Legislature(2021 - 2022)SENATE FINANCE 532

03/17/2022 09:00 AM Senate FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Invited & Public Testimony --
Heard & Held
-- Invited & Public Testimony --
<Removed from Agenda>
+ Bills Previously Heard/Scheduled TELECONFERENCED
SENATE BILL NO. 202                                                                                                           
     "An Act relating to the renewable energy grant fund                                                                        
     and recommendation program; and providing for an                                                                           
     effective date."                                                                                                           
9:54:50 AM                                                                                                                    
Co-Chair Bishop relayed that it  was the first hearing of SB
202.  It  was  the  committee's intention  to  hear  a  bill                                                                    
introduction and  a Sectional Analysis,  and to  take public                                                                    
9:55:09 AM                                                                                                                    
SENATOR JOSH  REVAK, SPONSOR, read from  a Sponsor Statement                                                                    
(copy on file):                                                                                                                 
     SB  202  extends  the authorization  of  the  Renewable                                                                    
     Energy Grant Fund and  Recommendation Program setting a                                                                    
     new sunset date of June 30, 2033.                                                                                          
     The Renewable Energy Fund  (REF) program was originally                                                                    
     established in 2008 with the  passage of House Bill 152                                                                    
     and  later received  a ten-year  extension in  2012, in                                                                    
     both   cases  receiving   a  unanimous   vote  of   the                                                                    
     legislature. The  REF is managed  by the  Alaska Energy                                                                    
     Authority in coordination  with a nine-member Renewable                                                                    
     Energy Fund Advisory Committee.                                                                                            
Senator  Revak  explained  that  the  program  had  an  open                                                                    
application  process and  was currently  in  Round 14.  Each                                                                    
submission  was considered  by  its  economic and  technical                                                                    
feasibility.   The    Alaska   Energy    Authority's   (AEA)                                                                    
recommendations  were sent  to the  advisory committee,  and                                                                    
its final recommendations were then  sent to the legislature                                                                    
for approval.  He noted that  39 applications  were received                                                                    
in the  last round.  He continued to  read from  the Sponsor                                                                    
     Since  its inception,  the  Renewable  Energy Fund  has                                                                    
     distributed over  $275 million  dollars in  grant funds                                                                    
     for  qualifying  and competitively  selected  renewable                                                                    
     energy projects across the state.                                                                                          
Senator Revak  detailed that $34  million had  been directed                                                                    
at  projects on  the road  belt, and  $248 million  had been                                                                    
directed to projects  in rural Alaska. He  continued that SB
202  amended the  2008 session  law  as amended  in 2012  to                                                                    
extend the  sunset date to  June 30,  2033, and also  set an                                                                    
immediate  effective  date.  The  bill had  a  $1.4  million                                                                    
fiscal  note   for  maintenance   of  the   fund,  financial                                                                    
services,  and oversight  of existing  and  new grants.  The                                                                    
amount  reflected  what  was  budgeted  for  in  FY  23.  He                                                                    
continued to address the Sponsor Statement:                                                                                     
     These  REF  grants  have   been  supplemented  by  both                                                                    
     federal and  local funding to  the tune of  hundreds of                                                                    
     millions  of  dollars.  These combined  funds  help  to                                                                    
     stabilize  and reduce  energy  costs  for consumers  by                                                                    
     supporting renewable energy projects  in both urban and                                                                    
     rural communities across Alaska.                                                                                           
Senator Revak  emphasized that as energy  prices climbed, he                                                                    
thought it  was important  for Alaska  to take  advantage of                                                                    
all of its available sources  of energy and heat, especially                                                                    
in the  state's most  vulnerable communities.  He summarized                                                                    
that the Renewable  Energy Grant Fund was  an important tool                                                                    
which  supported Alaskan  communities to  meet their  energy                                                                    
Senator  Revak explained  that there  was invited  testimony                                                                    
available to answer questions, and  there was a presentation                                                                    
that  had been  distributed to  members (copy  on file).  He                                                                    
noted that  because of  the REF Program,  there had  been 30                                                                    
