Legislature(2003 - 2004)
03/11/2004 01:30 PM Senate L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.