Legislature(2005 - 2006)CAPITOL 17
03/06/2006 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB445 | |
| HB392 | |
| HB51 | |
| HB424 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 445 | TELECONFERENCED | |
| + | HB 392 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 51 | TELECONFERENCED | |
| += | HB 424 | TELECONFERENCED | |
HB 445-ALTERNATIVE ENERGY GRANT FUND ACTING CHAIR ROKEBERG announced that the first order of business would be HOUSE BILL NO. 445, "An Act relating to the alternative energy grant fund and to alternative energy grants." REPRESENTATIVE GUTTENBERG made a motion to adopt CSHB 445, Version 24-LS1311\L, Cook, 2/24/06, as the working document. There being no objection, Version L was before the committee. REPRESENTATIVE BILL THOMAS, Alaska State Legislature, Sponsor of HB 445, informed the committee that HB 445 would take [$0.10] per barrel of oil and place it into an alternative energy fund, which is estimated to generate around $30 million per year. He said that the funds would be taken out only when oil prices are at $35 per barrel or higher. He explained that the Alaska Energy Authority (AEA) would manage the fund and administer grants of up to $20 million to power utilities who have shown a need. In addition, he said, the [utilities] would be required to secure matching funds equal to 25 percent of the grant. He stated that the priority would be given to those areas which experience higher costs of fossil fuels. He said that "alternative energy" means a system which produces energy and is not dependant on fossil fuel; however, natural gas is acceptable, as some rural communities have small gas fields they may be able to "tap into" in order to generate electricity. He explained that an "electric utility" is an entity which provides power for public consumption. REPRESENTATIVE THOMAS went on to explain that Yakutat uses around 1 million gallons of diesel per year. He pointed out that ConocoPhillips Alaska, Inc. has gas wells nine miles from Yakutat. Therefore, if the funding were available, [the community of Yakutat] would be able to run a gas line into town to run the generators. He said that in addition to Yakutat, there are many other areas needing assistance. He stated that if an area has additional projects, it would be able to submit additional grant applications. He added that this would help to create jobs throughout Alaska. He mentioned that he represents many fishing communities in the state. He then opined that the high cost of electricity negatively affects the amount of money that comes back to the state. In regard to the alternative energy grant fund, he said that this would free up [power cost equalization] funds which can then be used for areas that are still reliant on fossil fuel. In conclusion, Representative Thomas said that the alternative energy grant fund would help stimulate the economy in rural communities, in addition to ending the dependence on fossil fuels. 3:50:43 PM REPRESENTATIVE GUTTENBERG noted that in Version L, page 2, the definition of "alternative energy project" removes the reference to "nuclear fuel". He asked if this is the only change. REPRESENTATIVE THOMAS replied yes, and noted that "nuclear fuel for the supply of energy" was replaced with "other than natural gas for the supply of energy." REPRESENTATIVE LEDOUX asked if the legislature is required to appropriate money for the alternative energy grant fund. REPRESENTATIVE THOMAS said that although the legislature may appropriate the amount calculated by the Department of Revenue, the bill does not create a dedicated fund. REPRESENTATIVE LEDOUX asked why there is a fiscal note if there is not a dedicated fund. 3:52:04 PM KACI SCHROEDER-HOTCH, Staff to Representative Thomas, Sponsor, explained that the fiscal note estimates the amount of funds that would be available for grants, if the legislature decided to appropriate the funds. ACTING CHAIR ROKEBERG asked if there is a fiscal note from the Department of Natural Resources or the Department of Revenue regarding the $0.10. REPRESENTATIVE THOMAS replied no, and added that the AEA has stated that, at this time, it would not cost AEA any additional funds to run the grant system. ACTING CHAIR ROKEBERG remarked that this bill would lower [the states] revenue by $30 million a year, yet does not have a fiscal note. REPRESENTATIVE THOMAS agreed that there is a cost to the program. 