million gallons of diesel saved since 2008.                                                                                     
Senator Wilson  shared that he  was generally  supportive of                                                                    
the  program  and its  process  for  selecting projects.  He                                                                    
included that  he was  currently a  member of  the Renewable                                                                    
Energy Advisory Committee along with Senator von Imhof.                                                                         
9:58:51 AM                                                                                                                    
Co-Chair Bishop OPENED public testimony.                                                                                        
9:59:01 AM                                                                                                                    
JERRY  MEDINA, INSIDE  PASSAGE ELECTRIC  COOPERATIVE, JUNEAU                                                                    
(via teleconference),  testified in support of  the bill. He                                                                    
shared that  the Inside Passage Electric  Cooperative (IPEC)                                                                    
had  received two  construction  grants from  REF. In  2015,                                                                    
IPEC  completed a  hydroelectric  project  at Gartina  Falls                                                                    
outside of Hoonah. The REF  grant amount was $6,694,000, and                                                                    
the remainder  was financed with  a low-interest loan  of $3                                                                    
million. The project was completed  in August 2015. He cited                                                                    
the  following  figures  since   the  project  came  online:                                                                    
542,711 gallons  of diesel fuel saved,  $1,297,979 of diesel                                                                    
fuel costs replaced, and 7,910,266  kilowatt hours of hydro-                                                                    
Mr.  Medina informed  that IPEC  had also  received a  grant                                                                    
from REF in  the amount $3,920,000, as well as  a $3 million                                                                    
USDA Rural  Utilities Service grant for  construction of the                                                                    
Gunnuk  Creek  hydro  project in  Kake.  Additionally,  IPEC                                                                    
secured  a  low-interest  loan of  $1,840,000  for  a  total                                                                    
project  cost of  $8,760,000. The  project was  completed in                                                                    
October  2020.  He cited  the  following  figures since  the                                                                    
project came  online: 70,833 gallons  of diesel  fuel saved,                                                                    
$165,350  of  diesel  fuel  costs  replaced,  and  1,003,122                                                                    
kilowatt hours  of hydro-generation. He detailed  that there                                                                    
had  been  several days  in  Kake  with 100  percent  hydro-                                                                    
generation, where diesel generators had been off.                                                                               
Mr. Medina  continued his testimony. He  cited the following                                                                    
figures  resulting from  a combination  of  the projects  at                                                                    
Gartina Falls  and Gunnuk Creek:  613,544 gallons  of diesel                                                                    
fuel   saved,  resulting   in  $1,463,329   in  savings   to                                                                    
customers. He  summarized that REF had  been instrumental in                                                                    
completing  two successful  clean renewable  energy projects                                                                    
for IPEC  customers. He  shared that IPEC  had "skin  in the                                                                    
game" for both  projects. He emphasized that  the success of                                                                    
the projects would not have been possible without REF.                                                                          
10:01:37 AM                                                                                                                   
Co-Chair  Stedman   thought  there  were  several   ways  of                                                                    
measuring the  REF Program, one  of which was  fuel savings.                                                                    
He wanted to  know if the meter rate for  the communities of                                                                    
Kake  and  Hoonah  had  gone  down or  up  since  the  hydro                                                                    
projects had been operational.                                                                                                  
Mr. Medina  explained that  IPEC had the  same rate  for all                                                                    
four of  its service areas.  He discussed the  fuel savings,                                                                    
which was reflected in the  Cost of Power Adjustment (COPA),                                                                    
which was a fuel surcharge  that was currently just over .15                                                                    
cents per  kilowatt hour. He  explained that as  fuel prices                                                                    
fluctuated, the  COPA fluctuated  in the same  direction. He                                                                    
recalled  that  the  latest  invoice  from  the  fuel  barge                                                                    
reflected $4.22 per  gallon after recently being  at a price                                                                    
of just over  $3 per gallon. He hoped that  there would be a                                                                    
significantly  wet year  to generate  as much  hydropower as                                                                    
Co-Chair Stedman understood that the  meter rate in Kake had                                                                    
gone up after the hydro-project.                                                                                                
Mr.   Medina   thought   Co-Chair  Stedman   had   incorrect                                                                    
Co-Chair  Stedman  shared  that his  information  came  from                                                                    
