Legislature(2021 - 2022)BARNES 124
03/03/2022 10:15 AM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| HB247 | |
| HB358 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 247 | TELECONFERENCED | |
| += | HB 358 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 247-POWER COST EQUALIZATION FUND
[Contains discussion of HB 299.]
10:20:45 AM
CHAIR SCHRAGE announced that the first order of business would
be HOUSE BILL NO. 247, "An Act relating to the power cost
equalization endowment fund." [Before the committee, adopted as
a working document during the 2/15/22 House Special Committee on
Energy meeting, was the proposed committee substitute (CS) for
HB 247, Version 32-LS1301\I, Marx, 1/26/22 ("Version I").]
10:20:55 AM
REPRESENTATIVE KAUFMAN moved to adopt Amendment 1 to HB 247,
Version I, labeled 32-LS1301\I.1, Marx, 2/24/2022, which read as
follows:
Page 2, line 6, following "upgrades,":
Insert "for micronuclear reactors,"
10:21:03 AM
CHAIR SCHRAGE objected for the purpose of discussion.
REPRESENTATIVE KAUFMAN explained the purpose of the proposed
amendment is to align Version I with previous work done in the
committee concerning micronuclear reactors. He stated that the
amendment would add "for micronuclear reactors" on page 2, line
6, after "bulk fuel upgrades,".
REPRESENTATIVE ZULKOSKY requested the bill sponsor explain how
Amendment 1 would fit into the purpose of Version I.
REPRESENTATIVE STEVE THOMPSON, Alaska State Legislature, as
prime sponsor of HB 247, explained that Amendment 1 would create
another tool the Alaska Energy Authority (AEA) could use to
reduce energy costs, enabling communities to move away from the
Power Cost Equalization Program (PCEP). He stated that if
micronuclear reactors become viable and affordable for
communities, this would fit with the entire program.
REPRESENTATIVE ZULKOSKY, referencing the presentation to the
committee on [HB 299], pointed out [the Alaska Center for Energy
and Power] (ACEP) clarified that microreactor technology is not
at a point where it can be used in rural communities. She
recalled from the ACEP presentation that micronuclear reactors
would be better suited for communities on the road system, not
villages. She pointed out that villages are the primary
communities served by PCEP. She expressed appreciation for the
intent of the amendment but stated she could not support
Amendment 1 to HB 247, Version I, because of the lack of
technical capacity in villages served by PCEP. She expressed
interest in the result of other legislation that is before the
committee, [as this may be relevant] to Version I.
10:24:40 AM
REPRESENTATIVE THOMPSON responded that microreactor technology
is developing and would not be available for a few years. He
posited that if [the definition] was in statute, grants could
become available after technological advancements allowed
micronuclear reactors in rural villages. He added that the idea
is to reduce the need for power cost equalization (PCE) in the
state, including the villages. He expressed the opinion that
the technology will eventually advance, and this should be "on
the books to where this would be one of the tools in the
toolbox."
CHAIR SCHRAGE requested that a representative from the
Department of Commerce, Community, and Economic Development
(DCCED) comment on the question.
10:25:59 AM
CURTIS THAYER, Executive Director, Alaska Energy Authority,
Department of Commerce, Community, and Economic Development,
offered that DCCED does not hold a position on [Amendment 1 to
HB 247, Version I]. He offered his understanding of both points
of view. He said that there would not be the capability in some
communities, but technology is emerging, and the prediction of
its capacity in the future is unknown.
10:26:26 AM
REPRESENTATIVE CLAMAN mentioned an issue raised in the
discussion of micronuclear reactors during a hearing on [HB
299]. He stated that currently the legislature would have to
authorize any nuclear reactor sited in Alaska in a separate
legislative act. He expressed the understanding that, if
passed, [HB 299] would remove the requirement for legislative
authority. Concerning the amendment, he questioned whether the
added language would be "getting the cart before horse." He
expressed the belief that this would be problematic.
