Legislature(1993 - 1994)
02/11/1993 03:00 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 50: AUTHORIZING POWER TRANSMISSION INTERTIES HB 51: APPROP: POWER TRANSMISSION INTERTIES Number 101 REP. MIKE NAVARRE, PRIME SPONSOR OF HB 50 AND HB 51, testified that he has long been a supporter of these bills. He also outlined the information in the packets the members had in front of them. CHAIRMAN HUDSON asked Rep. Navarre to go over the costs of the bill. Number 180 REP. NAVARRE answered that HB 51 was the appropriation bill for HB 50. He stated the appropriation would be approximately $90 million from the Alaska Energy Authority and the other $90 million would come from the Railbelt rate payers. The total cost of the project would be $180,000,000. CHAIRMAN HUDSON asked for the figures on the Sutton to Glennallen interties. REP. NAVARRE replied that it was a total of $40,000,000. He stated there is currently $117,000,000 in the Railbelt Energy Fund. Number 237 REP. BRIAN PORTER inquired if that figure included the interest accrued. REP. NAVARRE answered yes. REP. PORTER asked if the Sutton to Glenallen intertie funding would come from the Railbelt Energy Fund. REP. NAVARRE answered in the positive. He said he considered Glenallen to be part of the Railbelt. Rep. Navarre further noted the funding for any Southeast projects should come from the Four Dam Pool Fund. Number 264 DAN BLOOMER, EXECUTIVE STAFF ASSISTANT, CHUGACH ELECTRIC, testified in support of HB 50 and HB 51. He noted that the construction of these interties has been a priority to the electric utilities in the Railbelt since 1987 when the Railbelt Energy Council first recommended the projects to the legislature. Funding for these projects was first set aside in 1986 when the legislature created the Railbelt Energy Fund with the money left over from the Susitna project. MR. BLOOMER noted that the fund has been used over the years for a variety of projects not related to the Railbelt or energy. Number 300 MR. BLOOMER stated the electric utilities have offered to share in the cost of the intertie projects with the state. MR. BLOOMER noted that, although there has been some argument regarding the exact level of the benefits of these projects by the experts, the Alaska Energy Authority has concluded the benefits will exceed the cost of the project. MR. BLOOMER listed some of the expected benefits of the project: 1) increased reliability; 2) reduce the number and duration of transmission related power outages; 3) more energy to be delivered to areas experiencing power outages from unaffected areas; 4) transfer lowest cost energy available throughout the Railbelt grid to the place where it is needed, which will ultimately reduce the cost to the consumer; 5) utilities could share generation facilities and thus reduce costs by not having to build costly facilities; 6) utilities could share reserve capacity; and 7) reduce lose of energy through transmission from one point to another. MR. BLOOMER concluded by saying Chugach believes the projects to be solid; they have stood the test of economic analysis and will yield direct benefits for 3/4 of the state's population for the next 50 years. Number 373 CHAIRMAN HUDSON asked Mr. Bloomer how long the project was expected to take. MR. BLOOMER answered two to three years. Number 403 CHAIRMAN HUDSON asked how the utilities would fund their 50 percent of the project. MR. BLOOMER responded that bonding would go through the Alaska Energy Authority or Chugach would sell bonds on the open market and share that cost with the other utilities. CHAIRMAN HUDSON wondered if the Alaska Industrial Development Authority (AIDA) would play into the funding and if anyone from AIDA was present at the meeting. No response was heard from the audience. Number 414 REP. GREEN stated that this project seemed to have a lot of support and questioned why it had been delayed. He asked, What would happen if this legislature did not pass it, and is there any jeopardy with the funds if they are not used in the near future? MR. BLOOMER responded that eventually if this legislation is not passed the utilities will implement the project and the rate payers will have to pay double the amount. He further stated that the utilities are all nonprofit cooperatives or municipalities so there is no profit motive. (Rep. Mackie arrived at 3:35 p.m.) REP. NAVARRE added that at one time the fund was tapped for a number of non-energy related projects, which was the real danger of not using the money now for its stated use. REP. MACKIE