Legislature(2015 - 2016)HOUSE FINANCE 519

03/22/2016 01:30 PM FINANCE

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01:31:27 PM Start
01:32:31 PM SB74
04:04:49 PM Preliminary Spring 2016 Revenue Forecast, Department of Revenue
04:47:22 PM HB143
05:26:30 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Fraud, False Claims, Penalties
After Hearing SB74, Will Recess Until 4:00 pm:
Preliminary Spring Revenue Forecast, Dept. of
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 143(FIN) Out of Committee
-- Public Testimony --
HOUSE BILL NO. 143                                                                                                            
     "An Act  authorizing the Alaska  Industrial Development                                                                    
     and  Export Authority  to issue  bonds  to finance  the                                                                    
     infrastructure   and   construction    costs   of   the                                                                    
     Sweetheart Lake hydroelectric  project; and relating to                                                                    
     legislative approval for a loan  from the power project                                                                    
     fund to the Lynn Canal Transmission Corporation."                                                                          
Co-Chair  Neuman  MOVED  to  ADOPT  the  proposed  committee                                                                    
substitute for HB 143, Work Draft (29-LS0599\S).                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
JANE   PIERSON,   STAFF,  REPRESENTATIVE   STEVE   THOMPSON,                                                                    
explained  the  changes between  the  S  version and  the  H                                                                    
version.  The first  change  was the  title.  The title  was                                                                    
shortened to  address what  was currently  in the  bill. The                                                                    
loan  from  the  Power  Project   Fund  to  the  Lynn  Canal                                                                    
Transportation  Corporation  had  been removed  and  was  no                                                                    
longer addressed in the bill or  in the title. Section 1 had                                                                    
been  amended  to  remove  financing  through  AS.44.88.172.                                                                    
Under  version  S  financing  would be  what  was  known  as                                                                    
conduit funding  paid through the  revenue derived  from the                                                                    
project.  The  revenue  bonds and  interest  due  would  not                                                                    
constitute  a  general  obligation   to  the  state  or  the                                                                    
authority.   Bonds  would   not  be   applied  against   the                                                                    
authority's  12 month  bonding limitation  in AS.44.88.095A.                                                                    
As previously stated  Section 2 of the bill  was removed. It                                                                    
would  have been  a  loan for  the  Lynn Canal  Transmission                                                                    
Corporation.  The repealer  date  was changed  in Section  2                                                                    
from June 30, 2019 to June 30, 2020.                                                                                            
Co-Chair Neuman assumed that  the legislation allowed Alaska                                                                    
Industrial Development and Export  Authority (AIDEA) to work                                                                    
as a  conduit to help the  project move forward but  did not                                                                    
obligate AIDEA to the financial packet.                                                                                         
Ms. Pierson replied that he was correct.                                                                                        
Representative  Gara asked  why  the reference  to the  Lynn                                                                    
Canal Transportation Corporation was removed.                                                                                   
Ms. Pierson  answered that it  was in working with  the bill                                                                    
sponsor.  It  was   a  fund  that  would  have   had  to  be                                                                    
recapitalized for  $22 million. In the  state's fiscal times                                                                    
it  was  not looking  to  recapitalize  or  to cap  out  its                                                                    
Representative Gara  noted that he would  have questions for                                                                    
REPRESENTATIVE  CATHY  MUNOZ,  SPONSOR, explained  that  the                                                                    
committee substitute  for HB 143  would allow  financing for                                                                    
the construction of a hydroelectric  facility dam located 43                                                                    
miles South  of Juneau. The proposed  project would generate                                                                    
19.8 megawatts of power and  would allow the Kensington Mine                                                                    
to come off  of diesel generation and  move to hydroelectric                                                                    
power. The  project would increase  hydro capacity  by about                                                                    
20 percent and would result  in many jobs for the community.                                                                    
The  initial   application  to  Federal   Energy  Regulatory                                                                    
Commission (FERC)  occurred in 2009. The  final FERC permit,                                                                    
the final  environmental impact study  (EIS), and  the final                                                                    
404 permit were expected in the summer of 2016.                                                                                 
4:47:22 PM                                                                                                                    
Representative  Pruitt  asked if  there  was  a power  sales                                                                    
agreement between  Kensington Mine and the  developer of the                                                                    
Sweetheart Lake Project.                                                                                                        
Representative  Munoz deferred  the  question  to the  chief                                                                    
executive officer of the Kensington Mine.                                                                                       
Representative   Gara  asked   what   percentage  of   power                                                                    
generated from the project would go to the Kensington Mine.                                                                     
Representative  Munoz  deferred   the  question  to  experts                                                                    
available to speak to the bill.                                                                                                 
