Legislature(2005 - 2006)CAPITOL 17
02/06/2006 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB393 | |
| HB335 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 335 | TELECONFERENCED | |
| *+ | HB 393 | TELECONFERENCED | |
HB 335-ENERGY RESEARCH & DEVELOPMENT 4:37:33 PM CHAIR ANDERSON announced that the final order of business would be HOUSE BILL NO. 335 "An Act creating the Alaska energy research and development program in the Alaska Energy Authority and providing for a Committee on Alaska Energy Research and Development to assist in the development of that program; and providing for an effective date." 4:38:02 PM LISA WEISSLER, Staff to Representative Ethan Berkowitz, Alaska State Legislature, Sponsor, stated that Alaskan communities are paying "ever-increasing" costs for fuel, adding that long-term solutions are needed in order to make communities more self- reliant. She informed the committee that HB 335 contains three main provisions. The first provision states that the Alaska Energy Authority (AEA), via a proposed Alaska energy research and development program, will conduct the initial assessments to determine the viability of alternative energy sources, and will then report its findings and assist communities in determining the appropriate energy source for their location. The State of Alaska will conduct any necessary further assessments. Ms. Weissler explained that this will allow the state to take advantage of the cost efficiencies associated with coordinated assessment, and address the inability of many communities to afford the upfront cost. MS. WEISSLER said that the second provision is the energy loan fund. This provides a way for communities to pay for alternative energy. Production incentive credits are generated by the production of alternative energy facilities, and are available to "pay down" the loan. Ms. Weissler stated that this provides the incentive to keep the [alternative energy] facility in good, working condition. The third provision pertains to the establishment of the Committee on Energy Research and Development. This committee will develop and guide implementation of aforementioned the energy research and development program. She added that it is the sponsor's hope that once the facilities are built, they will provide Alaskan communities with stable energy prices. MS. WEISSLER explained that a proposed Committee Substitute (CS), included in members' packets, is based on a conversation with utilities and addresses their concerns. The biggest change gives the committee the duty to develop the regulations. It also deletes the requirement for the committee to create energy portfolio standards and a tradable credit system. She explained that this would have required utilities to produce a certain amount of energy from alternative energy sources, and if unable to do so they would have been able to purchase credits from an area that was producing alternative energy. She went on to say that there was concern about whether this would have worked in Alaska. 4:41:09 PM CHAIR ANDERSON moved CSHB 335(24-LS1354\I, Wayne, 2/1/06, as the working document. There being no objection, Version I was before the committee. REPRESENTATIVE LYNN asked if there would be any statutory conflict between the Alaska Energy Authority and the proposed Committee on Alaska Energy Research and Development. MS. WEISSLER replied that Legislative Legal and Research Services commented that there may be an issue, but did not specifically say that there was. CHAIR ANDERSON asked for documentation from Legislative Legal and Research Services regarding this question. REPRESENTATIVE LYNN stated his understanding that the AEA currently manages 47 projects, and asked if this legislation would cause any conflicts with these. MS. WEISSLER answered that the intent of the legislation is to coordinate and bring all of these projects together. 4:42:57 PM BECKY GAY, Project Manager, Alaska Energy Authority (AEA), stated that the AEA's concerns regarding HB 335 relate to the duplication of efforts and statutory powers and the potential for conflicts of interest, particularly between the AEA's board of directors and the proposed Committee on Alaska Energy Research and Development. She explained that AEA's statutory powers include: equipping and improving power projects, waste energy [projects], energy conservation [projects], and alternative energy facilities and equipment. AEA's statutory powers also include loans for [alternative energy facilities and equipment]. To support these efforts, AEA projects and programs provide assistance for the development of safe, reliable, and efficient energy systems throughout Alaska that are sustainable and environmentally sound. Ms. Gay went on to say that these projects provide reduced electricity costs for residential and community facilities in rural Alaska and also increases the AEA's ability to respond quickly and effectively to electrical