Legislature(2023 - 2024)ADAMS 519
03/09/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB62 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 62 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 62
"An Act relating to the renewable energy grant fund
and recommendation program; and providing for an
effective date."
1:37:31 PM
REPRESENTATIVE BRYCE EDGMON, SPONSOR, introduced the
legislation. The bill would reauthorize the Renewable
Energy Grant Program for an additional 10 years. He thought
he may be the only current House member who had been in the
legislature at the time the original legislation was
passed. The program had started in 2008 with substantial
capitalization and as oil prices dipped down after 2008 it
relied largely on year-to-year funding. He explained that
when oil prices had been extremely high in 2007 and 2008,
the program had been created with the idea that it would
provide up to about $50 million in the first five years.
The program provided grants to entities around the state
for startup work on renewable energy projects such as
feasibility, design, and engineering. Over the years the
program had been quite successful and had capitalized
nearly 250 grants over its lifetime with 94 projects and
about $275 million along with funding contributed by the
state. He emphasized the program had been a conduit for
attracting outside funding sources such as federal monies
up to the tune of about $300 million.
Co-Chair Edgmon believed the program merited another 10
years of reauthorization. He stated that some may wonder
why there was a sunset date on the program at all. He
explained the program was incumbent upon state funding with
attached performance metrics on a year-to-year basis
through the Alaska Energy Authority (AEA). The bill came
with a fiscal note of $1.4 million. He relayed the costs
were already embedded in the governor's FY 24 budget
submission that came out in December. He asked his staff to
review the sectional analysis.
LAIB ALLENSWORTH, STAFF, REPRESENTATIVE BRYCE EDGMON,
reviewed the sectional analysis (copy on file):
Sec 1. Amends Section 5, Ch. 31, SLA 2008, as
previously amended, to extend the repeal date of the
fund to June 30, 2033.
Sec 2. Makes the sunset extension retroactive to
June 30, 2023 if the bill takes effect after the Fund
sunsets on that date.
Sec 3. Establishes an immediate effective date under
AS 01.10.070(c).
Co-Chair Foster noted Mr. Curtis Thayer with AEA was
available for any questions.
1:41:53 PM
Representative Hannan directed a question to Mr. Thayer.
She considered there was a dollar amount governing the
number of projects that could be done in a year or budget
cycle. She asked if there was a list of the total need if
the state tried to capitalize all of the renewable energy
projects. She clarified she was not suggesting an amendment
to the legislation. She wondered if there were currently $1
billion in projects versus $2 million.
CURTIS THAYER, EXECUTIVE DIRECTOR, ALASKA ENERGY AUTHORITY,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,
replied that the program was designed to go through rounds
and applications of interest. The program had gone through
several rounds where it had not received funding. He
elaborated that two years ago the program had $4.7 million
with 11 applicants, last year the program had $15 million
available with 27 applicants, and the current year was
round 15 with $21.5 million and 33 applicants. The program
went through an evaluation on the economics, technology,
and feasibility of a project. He explained that people
applied for funding and AEA reviewed the applications and
based awarded funding on the recommendations of the
legislature. He noted AEA had a renewable energy fund
advisory committee comprised of five members of the public,
two members of the House and two members of the Senate. The
program did not encompass everything, but it encompassed
communities for feasibility, reconnaissance, and early
projects. He highlighted that the program had displaced 30
million gallons of diesel fuel. He reported that AEA was
currently doing an evaluation of the program with a third-
party economist to bring updated numbers to the legislature
on the success of the program since inception.
1:44:43 PM
Representative Galvin wanted to ensure the record reflected
that the program replaced 30 million gallons of diesel per
year.
Mr. Thayer replied affirmatively.
Representative Galvin highlighted new incoming federal
funding for projects, particularly aligned with renewable
energy pieces. She asked if the program complimented the
incoming funding well. She referenced the 33 projects and
wondered if applicants would look stronger if there was
more state support.
Mr. Thayer answered that the program had not been designed
to support the federal funding that was now coming through.
He relayed that AEA was finding that because reconnaissance
work, feasibility, and early design had been done, it had
better-positioned some projects that had been on the shelf
to allow them to receive federal funding primarily through
the Infrastructure Investment and Jobs Act (IIJA). He
highlighted the Hiilangaay hydroelectric project that had
taken Prince of Wales Island to 95 percent renewable as an
example of a project started with grants through the
program. He noted there were over 100 different projects
that had done so. He relayed that over 80 percent of the
program funding had gone to rural Alaska because one of the
economic standards was the cost of energy in a community.