Co-Chair  Thompson  asked  the   other  testifiers  to  come                                                                    
forward to address the committee.                                                                                               
KEITH COMSTOCK, CEO, JUNEAU  HYDROPOWER INC., indicated that                                                                    
there  was  a  slide  presentation  in  the  member  packets                                                                    
titled:  "Juneau  Hydropower  and Lynn  Canal  Transmission"                                                                    
(copy on  file). He  began by providing  a brief  history of                                                                    
the  project. It  was a  project identified  by the  federal                                                                    
government   in  1906   as  having   significant  hydropower                                                                    
capacity. In 1929 it was  identified as a federal power site                                                                    
classification and  removed from other uses.  There had been                                                                    
multiple attempts  to look at  the project. For a  number of                                                                    
reasons such  as access  to a market,  the timing,  or other                                                                    
issues have  prevented the project  from moving  forward. In                                                                    
the mid to  late 80s the state had come  closest to building                                                                    
the  project. In  December of  2009 Juneau  Hydropower filed                                                                    
for  a FERC  preliminary permit.  At that  time the  company                                                                    
began studying  and investing  money to  do all  the various                                                                    
environmental   studies,  the   hydrological  studies,   and                                                                    
fortunately  for the  company the  project had  been studied                                                                    
repeatedly and  had 40  years of  water data.  The 40  to 50                                                                    
year old  water data was  saying the  same as the  new water                                                                    
data.  He  continued that  from  2009  to 2014  the  company                                                                    
conducted  environmental, hydrological,  and preconstruction                                                                    
studies. It  had worked  on all  of the  various regulations                                                                    
and  defining the  customer base.  In May  2014 the  company                                                                    
submitted  its  final  FERC license  application  that  FERC                                                                    
accepted.  Once the  application was  accepted the  timeline                                                                    
began  for the  EIS.  The  final comment  period  was a  few                                                                    
months prior.  The company was expecting  its final license,                                                                    
the 404 permit,  and the notice to proceed on  or around the                                                                    
July timeframe.  Also in February the  company announced the                                                                    
existence of  the Juneau District Heating,  a major customer                                                                    
for Juneau  Hydropower Inc.  The company  received unanimous                                                                    
letters  of support  from  the City  and  Borough of  Juneau                                                                    
assembly. He was before the  committee asking for support in                                                                    
order to find some bond financing.                                                                                              
4:51:18 PM                                                                                                                    
Representative  Kawasaki  asked  Mr. Comstock  to  tell  him                                                                    
about  the  company's  attempt  to  make  private  financing                                                                    
available or whether private financing has been available.                                                                      
Mr. Comstock answered that the  project had been 100 percent                                                                    
privately  financed,  very  unusual  for a  hydro  power  in                                                                    
Alaska. He  had not received  any or applied for  any grants                                                                    
or  assistance from  any state  or  federal agencies.  Every                                                                    
dollar to-date had  been private money. He  was bringing his                                                                    
own  private  equity to  the  project.  In addition,  should                                                                    
AIDEA  invest in  the company,  the company  would still  be                                                                    
required to put up a significant amount of private equity.                                                                      
Representative  Kawasaki   asked  how  much   equity  Juneau                                                                    
Hydropower had  in the project  to-date. He wondered  if the                                                                    
amount of  the bond,  $120 million,  was enough  to complete                                                                    
the project.                                                                                                                    
Mr.   Comstock  replied   that  the   entity  had   invested                                                                    
approximately $4  million private dollars in  the project at                                                                    
present.  The   company  anticipated  that   between  Juneau                                                                    
Hydropower Inc.,  the Juneau District Heating,  and the Lynn                                                                    
Canal   Transmission   Corporation,  the   project   totaled                                                                    
approximately  $175  million. He  was  expecting  to put  in                                                                    
about $40 million to $50 million in private equity.                                                                             
Representative  Gara spoke  to the  Juneau District  Heating                                                                    
component  that would  convert energy  from  the canal  into                                                                    
heat.  He  asked if  the  component  was contingent  on  the                                                                    
Sweetheart Lake project.                                                                                                        
Mr.  Comstock  answered  that the  items  were  related.  He                                                                    
provided  a brief  explanation  of  Juneau District  Heating                                                                    
project. The Ted Stevens Marine  Research Center in Auke Bay                                                                    
