Legislature(2009 - 2010)BUTROVICH 205
02/15/2010 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB220 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 220 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 220-ENERGY EFFICIENCY/ ALTERNATIVE ENERGY
3:35:29 PM
CO-CHAIR WIELECHOWSKI announced SB 220 [version 26-LS1197\C was
before the committee] to be up for consideration. He said the
committee substitute (CS) was a product of many discussions with
the administration on implementing the provisions. He thanked
the members of the administration for their willingness to work
so intensively with staff.
SENATOR FRENCH moved to adopt CSSB 220(RES) [version 26-
LS1197\K]. There were no objections and it was so ordered.
3:36:12 PM
MICHELLE SYDEMAN, aide to Co-chair Wielechowski, said that she
and Mike Pawlowski, aide to Co-chair McGuire, would explain the
committee substitute (CS) to SB 220. To begin she said Section
1 is simply the short title and it has no change - it remains
the Alaska Sustainable Energy Act. Section 2 had the first
change and was initially a policy statement suggested by a
stakeholder group representing diverse interests pulled together
by the House Energy Committee. The statement used to be towards
the middle or the end of the bill and it was going to be in
statute. In a meeting facilitated by the Governor's legislative
director, several representatives from the Department of Law
cautioned them against putting the policy in statute because
many of the goals were "aspirational" and might not be easily
met. The DOL representatives said the state could be held to
some of those goals and could be sued if for some reason those
goals weren't met. So, that section was pulled into the
beginning of the bill as uncodified law and intent language.
3:38:40 PM
MIKE PAWLOWSKI, aide to Senator McGuire, said the previous two
section items on page 2, lines 5-6, and page 2, line 21, were
the step goals for energy efficiency of 10 percent and 15
percent (on lines 5-6). The goal of 50 percent renewable energy
was on line 21. They were originally included as distinct items
that have now been rolled into the policy section of the bill.
SENATOR STEDMAN said he was concerned that they didn't just pick
numbers out of the sky.
MS. SYDEMAN responded that many states had set goals and some
were set many years ago, so they looked at what other states
were able to achieve. They also would reference later a pilot
project just carried out by the Anchorage School District in
which they achieved significant reductions in gas and electric
use. Both the House and Senate staff felt these goals were
achievable during this timeframe.
SENATOR STEDMAN said he was still concerned that the goals were
solid because he thought as the state goes forward energy
consumption would increase along with the efficiencies.
3:40:52 PM
CO-CHAIR WIELECHOWSKI asked for documentation by the next
meeting on why that figure was used.
MR. PAWLOWSKI responded that similar concerns were expressed by
the Department of Transportation and Public Facilities (DOTPF)
and other agencies, so on page 2, line 6, the year 2010 was
established as a zero baseline to measure from.
MS. SYDEMAN clarified that they did refer to the fact that they
would need to account for growth in population and economic
development in the energy efficiency goal on page 2, lines 6-7.
SENATOR HUGGINS asked if federal renewable energy policy didn't
include hydro.
MS. SYDEMAN responded that was the current state of affairs.
SENATOR HUGGINS asked why they wouldn't include nuclear, so at a
future date it wouldn't be precluded and someone would have to
change it.
CO-CHAIR WIELECHOWSKI said this body did pass a resolution
urging Congress to include hydro as a renewable resource and the
Legislature and state have been having discussions on nuclear
energy and will continue those.
3:43:14 PM
SENATOR STEDMAN asked what language on page 2, line 29 [(D)
creating and maintaining a state fiscal regime that encourages
private sector development of the state's energy resources;],
meant.
MS. SYDEMAN replied that language came from the stakeholder
group, but they could get clarification.
3:43:57 PM
She said Sections 3 and 4 had no substantive changes.
3:44:32 PM
BRIAN BUTCHER, Director, Governmental Relations and Public
Affairs, Alaska Housing Finance Corporation (AHFC), commented on
Section 4 that of the $28 million in stimulus funds they
received last summer, $4 million was earmarked for the
Corporation to develop software to do ratings for residential
homes to expand it to commercial as well as work to begin
educating various communities on the issues of energy efficiency
and with the expansion to commercial. The U.S. Department of
Energy (USDOE) just approved the state plan a couple of weeks
ago.