He cited King Cove as another hydro project 20 years back
that had received funding the program. The project resulted
in costs of $0.14 to $0.15 per kilowatt as opposed to $0.19
on the Railbelt. He stated the program had resulted in
successes across the board. He noted he could provide
members with program detail broken out by legislative
district.
1:47:17 PM
Representative Ortiz was supportive of the program and the
bill. He highlighted the variance in projects from year-to-
year that Mr. Thayer had reviewed. He asked if the fund
balance varied significantly because federal opportunity
varied from year-to-year. He asked for the current balance
of the Renewable Energy Fund.
Mr. Thayer answered that the balance was what the
legislature obligated for the fund. In 2022, the program
had received $15 million and had funded 27 projects. The
year prior had been $4.7 million in funding for 11
projects. Subsequent to that timeframe there had been no
funding for seven to eight years. He explained that after
the projects were reviewed by the Renewable Energy Fund
Advisory Committee, the list of projects and dollar amounts
were sent to the legislature. He noted that how the funds
could be parlayed into additional state or federal funds
was a different conversation. He detailed that applicants
applied to be included in a round and the projects were
evaluated.
Representative Ortiz looked at the fiscal note showing an
ongoing $1.4 million appropriation to the fund. He asked
for verification that it did not sidestep the yearly
legislative process where it could decide to appropriate
money for particular projects.
Mr. Thayer answered that AEA did not have dedicated staff
for the program. The program was administered by AEA's
planning department and its engineers and project managers
(who were subject matter experts on renewable energy)
served as advisory and technical side. Depending on the
size of the appropriation, the administrative costs
averaged to be $1.4 million. Years back, the program had
received a $50 million appropriation, which had cost AEA
$2.2 million to administer and oversee the projects. He
reported that AEA was currently managing over 44 projects
and its cost was approximately $1.4 million. He relayed
that part of the cost was due to AEA's work with an
independent third-party economist to help identify the
economics. Additionally, AEA had an RSA [reimbursable
services agreement] with the Department of Natural
Resources to help in the evaluation process.
1:50:23 PM
Representative Ortiz asked for verification the [$1.4
million] amount was the average cost of administering the
amount of money the legislature appropriated annually.
Mr. Thayer agreed.
Representative Cronk looked at a project list included in
members' packets [titled "Renewable Energy Projects by
Energy Region as of February 7, 2023"]. He observed
numerous projects on the list were closed. He asked if the
projects highlighted in blue were new.
Mr. Thayer answered that projects highlighted in blue were
active. He noted they did not include the 33 projects
currently under review in round 15 that the legislature
would see in early April.
Representative Cronk looked at a column on the list titled
"Native Corporation." He asked for detail.
Mr. Thayer replied the list was broken down by region and
specified the Native corporation specific to the regions.
The list also included the specific technology used in each
project, the state region, and the cost of power for each
community listed.
Representative Cronk asked if there were excess funds from
the Power Cost Equalization (PCE) program that could be
directed towards additional projects.
Mr. Thayer answered affirmatively. He elaborated that of
any excess earnings from the PCE endowment, the first money
went to the PCE program, the next $30 million went to
community assistance, and then there was a waterfall effect
where a percentage of excess earnings could go into three
buckets for power houses, the Bulk Fuel Revolving Loan
Program, and the Renewable Energy Fund. He explained that
in 2022, $15 million had been committed from the PCE
program to support round 14. He noted that since the
inception of the Renewable Energy Fund, PCE earnings had
only been used twice. The program fund source was primarily
general funds. He informed the committee that the predicted
earnings would not support the waterfall effect in future
years due to the dip in the market and some issues within
the PCE endowment.
1:53:02 PM
Representative Stapp asked about the regulatory statute
definition that included renewable, facilities, and gas. He
highlighted new 45Q ammonia tax credits. He wondered if a
regulatory update in statutory guidance was needed in the
event a project wanted to go down that route.
Co-Chair Edgmon replied that he would follow up. He did not
recall the topic coming up during research on the bill or
during his years on the Renewable Energy Fund Advisory
Committee.