had  a  first  generation  seawater  heat  pump  system.  It                                                                    
resulted in  a savings  of 120 gallons  of fuel  annually by                                                                    
switching to  seawater heat pump  heating. The  heating only                                                                    
supplied  a  building. The  same  concept  was  in use  -  a                                                                    
generation 2 heating system -  at the Alaska Sea Life Center                                                                    
in Seward.  The Juneau  District Heating  system would  be a                                                                    
third generation  heating system, a high  heat system, which                                                                    
would allow a building  like Alaska's State Capital building                                                                    
to cheaply and easily convert  from an oil-based system to a                                                                    
seawater heat pump based system  or a hot water based system                                                                    
without a  costly retro  fit only  having to  change certain                                                                    
equipment. The other two systems  were low-heat systems that                                                                    
required new construction. The company  was copying a system                                                                    
that was first  brought online in Drammen,  Norway, in 2011.                                                                    
The payback  on their  total investment  was under  3 years.                                                                    
Seawater heat pumps were an  old technology. However, modern                                                                    
refrigerants and  the ability to  boil refrigerants  to very                                                                    
high temperatures have made it  viable as a capacity to heat                                                                    
a city.                                                                                                                         
4:55:33 PM                                                                                                                    
Representative  Gara  asked  how the  seawater  portion  was                                                                    
related to the Sweetheart Lake Hydro Project.                                                                                   
Mr. Comstock  answered that in  order to run the  heat pumps                                                                    
it  required   a  significant  amount  of   electricity.  He                                                                    
suggested that  for every unit  of electricity that  was put                                                                    
in, 3  units of heat  energy resulted. It was  an incredible                                                                    
efficiency of  300 percent. This  efficiency was  the reason                                                                    
the numbers worked to pay  for the more expensive costs such                                                                    
as digging  up and laying  down pipes.  If a person  were to                                                                    
burn oil it  was 85 or 90 percent efficient  and natural gas                                                                    
was 95 percent  efficient. This project would  provide a 300                                                                    
percent efficiency rate.  It required a lot  of energy which                                                                    
the Sweetheart Lake project would be able to provide.                                                                           
Representative  Gara  asked  for comfort  that  the  project                                                                    
would not damage fisheries.                                                                                                     
Mr.  Comstock replied  that he  was a  life member  of Trout                                                                    
Unlimited  and had  been involved  in  cold water  fisheries                                                                    
issues most  of his adult  life. He spoke to  the Sweetheart                                                                    
Lake  fishery claiming  it was  a  no-deposit and  no-return                                                                    
salmon  fishery. In  other words,  the  Sockeye Salmon  that                                                                    
were stocked by  Douglas Island Pink and  Chum, Inc. (DIPAC)                                                                    
the local hatchery were stocked  and could get out. However,                                                                    
they could not  get back to span again.  Therefore, they had                                                                    
to be artificially replenished  every year. His organization                                                                    
worked  closely with  DIPAC who  supported the  project. His                                                                    
organization believed  it would  enhance the  fishery versus                                                                    
causing any distraction  at all from the  fishery. They have                                                                    
had  good  support  from  the   sportsmen  and  the  fishing                                                                    
Representative  Gara wondered  if there  were any  wild fish                                                                    
runs that would be impacted in the area.                                                                                        
Mr. Comstock  reported that there  were no  significant wild                                                                    
runs  in the  lake because  the lake  was high  in elevation                                                                    
which meant it  was a relatively low  biomass, low producing                                                                    
lake. There were  some native Dolly Varden  trout that would                                                                    
not be  impacted. There  was a  small population  of Rainbow                                                                    
trout first stocked in the  50s. The company had worked very                                                                    
closely with the  Department of Fish and Game  (DFG) and the                                                                    
Department  of Natural  Resources  (DNR) on  the issues  and                                                                    
they had been very supportive.                                                                                                  
4:58:38 PM                                                                                                                    
Co-Chair Neuman asked if the  group anticipated asking AIDEA                                                                    
for future investments into the  project. Mr. Comstock asked                                                                    
if  he  meant  beyond   the  request  currently  before  the                                                                    
Co-Chair Neuman understood that  AIDEA's role in the project                                                                    
was to provide some conduit  bonds so that the company would                                                                    
provide   for   its   own   financing.   Alaska   Industrial                                                                    