3:46:05 PM
CO-CHAIR WIELECHOWSKI asked if he thought working with
municipalities and corporations would help make public buildings
more energy efficient.
MR. BUTHCER replied yes. He reminded them that the Legislature
appropriated $360 million for residential weatherization and the
Home Energy Rebate Program. At the time they were all aware that
increasing the energy efficiency of residential homes in all
areas of the state is a positive thing, but when you have
schools, other government buildings and commercial buildings
still using a tremendous amount of energy, particularly in Rural
Alaska where it's at the crisis level, it is something that they
are excited about moving forward with.
3:47:07 PM
MR. PAWLOWSKI said Section 5, the energy efficiency grant funds
section, was deleted and the new Section 5 is what the old
Section 6, the alternative energy for public works provision,
was in the C version. Changes were made to this section working
with the DOTPF particularly - the idea being that the department
had to predict which energy sources will become available. That
has been removed and it is now limited to considering
alternative energy sources in the design phase of a building.
Further, a definition of "construction" was added on page 4,
lines 12 and 13, so that when a capital project - a retrofit
reconstruction alteration of a building, for instance - that the
requirement envisioned by this section isn't automatically
triggered by this section.
CO-CHAIR WIELECHOWSKI asked the DOTPF representative his
thoughts on Section 5.
3:48:32 PM
JOEL ST. AUBIN, Engineer, Statewide Facilities, Department of
Transportation and Public Facilities (DOTPF) DOTPF, said their
concerns on Section 5 were addressed and he didn't have any
comments.
SENATOR FRENCH asked if he was comfortable with "shall consider"
language. He wanted to know how meaningful it was to use it. Was
it a passing consideration, a day's worth or what?
MR. ST. AUBIN answered that they would take what non-fossil fuel
designs that were in the marketplace into consideration when
designing a facility. It would be more than a passing
consideration especially if it's adopted into statute.
SENATOR FRENCH asked when the final decision point is reached on
that issue.
MR. AUBIN replied that the things they are to consider were
well-outlined on page 4, lines 3-6, that says when the cost is
not more than a fossil-fuel fired system over the lifecycle of
the equipment to purchase, install, maintain and operate.
3:51:00 PM
SENATOR HUGGINS said when putting elements (A) and (B) [page 4,
lines 3-6] together a person would almost use nothing other than
fossil fuel, because the other systems cost more.
MR. AUBIN replied that he had no comment on that.
SENATOR HUGGINS asked again if they could do anything else if
those two elements are in place, because generally speaking,
systems that have been around for a long time like fossil fuel
systems are relatively inexpensive relative to their
counterparts, which are new. The measurable adverse piece is
that it is hard to put a new system into affect.
MR. AUBIN replied that it was difficult to answer his question,
but 100 percent of the systems they put in now are fossil-fuel
fired. He didn't have a lot of firsthand knowledge about non-
fossil fuel systems. They have a less measurable adverse affect
on the environment and that is the overall goal of the non-
fossil fuel fired systems.
MR. PAWLOWSKI said he felt it was important to clarify that the
issue was that they consider the entire life-cycle cost of the
investment in deciding which systems to go with.
3:52:47 PM
MS. SYDEMAN went to Section 6 that started out by requiring
DOTPF to establish through regulation a purchasing preference
for energy efficient appliances, equipment and vehicles. That
language has been pulled back somewhat to require that when the
DOA enters into contracts to purchase equipment that use energy,
it shall give substantial consideration to the energy efficiency
of the equipment. The original language referred to energy star
appliances that are used primarily in households rather than in
commercial and business settings, such as State of Alaska
offices. Another issue raised is that much of the information
that is available about appliances is not credible; a lot of it
is promotional material provided by the makers of those
appliances. They wanted some caveat to use credible and
objective information, not just advertising. A third issue was
that there are approximately 7-9 purchasing preferences
currently in state statute and the DOA was opposed to including
a new preference because purchasing is very complicated already.
3:55:04 PM
VERN JONES, Chief Procurement Officer, Department of
Administration (DOA), said he also oversees the Division of
General Services, DOA, and that Ms. Sydeman was correct about
the issues they had with the previous version. They understand
what is being attempted in the current version, but he had one
issue with adding the word "substantial" to consideration of
energy efficiency when they consider purchasing equipment and
when credible objective information is at hand. He thought that
including "substantial" makes this section more unclear and
suggested adding "compared to cost or estimated life span or
functionality. But he suggested that deleting "substantial"
would alleviate that concern.