3:54:09 PM CHRIS ROSE, Executive Director, Renewable Energy Alaska Project (REAP), explained that the REAP is a statewide coalition of large and small utility companies, conservation groups, and Native organizations which share the same goal of increasing the production of renewable energy in the state. He said that the REAP believes that HB 445 is a "great start" toward more energy production in the state, adding that Alaska is one of 15 states in the country that does not have a renewable energy policy. He opined that [establishing an alternative energy grant fund] would be policy statement that the state can make in order to begin providing incentives to increase the production of renewable energy. He said that Alaska has some of the best sources of renewable energy resources in the country. MR. ROSE said that by providing an incentive for renewable energy production, the state will be attracting technology and knowledge-based workers to the state. In addition, he said, there are over 200 villages in the state that are reliant on diesel, and as the price of oil continues to rise, these villages will continue to have a problem meeting the basic needs. He stated that there are many projects throughout the state which would be helped by this legislation. MR. ROSE went on to say that Alaska has the opportunity to become a world leader in renewable energy. He stated that several villages are experimenting with wind-diesel technology, adding that it is "working very well." He opined that this technology could be exported to the world. In regard to including natural gas, he said that the REAP is focused on wind, geothermal, biomass, ocean power, and hydro-electric. He opined that the language regarding project eligibility could be strengthened. He said that the REAP would also like to suggest amending the bill to include loans and production credits, which it believes would be a good vehicle to get these projects up and running. [Representative Rokeberg passed the gavel to Representative Kott.] 3:58:21 PM CONNIE FREDENBERG, Natural Resources Coordinator, Aleutian Pribilof Islands Association, informed the committee that she would be speaking on her own behalf. She said that she would like to echo the previous testimony. She stated that while this legislation is a good start, she would like to see more included in the bill, such as a renewable portfolio standard, which currently exist in 22 other states. In regard to PCE, she surmised that there may be a way to "tweak" it so that it provides more incentive to develop renewable energy. Ms. Fredenberg went on to say that she believes that AEA should have more guidance during the selection process, adding that it may be helpful to include members from rural Alaska on the selection committee. 4:00:28 PM GREG KINGSLEY, Planning Commission, Lake and Peninsula Borough, explained that the borough has been working on setting up generators in two villages, along with anemometer studies. Furthermore, the borough has been working for the last three years to receive state and federal funding, which has been difficult to acquire. He expressed agreement with the previous testimony. He stated that addressing the high cost of energy is the borough's top priority. He said that the borough is paying $4.10 per gallon for heating oil. He stated that the borough is at risk of losing valuable infrastructure. He explained that [Pilot Point] school enrollment is down to 10 [students]. Moreover, there are four or five villages in the borough that are "about ready to go under" due to the high price of fossil fuel. He added that when schools shut down, the entire village shuts down, which affects the entire region. 4:02:25 PM REPRESENTATIVE THOMAS, in response to an earlier question, stated that he would look into the renewable portfolio standard provided by other states, and added that he has been working with AEA and REAP. He stated that in the past, the Denali Commission has funded these projects with federal monies, and opined that the Congressional Delegation is hopeful that the state will "step up to the plate." He reiterated that this bill would use AEA, which is already in place, and would not cost additional funds. REPRESENTATIVE GUTTENBERG asked why the grants are limited to electric utilities. He surmised that there may be situations when [the city] may have a viable project in which the utility is not interested. REPRESENTATIVE THOMAS replied that the bill is intended to assist those municipalities which are in need of assistance with the price of fuel. REPRESENTATIVE GUTTENBERG expressed concern with the definition of "electric utility," as follows: (2) "electric utility" means a corporation, whether public, cooperative, or otherwise, company, individual, or association of individuals, their lessees, trustees, or receivers appointed by a court, that owns, operates, manages, or controls a plant or system for furnishing, by generation, transmission, or distribution, electrical services to the public for compensation. REPRESENTATIVE LEDOUX asked if the bill would require an appropriation