Representative Galvin noted that the bill packet documents
showed a couple of different dates pertaining to round 15
and the 33 projects. She noted that Mr. Thayer had
mentioned that the legislature would hear about the
projects in April. She asked for clarification on the date.
Mr. Thayer replied that round 15 was not currently before
the legislature. He detailed that AEA was currently
evaluating the project list and it had been delayed until
March. He explained that two members of the House needed to
be appointed to the committee and had not yet been named.
Senators David Wilson and Bert Stedman were the Senate
members. He noted his April estimate provided a bit of a
fudge factor to allow time for the House members to be
appointed.
Co-Chair Edgmon stated the actual funding for the current
year was about $15 million. He believed there was a
placeholder of $7.5 million currently in the budget that
could be increased depending on what the legislature
decided what to do. He highlighted that historically most
of the appropriations had been undesignated general funds
(UGF) with a couple of years receiving excess earnings from
the PCE endowment. He stated that unfortunately, the PCE
endowment had gone backwards in value and did not have a
surplus in the past fiscal year. He relayed that whatever
funding came forward for the projects would likely have to
come through a separate appropriation.
Representative Galvin thought it made sense to look at the
history of good work done and for the legislature to extend
a bit of faith by providing the funds towards a program
that would bring returns in plentiful ways, particularly
for rural Alaska that was struggling with the cost of
diesel. She underscored the previous statement that the
program displaced 30 million gallons [of diesel]. She
emphasized it was a lot of work and thanked Mr. Thayer.
1:57:27 PM
Representative Josephson asked about AEA's tolerance to
handle extra money and resources. He asked about a scenario
where the legislature decided to provide the program with
more resources. He asked if AEA would open up the rounds to
more applicants. Alternatively, he wondered if the scenario
would become a workforce or carrying capacity problem.
Mr. Thayer responded that one area where the program could
be expanded if additional funding was available was making
more money available for communities. He explained that AEA
had that flexibility up to $4 million but when money was
tight applicants were limited to $1 million or a $2 million
cap. He elaborated that [with additional funding] the cap
could fluctuate. The administering of the program was done
currently with internal resources and subject matter
experts. He highlighted that AEA was requesting five new
positions in its operating budget.
Mr. Thayer detailed that when AEA had submitted its budget
in January it had $74 million of infrastructure funds
coming forward. He underscored that now in March it had
$175 million coming through the agency. He relayed that
staffing would be an issue and would require a conversation
with the legislature the agency had already had a
conversation with the governor. The agency had started the
approval process for the positions, but positions had not
been filled. He believed there would be another
conversation about the agency's total workload. The agency
currently had 32 staff and $202 million in infrastructure
projects, $175 million in capital primarily through IIJA,
and bonding of $166 million for transmission upgrades along
the Railbelt. He stressed that the agency had a lot of work
going on.
Representative Hannan noted that Co-Chair Edgmon had used
the phrase "a placeholder of $7.5 million." She asked if
the increment was in the capital budget. She asked for
verification funds would be included in the capital budget
if the legislature decided to add additional money for the
program.
Co-Chair Edgmon replied affirmatively.
Representative Cronk looked at the project list and asked
how many interior wood boilers were still working. He was
not certain the state had figured out what worked best. He
believed some things were not working best. He requested a
list showing which of the wood boiler projects were still
working and what was still working (i.e., wood, pellets,
chips). He wanted to ensure projects used solutions that
would work continuously.
2:00:56 PM
Mr. Allensworth replied that he would be happy to review
the fuel sources used by the projects in the specific
region. He offered to meet with Representative Cronk after
the meeting.
Co-Chair Foster OPENED public testimony.
2:02:18 PM
JOHN SONIN, CIVILIZED HUMANITY, JUNEAU, supported the
extension of the Renewable Energy Fund. He highlighted the
current climate conundrum and believed it was necessary to
continue to facilitate renewable sources of energy
production for as long as possible. He had been made aware
of how microgrids or personal panels on homes were becoming
cheaper than oil to heat homes. The transition would
require government synergy to help monitor and steer the
direction to a sustainable and opportunity filled future
for the state's children. He asked the committee to extend
the program for as long as possible. He supported the
legislation.