REPRESENTATIVE KAUFMAN said if HB 299 does not pass, the
legislative authority would remain the same, and Version I would
only allow [a micronuclear reactor to be sited] through approval
from the legislature. He said, "It is not letting the horse out
of the barn door because we still have legislative authority."
REPRESENTATIVE CLAMAN, with a follow-up comment, explained one
of the reasons for his reluctance is "it feels like we are not
at that place yet." He questioned whether a micronuclear
reactor should be included as a rural power system upgrade
(RPSU).
10:29:12 AM
MR. THAYER explained that a common reference for RPSU is a
powerhouse, which includes the diesel generation unit and the
distribution into the community.
REPRESENTATIVE CLAMAN, with a follow-up question, voiced the
understanding of the common application, but he questioned
whether there is a definition in statute for RPSU. He
speculated that if it is not defined in statute, a decision
could be made to include micronuclear reactors as an RPSU. He
suggested this could be done today.
MR. THAYER indicated that the reference is found in DCCED's
regulations.
REPRESENTATIVE CLAMAN, with a follow-up comment, clarified that
the term is in the regulation but not in statute. He maintained
that the legislature would not have to change the statute for
the regulation to change.
MR. THAYER responded in the affirmative.
REPRESENTATIVE CLAMAN, with a follow-up comment, explained that
because of the timing of the amendment, and the department's
existing regulatory power to expand the meaning of RPSU, he
would not be supporting Amendment 1 to HB 247, Version I.
REPRESENTATIVE KAUFMAN voiced the opinion that the intent of the
amendment would be to create a pathway should a village be able
to move from diesel power; the amendment would futureproof the
ability to use developing technology. He said, "The commonality
of new technology is that it gets smaller, cheaper, more
available, and more reliable." He expressed the belief that
[micronuclear reactors] are on the verge of this advancement.
Unless there is a change in statute, he said, the authority
would remain with the legislature with "no risk of the horse
being let out of the barn." He stated that there are concerns
about nuclear power because of past designs and performance
issues, and he expressed the belief that [nuclear power would
not carry these concerns] in the future. He added that there
may not be a willingness to change the regulation unless it is
in statute. He argued that if there is a reliable, safe,
affordable substitute [for energy], leadership would need to be
provided to move communities away from diesel.
10:32:33 AM
REPRESENTATIVE KAUFMAN, in response to Representative Rauscher,
recited the amendment as it would appear in the proposed
legislation.
REPRESENTATIVE RAUSCHER voiced the opinion that micronuclear
reactors would become part of the future. He offered his
support for Amendment 1 to HB 247, Version I.
10:34:45 AM
REPRESENTATIVE TUCK stated that the proposed legislation would
add a new subsection for renewable energy projects which aligns
with the state's energy policy created in 2010. He deduced that
micronuclear reactors would align with this energy policy and
the state's vision for development. He stated that the
regulation could be changed, but if it was put in statute, it
would be definite. He offered his support for Amendment 1 to HB
247, Version I. He stated that the proposed legislation would
not be reenacting the PCE fund but adding renewable energy. As
a sidenote, he shared that the micronuclear project originated
in the village of Galena. The village had considered a reactor
project 12 years ago, and this interest caught the legislature's
attention.
10:36:29 AM
CHAIR SCHRAGE removed his objection to the motion to adopt
Amendment 1 to HB 247, Version I.
REPRESENTATIVE ZULKOSKY objected.
10:36:40 AM
A roll call vote was taken. Representatives Tuck, Rauscher,
Kaufman, and Schrage voted in favor of Amendment 1 to HB 247,
Version I. Representatives Claman and Zulkosky voted against
it. Therefore, Amendment 1 was adopted by a vote of 4-2.
10:37:46 AM
REPRESENTATIVE ZULKOSKY voiced her support to decrease rural
communities' reliance on diesel and expand the renewable energy
fund (REF). She reminded the committee that PCEP is important
because it provides equity in energy costs throughout the state.