MS. SYDEMAN said staff would defer on that issue to the will of
the committee and to Mr. Jones' 20 years of experience in
purchasing with the state.
3:57:35 PM
MR. PAWLOWSKI said Section 7 used to be Section 8 in version C
and regards the renewable energy grant fund. The CS deletes the
idea that the Alaska Energy Authority (AEA) should verify
matching funds. The ability to verify matching funds provided
some problems for the AEA, but the sponsors felt it was
important to stick with the principle of the section of having
projects that have a financial benefit to the state greater than
the amount of the grant funds received to go forward.
3:58:25 PM
SARAH FISHER-GOAD, Deputy Director, Operations, Alaska Energy
Authority (AEA), said she appreciated the change. Their concern
is with verifying the match at the time of application, because
sometimes federal grant funds are pending state or other funds.
She stated that the match requirements are verified at the time
of the grant.
SENATOR STEDMAN went to page 4, lines 20-31, and said the
"average cost of energy for each resident" should maybe have a
specific btu-equivalency, because it is hard to compare the cost
of natural gas in Anchorage to hydro in Southeast or oil out
West. He also hoped the projects using renewable energy grants
would show a greater benefit than the cost of the grant.
MS. GOAD said she could get some additional information with
respect to determination of the high cost areas. With respect to
the addition on lines 29-31, she said the AEA already has a
benefit cost review that is significant for their evaluation
process. She pointed out that they were not always talking about
construction projects where a benefit/cost analysis could
clearly be done. A study may have a public benefit, not
necessarily a financial benefit and they evaluate other benefits
for a proposed project and application.
4:01:36 PM
SENATOR STEDMAN said it appears from the numbers of current
hydro projects moving forward in Southeast that the cost per Kwh
may be 21-23 cents, which is substantially higher than hydros
that were built several years ago, but that is not too different
than what Fairbanks is faced with now at 23 cents Kwh.
MS. GOAD agreed that having these evaluation criteria is very
difficult for hydro projects. AEA's statutory guidance is to
give most weight to high-cost areas without defining
"significant" for regional spreading, for match requirements and
also now for the benefit/cost evaluation. So they have
established regulations that provide a systematic method to
evaluate projects even though there are a lot of moving parts.
CO-CHAIR WIELECHOWSKI said this is tough to resolve because of
residents in rural Alaska paying outrageous rates while at the
same time urban residents have low cost energy.
SENATOR STEDMAN said the further they move off of hydro and wind
into "it might work at one particular spot on the planet" the
more uncomfortable he becomes. The state can't afford to have
"upside-down projects."
4:05:14 PM
CO-CHAIR WIELECHOWSKI noted that the bill has separate sections
for different funds.
SENATOR STEDMAN repeated the more they deviate from proven
technology the more uncomfortable he becomes and stated,
"There's enough good projects; we don't have to go out and roll
the dice."
SENATOR FRENCH asked what language is pointing them away from
proven technologies. This language says "projects that are
likely to have a financial benefit that exceeds the amounts of
grant funds received."
SENATOR STEDMAN said he is fine with the language, but he is
concerned about a movement by some groups away from it. He just
wanted them to be cautious.
4:08:08 PM
MS. GOAD said the regulations that were adopted that further
guide the renewable energy fund recommendation program require a
project to have reasonable environmental and technical risk and
the proposed energy system can reliably produce and deliver the
energy as planned or proposed in an application. She said they
would be providing information to the Legislature regarding
their round three grant recommendations at the beginning of next
week.
SENATOR FRENCH asked for a list of projects that had been
approved under this section, so he could get a grip on what they
had spent money on so far.
SENATOR WAGONER said he agreed with Senator Stedman that they
have to be very careful about how far they go. "We've got too
many rabbit trails to run down," he said.
CO-CHAIR WIELECHOWSKI said any guidance members have on
adjusting the language to get to where they are all headed would
be much appreciated.
4:10:45 PM
MR. PAWLOWSKI said Section 8 is complimentary language to
Section 7. The change from the previous Section 9 in the C
version is the deletion of the specific reference to the word
"economist". It relates to the independent, economic and
financial analysis of the renewable energy fund grant projects -
to fulfill the intent in Section 7.