Development  and  Export Authority  would  help  set up  the                                                                    
financing  mechanism.  He  asked  if  he  was  correct.  Mr.                                                                    
Comstock replied in the affirmative.                                                                                            
Co-Chair Neuman asked if it  was the company's intent to ask                                                                    
AIDEA to invest  in the project. Mr.  Comstock answered that                                                                    
the entity's intent  was to work with AIDEA as  a partner to                                                                    
work with the  Goldman Sachs Group and various  folks in the                                                                    
country. He did not  anticipate returning to the legislature                                                                    
with an  additional funding  request in  the future  if that                                                                    
was what  Co-Chair Neuman  was asking. He  did not  know the                                                                    
full gamut  of products  and services available  from AIDEA.                                                                    
At  the moment  discussions had  been focused  mostly around                                                                    
conduit bonds.                                                                                                                  
Co-Chair  Neuman  commented  that  his  question  was  about                                                                    
whether the  financial plan for the  project revolved around                                                                    
AIDEA's  investment.  It  sounded   like  it  did  not.  Mr.                                                                    
Comstock  answered that  funds from  AIDEA were  desired but                                                                    
not required.                                                                                                                   
Vice-Chair Saddler  asked about the percentage  of power the                                                                    
dam would  use. Mr.  Comstock answered  that his  belief was                                                                    
that Kensington  Mine's demand was  about 60 percent  of the                                                                    
Vice-Chair  Saddler  asked  how  much  the  Juneau  District                                                                    
Heating project would consume. Mr.  Comstock replied that it                                                                    
would take the bulk of the balance.                                                                                             
Vice-Chair  Saddler asked  if  the  Juneau District  Heating                                                                    
project  would  be  possible  without  the  Sweetheart  Lake                                                                    
project.  Mr.  Comstock  answered   that  it  would  not  be                                                                    
possible. Currently  the local  utility had issues  with the                                                                    
possibility  of  running out  of  power,  especially in  low                                                                    
water years. They had  several major interruptible customers                                                                    
such  as the  Greens  Creek Mine,  Princess  Cruises, and  a                                                                    
variety  of  others. The  short  answer  was not  without  a                                                                    
significant supply of power into the community.                                                                                 
5:01:39 PM                                                                                                                    
Representative   Pruitt   asked   about   the   Lynn   Canal                                                                    
Transmission  Project  that  was removed  in  the  committee                                                                    
substitute. He wondered if Mr.  Comstock was associated with                                                                    
the change.                                                                                                                     
Mr.  Comstock responded  that Juneau  Hydropower was  one of                                                                    
the  members of  the  Lynn  Canal Transmission  Corporation.                                                                    
Another primary  member was the  Alaska Power  and Telephone                                                                    
Company  (the  utility  for Haines  and  Skagway  and  other                                                                    
places).  His  company would  like  to  ask for  money  from                                                                    
AIDEA, but it was hard to ask  for the funds if they did not                                                                    
exist. The entity believed it  could locate other sources of                                                                    
funding. The company  liked the terms and  the interest rate                                                                    
in  AIDEA's  program.  He  understood  the  state's  current                                                                    
fiscal  situation  and  indicated  that  his  company  could                                                                    
access  money at  a  slightly higher  interest  rate in  the                                                                    
Representative Pruitt  wanted to ensure the  legislature did                                                                    
not fund another project and  then find the company short of                                                                    
funds before project completion.  He wondered if the company                                                                    
could  financially  handle   the  intertie  separately.  Mr.                                                                    
Comstock answered  that he was  fairly certain.  The company                                                                    
had several viable plans.                                                                                                       
Representative  Pruitt  asked  for  the total  cost  of  the                                                                    
project. Mr.  Comstock answered that between  the Lynn Canal                                                                    
Transmission Corporation portion (set  up as a non-profit to                                                                    
keep transmission costs  as low as possible),  the build out                                                                    
of the Juneau District Heating  (putting pipes in the ground                                                                    
and building a heat pump  facility), and the Sweetheart Lake                                                                    
Hydro  Plant   the  cost  would  total   approximately  $175                                                                    
Representative  Pruitt spoke  to  the hydroelectric  project                                                                    
itself. He asked for the  cost of that portion. Mr. Comstock                                                                    
answered  that  the  cost was  about  $125  million  without                                                                    