community  leaders in  Kake, including  from  city hall.  He                                                                    
asked  Mr. Medina  to get  back to  the committee  with more                                                                    
detailed  information   regarding  historical   meter  rates                                                                    
charged  to citizens.  He shared  concerns regarding  losing                                                                    
sight  of the  goal of  lowered  rates as  the state  worked                                                                    
towards renewable  energy and  moving away  from the  use of                                                                    
Mr.  Medina  reiterated that  all  customers  paid the  same                                                                    
amount. He  thought all of IPEC's  customers benefitted from                                                                    
the hydro projects.                                                                                                             
Co-Chair Bishop  asked Mr. Medina  to provide  the committee                                                                    
with the information requested by Co-Chair Stedman.                                                                             
10:04:42 AM                                                                                                                   
MICHAEL ROVITO,  DEPUTY DIRECTOR, ALASKA  POWER ASSOCIATION,                                                                    
ANCHORAGE  (via teleconference),  spoke  in  support of  the                                                                    
bill. He  explained that the Alaska  Power Association (APA)                                                                    
was a statewide trade  association for electric utilities in                                                                    
Alaska. He relayed that APA was  in full support of the bill                                                                    
and of extending  the REF. He strongly urged  passage of the                                                                    
bill and thanked the sponsor.  He asserted that many members                                                                    
had received  crucial funding from REF  since its inception.                                                                    
He continued  that the funds  had supported the  addition of                                                                    
renewable  energy  projects  that had  lowered  reliance  on                                                                    
diesel  fuel, stabilized  rates,  and  decreased the  carbon                                                                    
footprint of electric generation.                                                                                               
Mr. Rovito continued his testimony.  He cited 244 REF grants                                                                    
totaling $275  million, and over 95  operating projects that                                                                    
had been built using the funds  to save more than 30 million                                                                    
gallons of  diesel each  year. He asserted  that REF  was an                                                                    
extremely  valuable  program  that  had  proven  itself.  He                                                                    
referenced numerous projects  under consideration for future                                                                    
rounds of grant funding through REF.                                                                                            
10:06:35 AM                                                                                                                   
JOMO   STEWART,  PRESIDENT   AND  CEO,   FAIRBANKS  ECONOMIC                                                                    
DEVELOPMENT  CORPORATION,  FAIRBANKS  (via  teleconference),                                                                    
testified  in support  of  the bill.  He  asserted that  the                                                                    
Fairbanks Economic  Development Corporation (FEDC)  had long                                                                    
supported  the REF  Program and  any state  efforts to  help                                                                    
communities to  diversity their energy  base and  drive down                                                                    
costs. He  mentioned that much  of FEDC's work  pertained to                                                                    
energy  and the  attempt to  diversify energy.  He though  a                                                                    
nice  complement to  the REF  Program would  be to  identify                                                                    
funding to  help reactivate the  Home Energy  Rebate Program                                                                    
that  had  been  operated  by  the  Alaska  Housing  Finance                                                                    
Corporation (AHFC).                                                                                                             
Co-Chair Bishop  thanked Mr. Stewart  and affirmed  that the                                                                    
committee  was looking  into the  topic of  the Home  Energy                                                                    
Rebate Program as of two weeks previously.                                                                                      
10:08:04 AM                                                                                                                   
Co-Chair Bishop CLOSED public testimony.                                                                                        
10:08:06 AM                                                                                                                   
AT EASE                                                                                                                         
10:09:17 AM                                                                                                                   
Senator Wielechowski asked if Mr.  Thayer had a sense of how                                                                    
many successful REF  projects there were as  compared to the                                                                    
number of abandoned projects.                                                                                                   
CURTIS THAYER, EXECUTIVE  DIRECTOR, ALASKA ENERGY AUTHORITY,                                                                    
ANCHORAGE  (via teleconference),  cited that  there were  99                                                                    
operational projects, with 38  in development and 240 total.                                                                    
There had been a little less  than 100 projects that had not                                                                    
gone forward, part of which was  due to the economics of the                                                                    
projects or  future funding for  the costs of  the projects.                                                                    