CO-CHAIR WIELECHOWSKI asked if Section 8 was designed to fix the
problem they were just talking about.
MR. PAWLOWSKI answered yes.
SENATOR HUGGINS said it made him a little nervous to designate
two organizations that the Authority can contract with on page
6, lines 16-17, even though they may be the perfect
organizations, because it would be limiting what they could do.
4:12:22 PM
MS. SYDEMAN said the new Section 9 is the same as the old
Section 10 with a few changes. She explained this section has to
do with a requirement that AEA work with communities around the
state to establish a statewide fuel buying cooperative. The
objective is to enable communities to buy fuel at a lower price
than what they are currently buying it at when they are all
buying separately - even different entities within each
community buy fuel separately. They don't achieve economies of
scale. The new language clarifies that they are asking the AEA
to facilitate the organization of such a cooperative, not to run
it or to even be a part of it. This is one of the things they
heard when the committee traveled to communities around the
state. Entities are listed that they thought might be interested
in joining such a co-op: local governments, utilities, school
districts, tribal governments, state agencies, housing
authorities and other interested non-profit entities.
She said they might want to further look at whether a village
store or other for-profit entity could participate in the co-op.
Her understanding was that Article 9, Section 6, of the
Constitution might place some limits if credit is being extended
by to a public authority like a local government. It might make
it impossible for for-profit entities to participate in a fuel
buying co-op. The main intention here, though, is to ask AEA to
contact interested parties to provide technical assistance to
them and help in the organization of such a cooperative.
4:14:40 PM
SENATOR STEDMAN said he thought "other interested non-profits"
language on page 5, line 19, was too broad, although he said he
was comfortable targeting local governments, utilities and
schools, the tribal government and state agencies. He thought
those words should be deleted and the sentence should maybe end
with "housing authorities."
SENATOR FRENCH asked for specific non-profits that might fall in
this category that they might delete.
MS. SYDEMAN said she put that language in and she was thinking
of public health or community health clinics.
CO-CHAIR WIELECHOWSKI said they could work on some appropriate
language. He wondered why they wouldn't want to open it up and
be more expansive rather than less expansive.
MS. GOAD responded that the Authority is interested in providing
the technical assistance that would be necessary to help
communities and entities form a fuel co-op, but their efforts
might not result in a statewide fuel co-op. Right now there is
no barrier for groups of organizations to get together to become
a fuel co-op. Several years ago they changed their bulk fuel
revolving loan fund statutes to allow a fuel co-op to borrow
funds from the Bulk Fuel Revolving Loan Fund for such a purpose,
but except for utility cooperatives that serve several
communities, there hasn't been any type of fuel co-op that took
advantage of that change to their statutes.
She said they would be more than willing to put an effort
forward on advertising and providing technical assistance. She
wasn't even sure that it would help find economies of scale that
would reduce the price in rural communities. Her understanding
is that the cost of the fuel is really the transportation. So a
community further up a river would pay more than one not as far
up. Even some larger utility cooperatives haven't had
necessarily good luck on buying fuel in bulk and delivering it
to several sites.
SENATOR FRENCH asked how the fuel co-op is envisioned to work
and how they actually work in real life. It seems like you buy
in bulk - sort of the Wal-Mart approach to life - if you put up
a big enough contract you get a break on the price.
MS. GOAD answered that when they had looked at changes to the
Bulk Fuel Revolving Loan Fund, she didn't know who approached
them - maybe someone in Northwest Alaska. She didn't think they
developed a cooperative. If they did, they didn't borrow from
the Bulk Fuel Revolving Loan Fund.
She said five communities are interested in combining to
purchase fuel in bulk. But the one that has the least expensive
transportation cost will all of a sudden have higher cost if
they are getting a levelized fuel price. One community may be
subsidizing another community if they are trying to mitigate
that transportation cost. Maybe a cluster of communities would
make sense.
SENATOR STEDMAN asked if this could be done already.
MS. GOAD answered yes; entities can already come together and
form a cooperative.
SENATOR STEDMAN said with that being the case, he would want to
move to delete Section 9 [page 5, lines 15-19].