contingencies.  The amount  depended on  how wet  the winter                                                                    
was,  how long  it  took  to build,  and  others things.  He                                                                    
thought  the $175  million total  project cost  was a  good,                                                                    
safe  number. Juneau  District Heating  was a  subsidiary of                                                                    
Juneau Hydropower Inc. They were one  and the same as far as                                                                    
construction  costs   went.  His  company  had   been  given                                                                    
direction from  Wall Street and other  financial entities to                                                                    
keep the items together as a single package.                                                                                    
5:05:32 PM                                                                                                                    
Representative  Kawasaki  asked  whether the  revenue  bonds                                                                    
would be tax exempt.                                                                                                            
Mr.  Comstock   responded  that   Representative  Kawasaki's                                                                    
question  would be  better directed  to  AIDEA. He  reported                                                                    
that  his  company  was  not basing  its  decisions  on  any                                                                    
potential future tax credits or subsidies.                                                                                      
Representative  Kawasaki  asked  if Mr.  Comstock's  private                                                                    
corporation  would be  required, if  it were  to obtain  the                                                                    
loans, to  pass on  savings to consumers  or if  the company                                                                    
would  be regulated  through  the  Regulatory Commission  of                                                                    
Alaska (RCA).                                                                                                                   
Mr. Comstock believed that the  hydropower function would be                                                                    
a  qualifying  facility  and  not  necessarily  a  regulated                                                                    
entity. It was likely that  Juneau District Heating would be                                                                    
a regulated entity.                                                                                                             
Co-Chair Thompson  thanked Mr.  Comstock for  testifying and                                                                    
introduced the  next testifier. He asked  Mr. Springsteen to                                                                    
review the decision tree that was in member packets.                                                                            
JOHN  SPRINGSTEEN,  EXECUTIVE  DIRECTOR,  ALASKA  INDUSTRIAL                                                                    
DEVELOPMENT  AND  EXPORT   AUTHORITY  (via  teleconference),                                                                    
introduced  himself. He  explained that  the handout  showed                                                                    
the  decision  making process  for  any  project that  AIDEA                                                                    
considered for  AIDEA financing.  He relayed that  AIDEA was                                                                    
looking  at  a  conduit  bond issuance  for  the  particular                                                                    
project  being  discussed  which  would be  subject  to  the                                                                    
requirements  of the  actual bond  buyers. He  believed that                                                                    
their process  would marginally  mirror AIDEA's  process. He                                                                    
relayed that when AIDEA was  reviewing projects for an AIDEA                                                                    
investment  the  first step  was  to  perform a  suitability                                                                    
assessment to  determine if the  project fit the  mission of                                                                    
providing  jobs  and  creating  revenue  for  the  State  of                                                                    
Alaska. If the project met  the mission and was suitable for                                                                    
AIDEA  then  a  feasibility analysis  would  follow.  Alaska                                                                    
Industrial Development  and Export Authority  would evaluate                                                                    
whether the  project could be  done, made economic  sense to                                                                    
complete, and was feasible. If  their criteria was met AIDEA                                                                    
would  move  into  the  due  diligence  step,  a  much  more                                                                    
detailed review.  If agreements to terms  and conditions for                                                                    
financing  could  be crafted  then  they  would be  improved                                                                    
internally by  AIDEA's investment committee and  then by the                                                                    
board   of  directors.   The  last   phase   would  be   the                                                                    
finalization  and   closing  of  the  deal   which  included                                                                    
completing the  agreements and  doing the  financing. Alaska                                                                    
Industrial  Development and  Export Authority  believed that                                                                    
it would  be a similar  process for  the bond buyers  in the                                                                    
case of a conduit issuance.                                                                                                     
5:09:33 PM                                                                                                                    
Vice-Chair  Saddler  referred  to   page  13  of  the  AIDEA                                                                    
document  titled  "Analysis  and Decision-Making"  (copy  on                                                                    
file). He asked Mr. Springsteen  to list the elements in the                                                                    
last blue box, after phase  4 was completed. Mr. Springsteen                                                                    
answered  that after  the finalization  and  closing of  the                                                                    
agreements,  ongoing  interactions   with  the  party  AIDEA                                                                    
financed would  ensue tracking the  progress of  the project                                                                    
and  ensuring that  the objectives  set out  with the  funds                                                                    
were being met.                                                                                                                 
Representative Gara asked if the  $120 million requested for                                                                    