in the operating budget. REPRESENTATIVE THOMAS replied that it would require an appropriation each year, although it may not be the same amount each year. REPRESENTATIVE LEDOUX asked if the appropriation is required. REPRESENTATIVE THOMAS replied no. REPRESENTATIVE LEDOUX asked if the bill would require a fiscal note once the money is appropriated. REPRESENTATIVE THOMAS said yes. 4:07:01 PM RON MILLER, Executive Director, Alaska Industrial Export & Development Authority (AIDEA) and Alaska Energy Authority (AEA), Department of Commerce, Community, & Economic Development, said that the bill takes a "straight-forward" approach in establishing a grant program within the AEA. He said that as funds are appropriated, the AEA would incorporate the alternative energy program and funds into the alternative energy and energy efficiency assistance plan, as required under the current regulations. He stated that, if HB 445 were to pass, the AEA would solicit a request for proposals based on the criteria established in the bill. He stated that this criteria is similar to the AEA's Energy Cost Reduction Program, which is funded by the Denali Commission. He stated that this program selects projects based on life cycle savings. 4:09:02 PM SARAH FISHER-GOADE, Alaska Energy Authority (AEA), Department of Commerce, Community, & Economic Development, in response to a question, explained that the fiscal note reflects the amount that would be available for appropriation through the mechanism provided in HB 445. She opined that there would be an annual appropriation requested to provide the fund transfer to the alternative energy grant fund. 4:09:41 PM ACTING CHAIR KOTT closed public testimony. 4:09:58 PM REPRESENTATIVE CRAWFORD expressed that he has an active interest in finding jobs and "new hope" for Alaskans. He opined that there is much potential in renewable energy, especially in rural Alaska. He stated that this bill is making an effort to work for the future of the state, more jobs for Alaskans, and additional opportunity. He said, "I support this wholeheartedly." REPRESENTATIVE GUTTENBERG said that while he is supportive of the bill, he remains concerned regarding local utilities putting effort into coming up with a grant proposal only to have the legislature not appropriate the money. He said "I hope that if we do pass this ... we follow through with it [by] funding projects that come before us." ACTING CHAIR KOTT referring to page 2, line 3, asked for more information regarding the determination of whether a project is "economically viable." PETER CRIMP, Program Manager, Alternative Energy and Energy Efficiency, Alaska Energy Authority (AEA), Department of Commerce, Community, & Economic Development, said: We perform a life-cycle analysis of the status quo, which is ... generally ... diesel usage. Then [we] compare the cost of [diesel usage] to the cost of the proposed projects, including the initial capital costs, the [operation, maintenance, and fuel] costs. We ... bring that back to a net present value of savings. In the Energy Cost Reduction program that [Mr. Miller] mentioned, we rank the projects based on their benefit to cost ratio and select the projects that way. ACTING CHAIR KOTT, referring to page 2, lines 6-8, asked if Anchorage would be used as the base for comparison of fossil fuel costs. MR. CRIMP opined that if this portion of the bill is removed, this would still favor the selection of projects in rural areas, as the cost of diesel is higher. He said that the AEA has found the savings to be greater in rural areas due to the cost of diesel. He stated that if the use of diesel can be avoided by using hydroelectric, this is "way ahead," and added that this could be detailed in regulations. ACTING CHAIR KOTT asked if the sponsor would be amenable to removing the aforementioned language. 4:14:54 PM REPRESENTATIVE THOMAS replied that this would be fine. ACTING CHAIR KOTT opined that the AEA would use Anchorage area costs, as no other area has lower fossil fuel costs. REPRESENTATIVE GUTTENBERG opined that if, in a given year, there were no other grant requests other than in Anchorage, the money could be used in Anchorage. REPRESENTATIVE THOMAS stated that rural projects are typically $6-$8 million versus the higher costs for larger projects. He stated that the intent was not to use Anchorage as the base for costs. ACTING CHAIR KOTT said that he understands the intent and noted that the bill would not be amended. 4:16:36 PM REPRESENTATIVE CRAWFORD moved to report CSHB 445, Version 24- LS1311\L, Cook, 2/24/06, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 445(L&C) was reported from the House Labor and Commerce Standing Committee.
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