MS. SYDEMAN added one of the documents they looked at when
writing this section was a report by the Department of Community
and Regional Affairs a number of years ago called "Cooperative
Purchasing: A Way to Save When Buying Fuel for Rural
Communities." She noted again that the purpose of this section
is to ask AEA to reach out to communities and assess interest in
this. While communities can do this on their own right now,
staff had received calls from them saying they need help doing
it - Ousinkie, for instance.
4:23:58 PM
CO-CHAIR WIELECHOWSKI said he didn't want to advance something
that wasn't needed. If it wasn't needed they would certainly
take it out.
MR. PAWLOWSKI went to Section 10, the Emerging Energy Technology
Fund, and said substantive changes made to this section from the
C version was the transference from the group that Senator
Huggins identified on page 6, lines 16. The Alaska Center for
Energy and Power was the original administrator of the proposed
fund, but in the current version it is the Alaska Energy
Authority. The AEA is authorized to enter into contracts with
the Center and the Institute for Social and Economic Research to
do the socio-economic and technical review of the projects they
will be deciding with the Advisory Committee to fund or not.
The Advisory Committee has been expanded to seven members on
page 6, line 25, through page 7, line 2. The inclusion on page
6, lines 30 and 31, of the National Renewable Energy Laboratory
and Arctic Energy Office of the National Energy Technology
Laboratory is because they are seen as being helpful because
they provide buy-in from the federal level and offer expertise
not necessarily available in the state. But choosing federal
agencies to be appointed by the governor presented some
problems, so page 7, lines 6-12, were added to provide in the
case of need for a contingency since the state cannot compel
federal service employees to serve on boards or commissions. If
these members were not available it provided a measure for the
governor to make those appointments.
4:26:42 PM
SENATOR WAGONER had a problem with requiring degrees in science
or engineering to be a member of the committee, because he could
think of a lot of people who have had a lot of experience in
power generation, alternative energy sources - geothermal and
wind energy, and they would miss a lot of good qualified
experienced Alaskans with that requirement. He suggested after
"have a degree in science or engineering" inserting "also or the
equivalent of experience in a related field of energy" so the
governor could "be a little creative in his selection."
4:28:19 PM
MR. PAWLOWSKI said Section 11 is a redraft of the transferable
tax credit section that was in version C. In looking at the
original program working with Robynn Wilson, Department of
Revenue (DOR), the idea of a transferable credit posed some
problems. He explained that a transferable credit by its nature
has to go through several entities. You have a broker, an end
purchaser; and since the universe of companies paying corporate
income taxes is moderately small in this state, they were
worried the dollar being transferred is the same dollar to the
state either direction. So, if the policy goal was to deliver
and incentivize private spending in renewable energy, keeping
that directly to the end person building the project made a lot
more sense than having them go out on market and shop these
small credits around the state where brokers and purchasers
would take percentages off of that value. So, section 12 was
redrafted as a simple refundable tax credit.
He said another major departure from the original version was
that while the credit was available at 15 percent of the Kwh
charged, there was a floor and a ceiling price put on of 2.1
cents and 5 cents. Given the varying degree of the price of
electricity around the state, this really didn't make much
sense. So, instead of sticking with this floor and ceiling
approach they relied on page 8, lines 29-31, where the limit is
put on the capital expenditure - the important caveat to that
10-percent capital expenditure being on line 31 going to page 9,
line 1. It says a person may not receive a credit for any state
or federal grants they receive for the capital investment -
making the refundable credit available only for private dollars.
However, since not every member of the public is a taxpaying
member, they inserted on page 8, lines 22-28, a procedure for
the department to get a refundable credit to someone who might
not be required to file an income tax report. This is the reason
the bill was modified in the first place to be a transferable
tax credit - as a policy goal. Making it a refundable tax credit
is easier for the department to administer and delivers the
maximum benefit of any subsidy to the people doing the
investments.
He pointed out on page 13, lines 21-22, Section 23 sunsets this
credit section.
SENATOR STEDMAN said it seems abstract because they don't have
any projects in front of them. A lot of hydros can be $100
million or $350 million. What kind of impact would that credit
for these projects make on the treasury and would this type of
tax credit incentivize construction that would not otherwise be
incentivized. "Show me that it's not a give-away - that it's a
behavioral inducement to change the direction of somebody."