the  project  would  impact AIDEA's  bonding  capacity.  Mr.                                                                    
Springsteen replied  that because it was  a conduit issuance                                                                    
and the project  was funded on the merits of  the project it                                                                    
would  not  affect  AIDEA's bonding  capacity.  However,  it                                                                    
currently affected  AIDEA's rolling  12 month limit  of $400                                                                    
million.  Through  the  proposed  legislation  the  issuance                                                                    
would not be counted towards the cap.                                                                                           
Representative Gara  asked for  detail related to  a conduit                                                                    
issuance. Mr.  Springsteen answered  that AIDEA  only filled                                                                    
the role  of a  facilitator related  to a  conduit issuance,                                                                    
which  was very  difference than  in  the case  of an  AIDEA                                                                    
obligation  bond  where  AIDEA's  revenue  and  assets  were                                                                    
providing a backstop  for a bond issuance. In the  case of a                                                                    
conduit issuance AIDEA was only a facilitator.                                                                                  
Representative Gara  asked about  AIDEA's compensation  as a                                                                    
facilitator. Mr.  Springsteen answered  that AIDEA  paid for                                                                    
issuance costs and the reward  was that economic capital was                                                                    
being brought to  the State of Alaska  resulting in economic                                                                    
and enterprise development and jobs.                                                                                            
Representative Gara observed that  the project seemed great,                                                                    
but  he wondered  if it  would cost  AIDEA. Mr.  Springsteen                                                                    
replied that AIDEA was paid back through issuances.                                                                             
Representative Gara  asked if AIDEA  had an option to  own a                                                                    
portion of the project.                                                                                                         
Co-Chair Thompson  stated that  the option  to own  was from                                                                    
the old version of the bill.                                                                                                    
Representative  Gara asked  if  he was  correct in  assuming                                                                    
that  AIDEA  did not  have  an  option  to own  the  project                                                                    
because all it was doing  was helping to secure the bonding.                                                                    
Mr. Springsteen answered in the affirmative.                                                                                    
5:14:39 PM                                                                                                                    
Representative Kawasaki  asked how  long phases 1  through 4                                                                    
in  the  established  decision   making  process  took.  Mr.                                                                    
Springsteen answered that the process  typically took 4 to 6                                                                    
months given the  need for review and for  board comment and                                                                    
interaction.  In   certain  cases   the  process   could  be                                                                    
Representative Edgmon  asked about the benefits  the project                                                                    
would provide  to the  longevity of  the Kensington  Mine by                                                                    
providing lower cost energy.                                                                                                    
Co-Chair  Thompson replied  that  the  general manager  from                                                                    
Kensington Mine would be testifying.                                                                                            
Representative  Edgmon  would  hold  his  question  for  the                                                                    
upcoming testifier.                                                                                                             
Representative   Wilson  asked   if  the   reason  for   the                                                                    
legislation  being considered  was  due  to the  legislature                                                                    
deciding that if a loan was  over a certain dollar amount it                                                                    
had to come through statute.                                                                                                    
Mr. Springsteen  answered that AIDEA  had a  restriction for                                                                    
general obligation bonds  and for total bonds  issued in the                                                                    
rolling 12  month period.  In the case  of an  AIDEA general                                                                    
obligation  bond over  $25 million  where the  authority was                                                                    
providing  its  assets as  a  backstop  to the  bond  buyers                                                                    
required  legislative approval.  In  the case  of a  conduit                                                                    
issuance the  question would be  about the $400  million 12-                                                                    
month rolling cap for bond issuances.                                                                                           
Representative  Wilson  asked  for verification  that  AIDEA                                                                    
would  conduct due  diligence to  ensure the  investment was                                                                    
sound. Mr. Springsteen replied that  in terms of the project                                                                    
and  due diligence  both AIDEA  and the  actual bond  buyers                                                                    
performed independent and similar reviews.                                                                                      
Representative  Wilson  asked   for  verification  that  his                                                                    
answer  was   a  "yes".  Mr.  Springsteen   replied  in  the                                                                    
affirmative.  In  any instance  AIDEA  had  a reputation  to                                                                    
uphold in the bond market.                                                                                                      
Representative  Pruitt   asked  whether  AIDEA   would  have                                                                    
