Legislature(2003 - 2004)
03/11/2004 01:30 PM Senate L&C
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SB 337-ENERGY PROGRAMS & FUNDS
CHAIR CON BUNDE announced SB 337 to be up for consideration.
MS. BECKY GAY, Project Manager, Alaska Industrial Development
and Export Authority (AIDEA) and Alaska Energy Authority (AEA),
said Jim McMillan, Deputy Director of Credit and Business
Development, Mike Harper, Deputy Director of Rural Energy, and
Sarah Fisher-Grove, Financial Analyst, would help her answer
questions.
MS. GAY said that SB 337 amends the AEA program.
The first program affected is the Power Project Fund
loan program (PPF). The PPF program provides loans to
local utilities, local governments and independent
power producers for the development or upgrade of
power projects. SB 337 proposes to amend this program
by expanding the definition of power project to
include energy efficiency projects. Under the current
statutory definition of eligible project, AEA has
actually denied loan applications for worthwhile
projects such as lighting retrofits. In addition, SB
337 proposes to repeal the loan committee that
approves loans from this fund. AEA will instead
utilize the same credit approval process that AIDEA
has successfully utilized for its credit program,
which includes an appeals process to the board of
directors.
The next program affected is the Bulk Fuel Revolving
Loan Fund program. This program provides short-term
loans to assist small rural communities in purchasing
annual bulk fuel supplies. SB 337 authorizes loans
from this fund to other entities such as corporations,
cooperatives and joint ventures. The Department of Law
recently interpreted the current statutorily eligible
borrowers to be only communities and natural persons -
that is private individuals. This change will not
expand the definition of eligible borrower beyond the
long-standing interpretation and practice that already
includes other entities such as corporations.
SB 337 also provides that AEA may invest the Power
Development Fund and with the concurrence of the
Department of Revenue, the Power Development Fund has
been invested by AEA since 1993. This bill proposes to
affirm this long-standing arrangement by providing AEA
the statutory authority to invest the fund. Then AEA
would continue to remit all earnings of this fund to
the general fund.
The general [indisc.] of AEA are proposed to be
amended by clarifying that AEA has the authority to
manage various programs and projects by issuing grants
and interim contracts. By acting as an agent for rural
communities, AEA manages power projects, bulk fuel
projects and alternative energy projects. The
Legislature has authorized AEA to manage these
projects through the appropriate process by providing
AEA authority to receive and expend federal funds from
entities such as the Denali Commission and the U.S.
Department of Energy.
In addition, SB 337 specifies that AEA's statutory
mandate to provide technical assistance may not be
used on an independent basis for tort liability
against AEA. AEA will continue to be liable for
negligence if it fails to use reasonable care in
providing the technical assistance, however.
And last, this bill proposes to repeal the inactive
Electrical Service Extension Fund. That concludes my
comments.... I urge your favorable support and action
on this bill.
CHAIR BUNDE asked if there is an actual size designation for
small rural communities in the bulk fuel program.
MS. GAY replied that small rural communities have a population
of 2,000 or less.
CHAIR BUNDE asked if she knew of any small rural communities
that are excluded.
MR. JIM MCMILLAN, Deputy Director, Credit and Business
Development, AIDEA, said he didn't have that information at his
fingertips, but he would get it for the committee.
CHAIR BUNDE said that Bethel comes to mind.
MR. MCMILLAN agreed with Bethel, but didn't want to venture a
guess on others.
SENATOR HOLLIS FRENCH asked for clarification of the provision
that repeals the committee that approves loans from the fund.
MR. MCMILLAN explained:
When we assumed the rural energy programs from the
Department of Community and Regional Affairs, Division
of Energy, in 1999, the loan committee was part of the
statutory process at that time - that the Division of
Energy used for approval of power project fund loans.
We [AEA] elected at that time not to change the
process and go with the established statutory loan
committee. We have been doing that since 1999, but it
was always our intent to try and meld the rural energy
programs and the process for approval into the long-
standing process that we have used on the other side
with Alaska Industrial Development and Export
Authority.
In the internal loan committee, we have the expertise
on staff and an appeal process to the board of
directors. So, what this is doing is repealing the
statutory loan committee, which is comprised of the
director of OMB, the executive director of AEA and
three public members from various judicial districts
appointed by the governor - in moving it to the
internal process similar to AIDEA.
CHAIR BUNDE asked if the loan committee's duties are being moved
to another already-existing credit committee, why is there no
change in the fiscal note. He thought savings would be seen at
least with per diem.
MR. MCMILLAN replied that is correct, but for the past year or
two, all of the meetings have been conducted telephonically.
There have been no requests for payment of per diem by the
committee members. The meetings last about an hour or less.
CHAIR BUNDE said he was glad he gave Mr. McMillan an opportunity
to brag about the committee's efficiency and said that SB 337
would be held for a later meeting.
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