He added  that there were  a few projects  currently seeking                                                                    
additional   funding,   primarily    through   the   federal                                                                    
infrastructure   bill   or   other   means.   He   discussed                                                                    
feasibility work, which had to  be complete in order to move                                                                    
projects forward. He noted that  early in the program itself                                                                    
there was more funding  available, while currently there was                                                                    
the ongoing challenge of a $1 million funding cap.                                                                              
Senator Wielechowski  inquired about  the 100  projects that                                                                    
had  not gone  forward and  asked what  percentage had  been                                                                    
abandoned versus projects still in development.                                                                                 
Mr. Thayer did not have  the information at hand. He offered                                                                    
to  send  the committee  a  complete  list of  projects  and                                                                    
project status.                                                                                                                 
Senator Wielechowski expressed his  continued support of the                                                                    
REF  Program and  thought it  had been  very successful.  He                                                                    
wanted  to get  a  sense of  if there  was  something to  be                                                                    
improved if the state had  invested in projects that had not                                                                    
gone forward.                                                                                                                   
Senator Wielechowski asked if the REF funds were sweepable.                                                                     
Mr. Thayer stated  that there were usually no  funds left to                                                                    
sweep because  projects were already  encumbered by  the end                                                                    
of  the fiscal  year. He  noted that  the $4.75  million for                                                                    
Round  13   (completed  in  August)  had   been  encumbered.                                                                    
Currently  AEA was  on Round  14 and  had approximately  $15                                                                    
million  if the  legislature approved  the funding,  with 39                                                                    
applications for  a total  request of  $19.2 million  in REF                                                                    
funds.  He identified  that there  were  some projects  that                                                                    
would  be  disqualified  based  on  economics  or  technical                                                                    
viability. The funds had not  been swept in the past because                                                                    
from  the time  AEA  moved a  project  forward and  received                                                                    
legislative approval,  the funding  was encumbered  within a                                                                    
few months.                                                                                                                     
10:12:44 AM                                                                                                                   
Senator Olson  asked if  the funds  were sweepable  if there                                                                    
were funds left in the account.                                                                                                 
Mr. Thayer thought  the funds were sweepable.  He noted that                                                                    
Round 10, 11,  and 12 had no funding by  the legislature for                                                                    
the  program.  The  previous  year  REF  had  received  $4.7                                                                    
million, and currently there was  a request for $15 million.                                                                    
He reiterated  that there had been  no money in the  fund to                                                                    
Senator  Hoffman thought  the REF  was a  great program.  He                                                                    
thought that  the largest benefit  was that  grantees funded                                                                    
for  hydro  or  wind  power  receive  stabilized  rates.  He                                                                    
thought people using diesel would  have seen rates double in                                                                    
the last few years. He  thought energy costs continued to be                                                                    
the  largest expenditure  for individuals  in rural  Alaska,                                                                    
whether  on heating,  electricity, or  fuel. He  was greatly                                                                    
supportive of  the program because it  stabilized individual                                                                    
rates and  the lives  of those  that benefited  were greatly                                                                    
Senator Revak thanked the committee for hearing the bill.                                                                       
Co-Chair Bishop set the bill aside.                                                                                             
SB  202  was  HEARD  and   HELD  in  committee  for  further                                                                    
Co-Chair Bishop discussed the agenda for the afternoon.                                                                         

Document Name Date/Time Subjects
SB 132 Sectional Analysis.pdf SFIN 3/17/2022 9:00:00 AM
SHSS 2/3/2022 1:30:00 PM
SB 132
SB 132 Sponsor Statement.pdf SFIN 3/17/2022 9:00:00 AM
SHSS 2/3/2022 1:30:00 PM
SB 132
SB 132 Final Version-Finance Committee 3.15.22.pdf SFIN 3/17/2022 9:00:00 AM
SB 132
SB 132 - PHA Bd Letter of Support - 2.25.22.pdf SFIN 3/17/2022 9:00:00 AM
SB 132
SB 202 Sectional Analysis 2.26.22.pdf SFIN 3/17/2022 9:00:00 AM
SB 202
SB 202 Support Docs REF Projects By Region 4.14.2021.pdf SFIN 3/17/2022 9:00:00 AM
SB 202
SB 202 Sponsor Statement 2.26.22.pdf SFIN 3/17/2022 9:00:00 AM
SB 202
SB 202 Support Docs Renewable Energy Fund Fact Sheet 2.11.2022.pdf SFIN 3/17/2022 9:00:00 AM
SB 202
SB 202 Support Letter APA 2.25.22.pdf SFIN 3/17/2022 9:00:00 AM
SB 202
SB 132 Letter of Opposition Veterinarians Exempt PDMP.pdf SFIN 3/17/2022 9:00:00 AM
SB 132
SB 202