invested   in   the  project   on   its   own  without   the                                                                    
legislature's influence if  the $400 million cap  was not in                                                                    
place and there  was not a need for  the current legislation                                                                    
before  the  committee.  Mr. Springsteen  answered  that  it                                                                    
would be the  type of project AIDEA would  consider with its                                                                    
own funds.                                                                                                                      
Co-Chair  Thompson Invited  the  next  testifier to  provide                                                                    
their statement.                                                                                                                
5:18:23 PM                                                                                                                    
MARY  BECKER,   MAYOR,  JUNEAU,  relayed  that   the  Juneau                                                                    
Assembly  had unanimously  voted  in support  of the  Juneau                                                                    
Hydropower  project  at  Sweetheart   Lake  and  the  Juneau                                                                    
District  Heating project.  She  thanked  the committee  for                                                                    
taking up the legislation.                                                                                                      
RODNEY  HESSON,  IBEW,  JUNEAU,  spoke  in  support  of  the                                                                    
5:20:06 PM                                                                                                                    
WAYNE ZIGARLICK,  GENERAL MANAGER, COEUR  ALASKA, KENSINGTON                                                                    
MINE, introduced himself.                                                                                                       
Representative Edgmon  asked about the benefits  the project                                                                    
would offer  to the Kensington  Mine in terms of  savings in                                                                    
the future.                                                                                                                     
Mr. Zigarlick responded that the  mine's single largest cost                                                                    
of  production was  labor and  the  second was  electricity.                                                                    
Although  it   was  difficult  to  quantify   what  kind  of                                                                    
extension there  might be with  a reduction in  power costs,                                                                    
any  reduction  in  the  mine's   operating  costs  had  the                                                                    
potential  to   take  mineralized  material  that   was  not                                                                    
currently generating  profits to  do so.  Thus, the  life of                                                                    
the mine would be extended.                                                                                                     
Representative Edgmon surmised that  the Kensington Mine was                                                                    
the backbone  of the  project. He also  thought the  life of                                                                    
the   mine  as   it  was   currently  envisioned   would  be                                                                    
commiserate with the life of  the bond issuance and possibly                                                                    
Mr. Zigarlick asked for clarification.                                                                                          
Representative  Edgmon stated  that, given  the significance                                                                    
of the  operations of  the Kensington Mine  and its  role in                                                                    
the overall  project, it would  extend the life span  of the                                                                    
mine enough to essentially pay off the loan package.                                                                            
Mr. Zigarlick answered  that he was unsure of  the length of                                                                    
the loan  package. However, the  Kensington Mine's  life was                                                                    
dynamic in  that it grew  every year and was  very dependent                                                                    
on  metal   prices  and  other  factors.   He  believed  the                                                                    
Kensington Mine would be around for  a long time, but he did                                                                    
not know the length of time specifically.                                                                                       
Representative Edgmon  clarified that  he was not  trying to                                                                    
put the  testifier in a box  with the question. He  spoke to                                                                    
long-term  opportunities that  cheaper  power could  provide                                                                    
citing Red Dog Mine as an example.                                                                                              
Mr.  Zigarlick   replied  that  Representative   Edgmon  was                                                                    
5:23:25 PM                                                                                                                    
Co-Chair Thompson OPENED public testimony.                                                                                      
Co-Chair Thompson CLOSED public testimony.                                                                                      
Co-Chair  Neuman  asked  if Alaska  Energy  Authority  (AEA)                                                                    
would  play a  role in  the transmission  of the  electrical                                                                    
power lines in the project.                                                                                                     
SARAH   FISHER-GOAD,  EXECUTIVE   DIRECTOR,  ALASKA   ENERGY                                                                    
AUTHORITY,  DEPARTMENT OF  COMMERCE, COMMUNITY  AND ECONOMIC                                                                    
DEVELOPMENT  (via teleconference),  answered that  currently                                                                    
AEA would not play a role in the project.                                                                                       
Co-Chair  Thompson  explained  that  HB  143  would  have  a                                                                    
forthcoming zero fiscal note.                                                                                                   
Co-Chair  Neuman  MOVED  to  REPORT  CSHB  143(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
CSHB  143(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass" recommendation  and with  one forthcoming  zero fiscal                                                                    
note  from   the  Department  of  Commerce,   Community  and                                                                    
Economic Development.                                                                                                           
Co-Chair Thompson  discussed the schedule for  the following