emergencies. MS. GAY stated that AEA's professional engineering and accounting staff allows AEA to focus on implementing commercially proven technology, including alternatives to diesel. The AEA partners with Arctic Energy Technology Development Laboratory (AETDL) based at the University of Alaska Fairbanks (UAF) for the research and development aspects of diverse areas such as fuel cells, energy storage, diesel efficiency, and the rural energy conference. She explained that the AETDL program is federally funded. MS. GAY, with regard to the potential conflicts of interest, stated that the members of the [proposed Committee on Alaska Energy Research and Development] would likely be drawn from the same pool of past and future AEA grantees. She added that AEA's powers are vested in its board of directors. The proposed legislation states that AEA "shall administer" the programs, but the [Committee on Alaska Energy Research and Development] shall provide oversight. She stated that this usurps statutory powers and responsibilities of the board, in addition to potentially causing management conflicts. She opined that if the proposed committee is responsible for developing regulations and AEA is required to adopt these regulations, this may violate due process protections if [in doing so] AEA is constrained from following the Administrative Procedure Act (APP). MS. GAY stated that AEA currently has a wide variety of energy initiatives, some of which are addressed in HB 335. These include: alternative energy source development and application, alternative energy resource assessment and data dissemination, and community and/or regional meetings on alternative energy options, among others. Ms. Gay noted that AEA is also an owner of large alternative energy assets for Alaska, including the Bradley Lake Hydroelectric Project near Homer and the Larson Bay Hydroelectric facility on Kodiak Island. She opined that the non-commercial research efforts suggested in the legislation may be better cultivated in an academic setting, such as the University of UAF, adding that this may enhance the combined efforts and lead to new technology applications for Alaska. 4:48:10 PM CHAIR ANDERSON opined that the intention of the new committee is not to replace the AEA, but rather to channel the direction towards alternative energy methods. MS. GAY, in response to questions from Chair Anderson, replied that upon review, the AEA feels that the committee would have broad powers with regard to its control over AEA's current programmatic efforts. She added that because there is no funding effort accompanying the legislation, it would be diluting AEA's efforts. REPRESENTATIVE LYNN inquired as to the possibility of private companies "filling in the gap." 4:50:46 PM PETER CRIMP, Project Manager, Alternative Energy and Energy Efficiency, Alaska Energy Authority (AEA), replied that it takes all kinds of assistance, adding that some projects are best addressed with commercial technologies and power utilities. He stated that hydroelectric is a "mature" technology that works. Technologies such as fuel cells, microturbins, and biodiesel require assistance from a University. 4:52:04 PM MR. CRIMP, in response to questions, replied that the AETDL is based at the UAF and is funded by the U.S. DOE's, and that AEA sits on the board that helps choose remote energy projects. REPRESENTATIVE ROKEBERG asked if this includes wind energy. MR. CRIMP replied that the AETDL currently receives most of it's funding from the DOE's fossil energy section. He opined that the AETDL would be better served if some of the funding came from the DOE energy efficiency and renewable energy funds, adding that this would give wider applicability in places where hydro, wind, and other renewable [energy sources] are being considered. REPRESENTATIVE ROKEBERG asked if members of Alaska's congressional delegation have been made aware of this. MR. CRIMP replied that a letter has been written. 4:53:52 PM REPRESENTATIVE LYNN asked if this program would be similar to those in the former Alaska Science and Technology Foundation (ASTF), and if so, why the legislature is "reviving" projects that the state previously decided were no longer "fit" to fund. MS. WEISSLER answered that the sponsor was not aware of the [ASTF] programs. She stated the sponsor's intent to look at what is currently happening and find a way to jump-start alternative energy development in the state. REPRESENTATIVE LYNN expressed his support for alternative energy and requested an answer to the previous question. CHAIR ANDERSON explained the process by which the ASTF was removed from the budget, and noted that HB 335 includes many of the same projects. REPRESENTATIVE ROKEBERG, referring to CS, asked if the language regarding "carbon credits" is completely removed from the bill. MS. WEISSLER replied that it is still included, and explained that there is a general belief that there will eventually be a national carbon [production] cap that the state may be able to take advantage of through carbon sequestration. REPRESENTATIVE ROKEBERG offered his understanding that the US is the only industrialized country that has stayed well below the carbon production cap listed in the "Kyoto treaty." 