MR. PAWLOWSKI said that was a very appropriate question, and he
said they would work to bring numbers back to the committee on
it. In this section they were interested in making sure that the
mechanics work. The actual financial impact they were leaving
for higher level decisions.
SENATOR STEDMAN asked how much they are talking about in
dollars.
MR. PAWLOWSKI responded that the 15-percent rate is the mechanic
that determines the refundable credit in any given tax year.
However, the overall aggregated credits a person can claim under
this section is limited to 10 percent of their capital
investment - the sponsor's intent being that incentivizing
private dollars as opposed to grant funds is important in
encouraging investment in renewable energy infrastructure in the
state.
4:34:16 PM
The goal of this section was to attract the private dollars. So
the fundamental cap is 10 percent of whatever private
contributions are made to renewable energy projects.
SENATOR STEDMAN asked if that includes leveraged or just the
equity position.
MR. PAWLOWSKI replied that his understanding is that it would
include leveraged positions.
ROBYNN WILSON, Manager, Corporate Income Tax Division,
Department of Revenue, added that her reading of this langauge
is that when her division is measuring the 10 percent capital
investment, that it would be excluding any state or federal
grants. She wasn't familiar with the state grant program that
would be relevant, but if she audited this she would try to
ascertain whether a particular contribution was a grant from the
state or not.
SENATOR STEDMAN asked, for example, if they build a $300-million
hydro and he goes out and borrows $200 million and puts up $100
million, would he get 10 percent of $300 million or 10 percent
of $100 million.
MS. WILSON replied that she wasn't certain about the intent
behind the word "grant." She could see money from a grant
program, but she didn't know the intent for subsidized interest.
SENATOR STEDMAN said he meant that they wouldn't use any
financing conduit from the state - just that the four of them
would put up $25 million a piece and then go out and borrow $200
million more. "Would the credit be $30 million or $10 million?"
MS. WILSON replied that she couldn't speak to intent, but her
reading would be that he would be responsible for that debt, so
he would get the benefit of the full amount. The phrase about
"ex-state or federal grant" would be specifically a grant
program.
SENATOR STEDMAN said a lot of energy generation try to get
grants and federal help; but a lot of them are financed directly
- for instance, the last hydro expansion in Juneau.
4:37:45 PM
SENATOR FRENCH questioned the dates on page 8, lines 13-16, of
July 1, 2009 because this probably wouldn't go into effect until
July 1, 2010.
MR. PAWLOWSKI explained that these dates were left in this
version because the committee actually took action at the time
to move the dates back to July 1, 2009 and the staff didn't feel
like they should change it. The sponsor's intent was to bring
those dates back up for committee reconsideration.
SENATOR STEDMAN assured them that when the bill pops out of its
final version the dates would be in the future not in the past.
MR. PAWLOWSKI added that Senator Stedman's point was very
appropriate and something that he would return to the language
about to exclude debt and leverage from the calculation of any
tax benefit. The sponsor's intent is that it should be on
equity.
CO-CHAIR WIELECHOWSKI remarked that Senator Stedman raised the
point that has been consistently raised in all the tax credit
bills - that is how to know this is really going to incentivize.
He asked him to find research or data that could sort of show
them that it works.
4:39:48 PM
MS. SYDEMAN went to Section 13 [page 9, lines 19-22] which she
said is new and directs the DOA to work towards developing a
standardized method of collecting and storing energy consumption
and cost data so progress on reducing energy consumption can be
measured to meet the goal of 15 percent by 2020. The idea was
that state government would play a role in that effort and would
lead by example. Including this goal would be meaningless
without a way to measure progress. She said the departments have
reported that there isn't an easy way to measure statewide fuel
consumption. So they asked the DOA to take six months to develop
a unified approach across state agencies of collecting and
storing this data.
4:41:05 PM
VERN JONES, Chief Procurement Officer, Department of
Administration (DOA), commented that the DOA is probably not the
appropriate agency to do this. He explained that DOA manages a
total of 15 facilities; DOTPF probably manages in excess of
1000; it is also the agency that manages the energy performance
contracts that they enjoy savings from. Other candidates like
AEA whose core business is energy related or the Office of
Management and Budget would be a better choice to coordinate and
collect that data. They have the same issue with Section 24 that
seems to go along with Section 13.