2:06:07 PM
MICHAEL ROVITO, DEPUTY DIRECTOR, ALASKA POWER ASSOCIATION,
ANCHORAGE (via teleconference), provided information about
the Alaska Power Association. The organization was
supportive of the legislation and strongly urged quick
passage of the bill. He thanked the bill sponsor. He read
from a prepared statement:
Many of Alaska Power Association's electric utility
members have received crucial funding from the
Renewable Energy Fund since its inception. These funds
have supported the addition of renewable energy
projects that have diversified generation portfolios,
helped to stabilize rates, and decrease the carbon
footprint of electric generation. The valuable
financial assistance of the Renewable Energy Fund
cannot be overstated. On providing grant funding for
projects, the program helps alleviate project cost to
ratepayers, while increasing clean energy generation
in the state. There are also numerous projects under
consideration featured around the grant funding for
the Renewable Energy Fund. These projects, as past
projects have, will be chosen through a deliberative
process run by the Alaska Energy Authority and
reviewed by the Renewable Energy Fund Advisory
Committee.
Finally, by extending the sunset date of the program,
electric utilities will continue to have opportunities
to receive funds for renewable energy projects as they
continue innovating the power systems of the state.
2:08:13 PM
CHRIS ROSE, EXECUTIVE DIRECTOR, RENEWABLE ENERGY ALASKA
PROJECT (REAP), SUTTON (via teleconference), spoke in
strong support of the legislation. He shared that REAP had
been an advocate for renewable energy and energy efficiency
throughout the state since 2004. He shared that the
organization had helped develop the original program in
2007. He highlighted that the fund had developed many
projects helping to save over 30 million gallons of diesel
per year. The fund had also put Alaska on the global map in
terms of its ability to develop renewable energy in
isolated microgrids that primarily run on diesel. The
organization had hosted numerous conferences over the past
15 years showcasing some of the success stories mostly from
rural Alaskan communities. He emphasized that the program
had been good for Alaskan communities and the state. He
reiterated REAP's support for the extension of the program.
2:09:47 PM
MATT JACKSON, CLIMATE PROGRAM MANAGER, SOUTHEAST ALASKA
CONSERVATION COUNCIL AND ALASKA CLIMATE ALLIANCE, SITKA
(via teleconference), spoke in support of the legislation.
He highlighted the statistic cited throughout the meeting
specifying that 30 million gallons of diesel had been
avoided. He informed the committee that the statistic was
from 2017; therefore, the amount of diesel avoided through
Renewable Energy Fund was in fact much greater. He provided
context and explained that under a scenario where the
average price of diesel in Alaska was $6 per gallon in the
past year (he understood the cost was much higher in many
locations), $180 million had been saved on diesel around
the state in a single year. There would continue to be
savings into the future. He remarked that the savings
reflected a very impressive return on investment.
Additionally, the figure represented 671 million pounds of
CO2 diverted from the atmosphere. He strongly encouraged
the legislature to generously fund the program. He
underscored it was a very good investment in the state's
future.
2:12:31 PM
Co-Chair Foster CLOSED public testimony.
Co-Chair Edgmon thanked the committee for hearing the bill.
He appreciated the good questions and thoughtful dialogue.
HB 62 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster announced an amendment deadline of noon the
following Tuesday. He reviewed the schedule for the
following meeting.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 62 Additional Document - REF Update Letter to Legislature from AEA 02.24.2023.pdf |
HFIN 3/9/2023 1:30:00 PM SFIN 3/28/2023 9:00:00 AM |
HB 62 |
| HB 62 Additonal Document - REF Projects by Energy Region by AEA 02.24.2023.pdf |
HFIN 3/9/2023 1:30:00 PM SFIN 3/28/2023 9:00:00 AM |
HB 62 |
| HB 62 Sectional Analysis Version A 2.24.2023.pdf |
HFIN 3/9/2023 1:30:00 PM |
HB 62 |
| HB 62 Sponsor Statement Version A 2.24.2023.pdf |
HFIN 3/9/2023 1:30:00 PM |
HB 62 |
| HB62- Additional Document REF Fact Sheet by AEA 2.24.2023.pdf |
HFIN 3/9/2023 1:30:00 PM SFIN 3/28/2023 9:00:00 AM |
HB 62 |
| HB 62 APA Support 030323.pdf |
HFIN 3/9/2023 1:30:00 PM |
HB 62 |
| HB 62 Thayer AEA Testimony HFIN 030923.pdf |
HFIN 3/9/2023 1:30:00 PM |
HB 62 |