asked if the sponsor would entertain a friendly amendment to include the Southeast intertie projects. Number 458 DAVE BURLINGAME, MANAGER OF POWER CONTROL FOR CHUGACH ELECTRIC, testified in support of HB 50 and HB 51. He stated that in many instances utilities are forced to maintain costly generation of power, not for load purposes, but as a hedge against outages. With the interties in place, the need for the above would go down and therefore the costs would also. CHAIRMAN HUDSON asked what was the capacity of the Bradley Lake project and what was the consumption level on the Kenai. MR. BURLINGAME answered that the peaking capacity of Bradley Lake was 120 megawatts and the consumption level of the Kenai was 84 megawatts. Number 570 REP. GREEN asked if this intertie would put the Soldotna generation unit on a standby or emergency position. MR. BURLINGAME answered that all the plants would be used to offset generation when needed, as opposed to being maintained just for reliability only. CHAIRMAN HUDSON asked that the record show Rep. Olberg joined the committee. Number 590 CLAYTON HURLESS, GENERAL MANAGER OF THE COPPER VALLEY ELECTRIC ASSOCIATION, testified on behalf of HB 50 and HB 51. Mr. Hurless stated that his concern over the years has been the extremely high rates the consumer pays. The consumers in his area pay some of the highest unsubsidized rates in the world. MR. HURLESS noted that, as a result of the high rates, economic development opportunities have been restrained. TAPE 93-10, SIDE B Number 000 CHAIRMAN HUDSON suggested that the committee would be aided by a schematic showing where the interties would be physically located. Number 100 GARY CROUSE, PRESIDENT OF THE BOARD OF DIRECTORS FOR THE MATANUSKA ELECTRIC ASSOCIATION, echoed the comments already on record. Number 219 JIM KOHLER, REPRESENTING THE SOUTHEAST CONFERENCE, supported interties and further noted that Southeast was in urgent need of the same. Mr. Kohler stated that the two things to have in order to develop and sustain economic development were transportation and power. Number 290 CHAIRMAN HUDSON asked Mr. Kohler for more information from the Southeast Conference. Number 298 BOB MARTIN, GENERAL MANAGER OF TLINGIT HAIDA REGIONAL ELECTRICAL AUTHORITY AND CHAIRMAN OF THE ALASKA ENERGY AUTHORITY, testified in support of HB 50 and HB 51. Mr. Martin stated that the National Energy Liability Council evaluated the current Railbelt system and found it to be inadequate, and with the proposed interties, to be marginal at best. MR. MARTIN reiterated many of the comments previously given. RON GARZINI, EXECUTIVE DIRECTOR OF THE ALASKA ENERGY AUTHORITY (AEA), asked the committee to take a look at the testimony of the commissioner of Commerce. Mr. Garzini stated he believed the concept of a low-interest loan with long-term payback would work well to fund the interties. The AEA was recommending that the legislature authorize the northern and southern interties. MR. GARZINI stated that the only difference between the AEA's proposal and the one before the committee was that there would be a $90,000,000 zero-interest loan to be paid back over 50 years. This is the difference between a direct grant and a loan with favorable terms. The money paid back then could be used to fund other projects. He stated the AEA also recommended that funds be set aside for the intertie between Sutton and Glennallen. MR. GARZINI informed the committee that the AEA was working with the Southeast Conference for the purpose of picking the most beneficial project, and they would like to reserve $40,000,000 for a zero-interest loan. Number 530 CHAIRMAN HUDSON inquired as to when the administration's energy bill would be available for review by the committee. MR. GARZINI replied that it was his understanding it was the highest priority in the Governor's office and should be out early next week. Number 561 REP. PORTER asked if it was the position of the administration that they were not supportive of HB 50 and HB 51. MR. GARZINI directed the committee to the commissioner of Commerce's statement, which in effect said that they supported the interties and the funding, but the administration wanted to see a broader energy program. CHAIRMAN HUDSON attempted to clarify the question by stating that in his opinion the committee was looking for any and all options laid before them that would accomplish the two interties. TAPE 93-11, SIDE A Number 010 CHAIRMAN HUDSON announced that he would hold the bills in committee and adjourned the meeting at 4:44 p.m.