Legislature(2003 - 2004)
04/15/2004 09:06 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 337(L&C)
"An Act relating to the powers of the Alaska Energy
Authority to make grants and loans, to enter into
contracts, and to improve, equip, operate, and maintain
bulk fuel, waste energy, energy conservation, energy
efficiency, and alternative energy facilities and
equipment; relating to the bulk fuel revolving loan fund;
relating to the Alaska Energy Authority's liability for the
provision of technical assistance to rural utilities;
relating to the Alaska Energy Authority's investment of the
power development fund; repealing the electrical service
extension fund; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken, noted that this legislation, which is sponsored
by Senate Rules by the Request of the Governor, pertains to the
powers of the Alaska Energy Authority and would amend statutory
provisions of the Authority's Energy Loan Program (ELP).
SARA FISHER-GOAD, Financial Analyst, Alaska Industrial
Development & Export Authority (AIDEA) and Alaska Energy
Authority (AEA), Department of Community and Economic
Development, testified via teleconference from an offnet site,
and stated that this legislation would allow the Power Project
Fund (PPF) to authorize loans for waste energy and energy
conservation, energy efficiency, and alternative energy
facilities and equipment.
Co-Chair Wilken noted that Members' packets contain an AIDEA/AEA
letter [copy on file] dated March 16, 2004 and addressed to the
Committee co-chairs, that outlines the projects affected by this
legislation.
Ms. Goad stated that the changes proposed to the PPF would
expand the definition of eligible energy efficiency projects in
order to include projects such as lighting retrofits. She also
noted that the bill would repeal the Loan Committee that
approves the PPP loans and incorporate the credit approval
process that includes an appeal process to the Board of
Directors, as currently utilized by AIDEA.
Ms. Goad stated that another program affected by the legislation
would be the Bulk Fuel Revolving Loan Fund (BFRLF) that provides
"short-term loans to assist small rural communities in
purchasing annual bulk fuel supplies." She qualified that while
the Department of Law recently interpreted the definition of
eligible borrowers to be communities and private individuals,
the bill would allow funds to be provided to other entities such
as corporations, cooperatives, and joint ventures. This
expansion, she attested would "not expand the definition of
eligible borrower beyond the long-standing interpretation and
practice that included other entities such as corporations."
Ms. Goad noted that while AEA has been investing the Power
Development Fund since 1993, this bill would affirm its ability
to do so by, with the concurrence of the Department of Revenue,
providing AEA with the necessary statutory authority. She
pointed out that all earnings of the Fund are remitted to the
State's general fund.
Ms. Goad noted that this bill would clarify AEA's general power
of authority to issue grants and contracts in that, "as acting
as an agent for rural communities, AEA manages power projects,
bulk fuel projects and alternate energy projects." She noted
that AEA receives and expends federal funds from entities such
as the Denali Commission and the US Department of the Energy
through the State's appropriation process.
Ms. Goad also stated that the bill "clarifies that AEA's
statutory mandate to provide technical assistance may not be
used as an independent basis for tort liability against AEA."
However, she noted that, "AEA would continue to be liable for
negligence if it fails to use reasonable care in the providing
the technical assistance."
Ms. Goad stated that the bill would also repeal the inactive
Electrical Service Extension Fund. She urged the Committee to
act favorably in regard to this bill.
Co-Chair Wilken noted that the repealing language regarding the
Electrical Service Extension Fund is located on page seven,
Section 12, of the bill. Furthermore, he noted that the Fund
money, amounting to approximately $85,000, would be transferred
to the general fund.
Senator Dyson asked whether "changing lighting systems" would
qualify as an energy efficiency project.
JIM MCMILLAN, Deputy Director, Credit and Business Development,
Alaska Energy Authority, Department of Community and Economic
Development, testified via teleconference from an offnet site,
and responded that, while projects of this nature have been
denied in the past, this bill would allow for retrofitting of
lighting to save energy costs to qualify for the PPF program.
Senator Dyson understood therefore that transitioning "from
incandescent lighting to something with a better power factor"
would be allowed.
Senator Olson asked for further information regarding the
repealing of the Bulk Fuel Revolving Fund, AS 42.45.250(l)(1),
as specified in the bill in Section 11, on page seven, line ten;
specifically as this might affect bulk fuel storage facilities
that store in excess of 10,000 gallons of fuel.
Mr. McMillan responded that the intent of this language is to
"clean up" State statutes as the definition of "bulk fuel
storage facility" is not included anywhere in State statutes. He
stressed that repealing the section would not have any affect on
the program's operation.
Senator Olson asked whether a minimum of 10,000 gallons of fuel
must be purchased in order to quality for the Loan program.
Mr. McMillan responded in the negative.
MIKE HARPER, Deputy Director - Rural Energy, Alaska Industrial
Development & Export Authority, Department of Community and
Economic Development, testified via teleconference from an
offset site to state that this legislation "is fairly straight
forward" and would provide the Authority "with the ability to
move forward and to carry out" the Loan Program's mission for
"building projects in rural Alaska."
Senator Bunde shared that he had heard from a fuel storage
constituent who operates in Western Alaska and who had shared
that there is a strong business interconnection between Western
Alaska and Central Alaska. He stated that these fuel sales are
important and are a priority in that, due to weather and being
required to ship via barge, the fuel must be shipped before the
onset of winter. On another note, he mentioned that another
person, who was having difficulty in paying for fuel, wrote a
letter saying that paying for his fuel would jeopardize his
cable, as it would be shut off if he did not pay that bill.
Senator Dyson noted that, in the past, he had conducted waste-
heat recovery studies in approximately fifteen villages in
Western Alaska, and he concluded that efforts to improve energy
situations by utilizing such things as power plants waste heat
to heat schools, is a "win-win situation." Therefore, he spoke
to his conflict of interest and stated that he has "a lot of
enthusiasm for what's being done."
Senator Dyson moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
There being no objection, CS SB 337(L&C) was REPORTED from
Committee with zero fiscal note #1, dated December 18, 2003 from
the Department of Revenue, and zero fiscal note #2, dated
February 3, 2004, from the Department of Community and Economic
Development.
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