Legislature(2009 - 2010)BELTZ 211
02/27/2009 11:00 AM Senate ENERGY
| Audio | Topic |
|---|---|
| Start | |
| SB31 | |
| HCR2|| HCR3|| HCR4|| HCR5 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 31 | TELECONFERENCED | |
| + | HCR 2 | TELECONFERENCED | |
| + | HCR 3 | TELECONFERENCED | |
| + | HCR 4 | TELECONFERENCED | |
| + | HCR 5 | TELECONFERENCED | |
SB 31-GEOTHERMAL ELEC. PROD. TAX CREDIT
CHAIR MCGUIRE announced the consideration of SB 31.
SENATOR WIELECHOWSKI moved to adopt the proposed committee
substitute (CS) to SB 31, labeled 26-LS0217\W, as a working
document.
SENATOR STEDMAN objected for the purpose of discussion.
TREVOR FULTON, Staff to Senator McGuire, said the CS to SB 31
changes the amount of the tax credit from 0.35 cents per
kilowatt hour to 2.1 cents. The bill is based on Utah's tax
credit, and he spoke with someone from there who told him that
0.35 cents was insignificant. The industry told him the same
thing. The credit now matches the federal credit. The CS limits
eligibility only to projects placed into service after January
1, 2010. Steve Haagenson of AEA (Alaska Energy Authority) noted
that if the credit were applied to current hydro projects,
Bradley Lake alone would cost the state $133 million. The third
change was to cap the amount of the tax credit to 20 percent of
capital investment on a given project. This was in response to a
concern by the tax division. The language is borrowed from
existing oil and gas tax credits. In order to get the bill to
function as envisioned, there needs to be a certificate issued
by the department to an eligible party that could be sold or
transferred in the open market.
11:15:18 AM
MR. FULTON said the fifth change was in response to another tax
division concern. There was a situation where a power producer
could double dip with the federal tax credit "that the state co-
ops, to the tune of 18 percent of that production tax credit. So
if we had our tax credit created by SB 31 in statute, and the
existing federal 18 percent of the federal tax credit in
statute, then there's the possibility for an entity to double
dip on that. We made changes to the bill and to existing statute
that addresses that federal PTC." The CS has a sunset clause of
January 1, 2025, which coincides with the governor's goal of
using 50 percent renewable energy.
11:16:29 AM
SENATOR STEDMAN asked for clarification on the Dorothy Lake
issue. He asked the status of the hydro energy sources.
CHAIR MCGUIRE said the tax division was concerned about the lost
revenue to the state. Hydro is included in the bill because it
is the main source of alternative energy in Southeast, but any
project in operation prior to 2010 will not be included.
SENATOR STEDMAN suggested clearing up expansions to these
projects. Dorothy Lake may have a second phase to increase its
production capabilities. There are other existing hydro sites
that may want to add additional turbines, raise dam levels, or
make other enhancements. It appears that this would exclude all
hydro projects in service, which would exclude expansions.
11:18:46 AM
CHAIR MCGUIRE said she shares those concerns. There are issues
of fairness. "Why should we be more favorable to individuals who
put in to place alternative energy today and seemingly punitive
to those who had the foresight to put them in years ago?" The
tax division was concerned about Bradley lake.
SENATOR WIELECHOWSKI asked about a fiscal note.
MR. FULTON said the fiscal note is indeterminate.
SENATOR WIELECHOWSKI said this issue can be worked on in the
Senate Resources Committee.
11:20:08 AM
CHAIR MCGUIRE said the effects of the incentive won't be known.
She hopes that the tax credit incentivizes many projects. It
will reduce the state share, but it is difficult to put a dollar
amount on it. Starting the credit in 2010 minimizes the loss of
state revenues for projects that were easy to quantify. It does
create an unlevel playing field. The division can give more
testimony in the Senate Resources committee, but the fiscal note
will likely remain indeterminate.
SENATOR STEDMAN removed his objection to adopting the CS.
Therefore, Version W was before the committee.
11:21:34 AM
SENATOR STEDMAN moved Amendment 1 to strike the language on page
1, line 14, and on page 2, line 1, "to be further worked on in
the next committee of referral."
SENATOR WIELECHOWSKI said this can be discussed in the next
committee, but he is concerned that by taking that language out,
"then we're talking probably hundreds of millions of dollars in
tax credits." He said he won't object because the bill is
referred to other committees. Senator Stedman raises valid
concerns about expansions. Expansions should be encouraged, but
it will cost the state hundreds of millions of dollars for
things that were done 20 or 30 years ago.
SENATOR STEDMAN said he agrees about not looking back in time,
but it will give the legislature the ability to target future
expansions and upgrades of existing systems.
11:22:52 AM
CHAIR MCGUIRE heard no objection, so Amendment 1 was adopted.
CLAY KOPLIN, Cordova, said the new credit amount is much more
aligned with industry standards and offers a real incentive.
There are several renewable energy projects in the pipeline for
2009, so he suggested that January 2010 should be the first
eligible tax credit date. That would benefit some of the
projects that are constructed before the end of the year.
CHAIR MCGUIRE asked what projects are in the works.
11:24:52 AM
MR. KOPLIN said he will put a list together.
CHAIR MCGUIRE said she hopes this bill will truly incentivize
alternative energy in Alaska.
SENATOR WIELECHOWSKI moved to report the CS to SB 31 as amended
from committee with individual recommendations and attached
fiscal note(s). There being no objection, CSSB 31(ENE) passed
out of committee.
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