MS. SYDEMAN clarified that the reason they selected the DOA for
this role is that they really thought how agencies keep track of
their energy expenditures was an accounting issue; it's not
related completely to management of public facilities, but
really to any energy expenditure.
4:42:56 PM
MR. JONES said he hesitated to speak for the Division of Finance
which controls their accounting system, but his limited
knowledge tells him that many of these agencies don't use the
state accounting system and would probably have difficulty in
capturing the data and reporting out on it. So he maintained the
DOA is still not the appropriate agency to do something like
this.
4:43:52 PM
SENATOR STEDMAN said getting the data is a good intent, but he
has trouble even finding how many state employees the state has
or how many automobiles are on the Alaska Marine Highway that
are nonrevenue. They have trouble getting basic information and
getting this information was beyond that. His expectations of
the department being able to do something like this weren't very
high without a considerable expense for setting it up and
running it.
CO-CHAIR WIELECHOWSKI directed staff to work with DOA, AEA,
DOTPF, and OMB to see who is best appropriate to do this task.
MS. SYDEMAN went to Section 14 that directs the DOTPF to
consider energy efficiency when purchasing new vehicles for the
state fleet. She believed they were already doing this, but this
bill requires it in statute.
4:45:31 PM
MARY SIROKY, Special Assistant to the Commissioner, Department
of Transportation and Public Facilities (DOTPF), said the
department had no problems with that language, and considers the
phrase "where practicable" gives them the necessary flexibility
to be able to do this.
4:46:20 PM
MS. SYDEMAN said Section 15 makes substantial changes to the old
Section 16 in version C which required DOTPF to retrofit all
public facilities if retrofitting them would result in net
energy savings to the state within 15 years. The department said
it was too ambitious of a goal and that made sense. So, this
version requires DOTPF to retrofit 25 percent of all public
buildings by 2020 starting with those that are least energy
efficient and this requirement is subject to funding being
available. This version also requires DOTPF to develop a
systematic process for determining which buildings should be
upgraded to reduce long-term energy costs and it requires DOTPF
to submit a report to the Legislature after consulting with the
DOA detailing the department's progress in meeting this mandate.
They also have put a less-expansive definition of "public
facility" in at the department's request. They are only looking
at facilities that are larger than 10,000 sq. ft. which
certainly narrows the universe of public facilities. They have
also excluded facilities that belong to the Legislature or Court
System because there was concern about the executive branch
being able to corral other branches of government. They have
also explicitly excluded facilities that are leased to the state
over which they have no control and in which they would not
invest state funds.
SENATOR WAGONER said it doesn't matter which department or which
branch of government owns the building, it's still owned by the
state. If the DOTPF was going to do this work, he wanted a
report from them as to what their administrative overhead charge
would be to see if it wouldn't be better to go out to private
engineering companies.
MR. ST. AUBIN responded that he would have to work on a fiscal
note for this, but DOTPF's public facilities' overhead, in
general, runs lower than the highway section's.
CO-CHAIR WIELECHOWSKI said that would be helpful.
SENATOR FRENCH asked how many public facilities owned and
controlled by the state would fall under this definition of
10,000 sq. ft.
MR. ST. AUBIN replied that a quick look came up with 190
buildings.
SENATOR STEDMAN asked him to elaborate on the age and location
of these buildings. He emphasized that this is broader than just
DOTPF and he was not excited about DOTPF creating a bureaucracy
to do this versus sourcing it out. He wanted DOTPF to
concentrate on building new roads and maintaining the state's
infrastructure.
MR. ST. AUBIN said the locations of the buildings are from
Ketchikan to Kotzebue and age will vary from built last year to
being over 50 years old.
SENATOR STEDMAN said he wanted a spreadsheet on that data.
MR. ST. AUBIN said he could do that.
MS. SYDEMAN said she didn't know if everyone was making the same
assumption they made in this section, but much of this work
would likely be done through performance contracting, not by the
department. She also noted that the Governor has a bill creating
a fund that would take about $18 million in federal stimulus
funds and use that to leverage up to $250 million that he is
requesting permission to issue as bonds. Sixty percent of that
money would be available for retrofitting public facilities. So
they wouldn't include a section like this unless they thought
there was a good possibility of funding being available for it.
The two are very closely linked.