4:57:32 PM MEERA KOHLER, President and Chief Executive Officer (CEO), Alaska Village Electric Cooperative (AVEC), informed the committee that she is in support of HB 335. Acknowledging that the AEA has concerns regarding conflicts between the proposed Committee on Alaska Energy Research and Development and the AEA board, Ms. Kohler opined that the AEA board does not represent the interests needed to develop the regulations that will impact many [rural] Alaskan communities. She informed the committee that AVEC serves 44 percent of Alaska's village population and 52 villages throughout Alaska. In the last two years, AVEC has started to bring alternative energy sources to the communities they support, which is expensive and laborious; however, AVEC believes this needs to be done. She commented that HB 335 is a "pretty modest" attempt to offset the high costs of alternative energy development. Typically, wind energy costs $5,000-$6,000 per kilowatt, which is 5-6 times the cost of diesel generation. She explained that a 2 percent loan program has the potential to bring the $30,000 per year costs on a $300,000 project down to about $25,000 per year. She added that this is modest, but valuable and has the potential to bring up projects that may not occur otherwise. 5:00:48 PM REPRESENTATIVE GUTTENBERG asked if AVEC feels that not enough has been done regarding alternative energy. MS. KOHLER replied that a lot remains to be done, explaining that AEA is making good progress in assessing wind regimes that may yield alternative energy in rural Alaska, adding that this needs to be done in more of the state. She opined that this legislation will encourage this. With regard to development of alternative energy, she commented that this is usually done by the local utilities. REPRESENTATIVE ROKEBERG asked if AVEC would prefer the legislature to appropriate monies to the emergency fuel and rural fuel program or to an energy loan fund. MS. KOHLER answered that "in the best of all worlds" she would want both programs to be funded. CHAIR ANDERSON stated that there are many different concerns regarding HB 335 and suggested appointing a subcommittee. He asked Ms. Kohler if, in her opinion, there are any areas of the bill that would adversely affect AEA's ability. MS. KOHLER replied that she does not think so, and opined that it could be a "harmonious" relationship. She noted that AEA is not in the business of developing and installing alternative energy in rural Alaska, adding that this is an area that the utilities should be responsible for. CHAIR ANDERSON requested a more detailed analysis of the proposed CS from AEA, adding that he does not see a problem with moving the bill from committee. REPRESENTATIVE ROKEBERG expressed concern regarding a possible Alaska Industrial Development and Export Authority (AIDEA) fiscal note and stated that this legislation would take a "stand alone" appropriation [in the budget]. He opined that it may be more effective to "marry" AEA with the provisions in the bill and also use the UAF program. He commented that Alaska is a small state and so trying to finance multiple programs may result in competition for funding. REPRESENTATIVE CRAWFORD stated that he is a cosponsor of HB 335 and does not feel that the focus [in Alaska] has been on alternative energy sources, and HB 335 is intended to do this, especially in rural areas where the cost to generate diesel is high. He stated that this legislation was not meant to be in competition with [current programs], but rather be in addition to these programs. REPRESENTATIVE KOTT asked if there are any nuclear projects "springing up" in the state. MS. KOHLER replied that she is aware of one project proposed for Galena but is not sure how close it is to being permitted. She stated her understanding that the cost is being covered by Toshiba, which is one of the primary sponsors, and estimated the project start time to be several years away if the permit is granted. She noted that nuclear energy is not covered in HB 335. REPRESENTATIVE CRAWFORD moved to report the proposed CS for HB 335, Version 24-LS1354\I, Wayne, 2/1/06, out of committee with individual recommendations and the accompanying fiscal notes. 5:13:18 PM REPRESENTATIVE ROKEBERG objected. A roll call vote was taken. Representatives Kott, Guttenberg, Crawford, Lynn, LeDoux, and Anderson voted in favor of moving CSHB 335, Version 24-LS1354\I, Wayne, 2/1/06, out of committee. Representatives Rokeberg voted against it. Therefore, CSHB 335(L&C) was reported out of the House Labor & Commerce Committee by a vote of 6-1.
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