She requested an explanation of the risks if the REF cap is
removed. She questioned whether the PCE Endowment Fund would be
destabilized.
10:39:09 AM
MR. THAYER, in response, explained that the [current] earnings
of the PCE Endowment Fund are approximately $1.1 billion. The
earnings would first be paid out to PCE at about $30 million,
and then it would pay the Community Assistance Program $30
million. After these payments, an estimated $25 million of
excess earnings would go to REF. He stated that this year $55
million would be left "on the table," which would go back into
the endowment fund. He argued that if the $25 million cap had
been removed [from REF], AEA would have been allowed to possibly
capture additional federal funding. This year, for example, $10
million for powerhouses has been matched with federal funding,
totaling $20 million. If the cap had not been in place, a match
of $50 million for federal funds could have been made, totaling
$100 million for rural Alaska powerhouses and bulk fuel
upgrades. He said that the deferred maintenance for powerhouses
is estimated to be $300 million, and the deferred maintenance
for bulk fuel upgrades is estimated to be $800 million. He
pointed out that this is the first time in the last three years
earnings have been able to tap into the "cascading waterfall" of
the $25 million. Last year $48 million in earnings paid for PCE
and a portion of the Community Assistance Program from the
previous two years, which equaled an average of $72 million. He
added that last year the earnings did not tap into the
[cascading waterfall] of the $25 million.
MR. THAYER, in response to a follow-up question, clarified that
there is no discrimination in the state where the funding is
available. He stated that approximately $34 million has been
used on Railbelt projects and $248 million has been used in
rural Alaska. He maintained that, predominantly, rural Alaska
benefits from REF.
REPRESENTATIVE ZULKOSKY, with a follow-up comment on the intent
of the PCE Endowment Fund, pointed out the significant
challenges rural Alaskans face with increasing energy costs.
She voiced the opinion that it would be more appropriate for the
legislature to expand funds available to PCE under the initial
calculation rather than removing the [REF] cap. Removing the
[REF] cap would allow projects to be funded regardless of their
location. She argued that PCEP was intended to be a financial
instrument to help hold down the energy costs and create equity
for rural communities not served by larger renewable energy
projects. She expressed appreciation for the intent of getting
communities off of diesel, but she argued that there should be
further discussion on which should be adjusted: the PCE
calculation or REF cap.
10:44:04 AM
The committee took an at-ease from 10:44 a.m. to 10:46 a.m.
10:45:46 AM
CHAIR SCHRAGE announced that HB 247 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 247 Amendment 1.pdf |
HENE 3/3/2022 10:15:00 AM |
HB 247 |
| HB 247 Sponsor Statement (Version I).pdf |
HENE 3/3/2022 10:15:00 AM |
HB 247 |
| HB 247- Ver I CS Draft.pdf |
HENE 2/15/2022 10:15:00 AM HENE 3/3/2022 10:15:00 AM |
HB 247 |
| HB 247 DCCED Fiscal Note 2.11.2022.pdf |
HENE 3/3/2022 10:15:00 AM |
HB 247 |
| HB 358 A.PDF |
HCRA 3/3/2022 10:15:00 AM HENE 3/1/2022 10:15:00 AM HENE 3/3/2022 10:15:00 AM |
HB 358 |
| HB 358 Sponsor Statement 2.24.2022.pdf |
HCRA 3/3/2022 10:15:00 AM HENE 3/1/2022 10:15:00 AM HENE 3/3/2022 10:15:00 AM |
HB 358 |
| HB 358 Sectional Analysis 2.24.2022.pdf |
HCRA 3/3/2022 10:15:00 AM HENE 3/1/2022 10:15:00 AM HENE 3/3/2022 10:15:00 AM |
HB 358 |
| HB 358 DCCED Fiscal Note 2.25.2022.pdf |
HENE 3/1/2022 10:15:00 AM HENE 3/3/2022 10:15:00 AM |
HB 358 |