4:52:30 PM
MS. SYDEMAN said Section 16 simply tasks the AEA and AHFC with
working together to annually plan and conduct a public education
campaign to promote energy efficiency and conservation. AEA has
already begun a public education effort; so this requirement is
consistent with their intent. They were told by the legal
drafters, however, that they don't have explicit statutory
authority for that right now. This language provides that
authority. She noted that other jurisdictions that have
implemented campaigns to reduce energy consumption have seen
significant benefits. The Anchorage School District recently
completed a pilot program to reduce energy costs in nine
Anchorage schools and documented a substantial reduction in use
of both natural gas and electricity.
4:53:39 PM
MR. PAWLOWSKI said Sections 17-20 together resurrect the old
alternative energy revolving loan fund in the Department of
Commerce. It's a reauthorization and there were no changes from
the C version.
4:54:08 PM
GREG WINEGAR, Director, Division of Investments, Department of
Commerce, Community and Economic Development (DCCED), explained
that this fund was created in 1987 and operated for nine years;
it made close to 3000 loans and was funded with $18 million. The
Legislature started taking money out of it in 1987 and passed
language which basically said as funds came in from loans those
funds reverted back to the general fund. This piece of
legislation would remove that language and allow this fund to
operate if a funding source were discovered for it.
MR. PAWLOWSKI said they asked the department to run three
scenarios based on different funding levels and this program
theoretically was a net positive to the state over its lifetime.
SENATOR WAGONER asked on page 12, line 23, if the "8 percent and
may not be less than 5 percent a year" interest rate was
reasonable at this time.
MR. PAWLOWSKI deferred that answer to Mr. Winegar.
4:56:24 PM
MR. WINEGAR responded that that was a good question. Essentially
when this program operated in the 80s the interest rate was 5
percent for the first $15,000 borrowed and 15 percent for
anything borrowed in the $15,000-$30,000 range. The program did
operate successfully; it was funded with $18 million and most of
the loans went out at 5 percent. The average loan was around $8-
9000. About $24 million came out of the fund over that nine-year
period. It actually cash flowed at a 5-percent interest rate.
The idea here was to provide as low a rate as possible, but at
the same time have it be a successful program over time. That is
where the 5-8 percent range came in, but that could be adjusted.
SENATOR WAGONER asked if higher risk projects would have the
higher interest rate.
MR. WINEGAR answered that essentially their decision is not
based on risk, but on what rates do in the market which would be
prime-plus 1 with a floor of 5 percent.
SENATOR FRENCH said it sounds like they were encouraging small
loans so that they could limit the state's risk in any given
investment in what was then alternative energy.
MR. WINEGAR replied that he thought that was the thinking in the
80s.
4:58:21 PM
MR. PAWLOWSKI said he didn't have his notes on Sections 21 and
22, but Section 23 is the renewable energy refundable tax
credit.
CO-CHAIR WIELECHOWSKI asked what Sections 21 and 22 repealed.
4:59:04 PM
BRIAN KANE, Legislative Counsel, Legislative Affairs, said he
thought they were related to repealing the Alternative Energy
Loan Program so that new language would make sense.
MR. PAWLOWSKI said Section 15 was the retrofits energy
efficiency and energy reports section to conform with the
purposes in Section 1.
CO-CHAIR WIELECHOWSKI said Section 23 was the renewable energy
sunset.
5:00:27 PM
MS. SYDEMAN said Section 25 is new and adds to uncodified law
the requirement for DOTPF to develop a systematic process of
prioritizing the retrofitting of state facilities. That would be
part of the mandate to retrofit. Section 26 is also new and
directs the Governor to submit a report to the Legislature by
November 1, 2010, with recommendations about how to structure
state energy program and offices to increase coordination and
operating efficiencies. She thought members were aware of the
fact the House has a bill to restructure energy programs within
the state and they are simply asking the Governor to provide
recommendations by next year to have the benefit of thinking of
the executive branch.
5:01:56 PM
CO-CHAIR WIELECHOWSKI thanked staff and the administration for
all of their work and input; he said they would continue to work
on SB 220 and adjourned the meeting at 5:01 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 220 version K.pdf |
SRES 2/15/2010 3:30:00 PM SRES 2/18/2010 3:30:00 PM SRES 2/22/2010 3:30:00 PM SRES 2/24/2010 3:30:00 PM |
SB 220 |