Legislature(1993 - 1994)

02/11/1993 03:00 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                              
  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                                                                   
  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                        
  MR. BLOOMER noted that the fund has been used over the years                 
  for a variety of projects not related to the Railbelt or                     
  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                      
    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                                                                   
  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                       
  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                                                                   
  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                                                                   
  MATANUSKA ELECTRIC ASSOCIATION, echoed the comments already                  
  on record.                                                                   
  Number 219                                                                   
  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                                                                   
  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.                 
  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                   
  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.                             

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