is comprehensive.   He encouraged committee to at least                                                               
consider working on the lighting aspect.                                                                                        
                                                                                                                                
4:32:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR EDGMON requested further information and any back-up.                                                                  
                                                                                                                                
REPRESENTATIVE  TUCK  related that  he  serves  on the  Anchorage                                                               
School District School Board, which  had six schools in its pilot                                                               
program.   He  offered  the  results were  amazing  savings.   He                                                               
commented that if  the state can make it easier  for schools that                                                               
it could free up some money for other educational purposes.                                                                     
                                                                                                                                
CO-CHAIR  EDGMON announced  that HB  148 would  be held  over for                                                               
further consideration.