Legislature(2009 - 2010)BUTROVICH 205

03/25/2010 03:30 PM Senate RESOURCES


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03:37:50 PM Start
03:39:04 PM Cook Inlet Natural Gas: the Way Forward
04:17:51 PM SB294
04:22:54 PM SB275
04:45:38 PM SR10
04:50:43 PM SB143
05:28:57 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Cook Inlet Natural Gas: The Way Forward
+= SR 10 DOMESTIC NATURAL GAS & ALT. ENERGY TELECONFERENCED
Moved SR 10 Out of Committee
+= SB 143 RAILBELT ENERGY & TRANSMISSION CORP. TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
= SB 275 AQUATIC FARMING
Heard & Held
= SB 294 SPORT FISH GUIDE LICENSES
Moved SB 294 Out of Committee
          SB 143-RAILBELT ENERGY & TRANSMISSION CORP.                                                                       
                                                                                                                                
4:50:43 PM                                                                                                                    
CO-CHAIR MCGUIRE  announced the  next order  of business  to come                                                               
before the committee was SB 143.                                                                                                
                                                                                                                                
REBECCA LOGAN, chairman of board,  Chugach Electric and chairman,                                                               
Railbelt Utility Task  Force, said she is here to  support SB 143                                                               
and will let the other utilities speak.                                                                                         
                                                                                                                                
CO-CHAIR MCGUIRE  said every governor  in years  past, regardless                                                               
of  party,  has  failed  to bring  the  utilities  together.  Ms.                                                               
Logan's bringing groups together to communicate is impressive.                                                                  
                                                                                                                                
SENATOR  WIELECHOWSKI   said  rate   regulation  is   a  concern,                                                               
particularly no regulation  after five years. He is  trying to be                                                               
open  to the  idea and  would like  to hear  how it  is going  to                                                               
protect consumers.                                                                                                              
                                                                                                                                
4:52:57 PM                                                                                                                    
MS.  LOGAN said  an in-depth  discussion should  take place  at a                                                               
different time about the pros and  cons of regulation. One of the                                                               
Utility Task  Force's "must-haves"  was no regulation  of Greater                                                               
Railbelt   Energy  and   Transmission   Corporation  (GRETC).   A                                                               
compromise  was reached  with the  governor's office  three weeks                                                               
ago: five year regulation with a sunset.                                                                                        
                                                                                                                                
MARK  JOHNSON,  general  counsel,  Chugach  Electric,  said  rate                                                               
regulation is  clearly a central issue.  He would like to  make a                                                               
presentation   and  allow   for   dialogue;  understanding   rate                                                               
regulation pertaining to GRETC is essential to SB 143.                                                                          
                                                                                                                                
4:55:28 PM                                                                                                                    
CO-CHAIR MCGUIRE told Mr. Johnson  she wants to know what options                                                               
will  be  available if  lack  of  regulation  led to  a  colossal                                                               
failure and the consumer is not protected.                                                                                      
                                                                                                                                
SENATOR  WIELECHOWSKI said  he is  concerned about  the provision                                                               
about  not being  able to  preclude  Independent Power  Producers                                                               
(IPP's) from  getting into  a system. He  wonders how  that works                                                               
without regulation.                                                                                                             
                                                                                                                                
MR. JOHNSON said more discussions and a firm answer will come.                                                                  
                                                                                                                                
4:57:59 PM                                                                                                                    
PHILLIP OATES, city manager, Seward,  said he is present to offer                                                               
Electric  Utility's  support to  SB  143.  All of  the  utilities                                                               
together  have  better  financing  due to  more  resources,  rate                                                               
payers,  revenue stream  and partnership  with  the state.  GRETC                                                               
will help  manage the transmission  system across  all utilities,                                                               
will  accomplish  regional  economic dispatch  and  comprehensive                                                               
long-range, regional  planning. Bringing together  the particular                                                               
circumstances of 4  co-ops and 2 municipalities,  of which Seward                                                               
is one, is  complex. Seward supports the  adequate reliable, safe                                                               
and  stable  delivery  of energy  and  wholesale  electric  power                                                               
transmission.  Seward will have  full membership in this not-for-                                                               
profit  corporation along  with other  utilities and  individuals                                                               
appointed by the governor.                                                                                                      
                                                                                                                                
5:01:39 PM                                                                                                                    
Brad  Janorschke,  general  manager, Homer  Electric  Association                                                               
(HEA)  said that  a  common misconception  is  that the  Railbelt                                                               
utilities can't  get along  and work  together. The  Bradley Lake                                                               
Hydro-Electric project is a big  success story with six utilities                                                               
working  together with  a state  agency  to build  and finance  a                                                               
project  that generates  some of  the  lowest cost  power in  the                                                               
state.  The Railbelt  utilities have  accomplished much  in price                                                               
and  reliability  and  can  choose   to  think  big  and  develop                                                               
opportunities, particularly  in renewables.  GRETC is  an omnibus                                                               
document  supported by  all utilities  and developed  by electric                                                               
utility professionals.                                                                                                          
                                                                                                                                
The  intent of  the letter  distributed by  HEA was  to encourage                                                               
minimal  change to  the originally  agreed  upon legislation.  He                                                               
reiterated HEA's  support of GRETC,  in its original  form, which                                                               
provides the best opportunity to diversify energy sources.                                                                      
                                                                                                                                
5:05:40 PM                                                                                                                    
SENATOR  FRENCH asked  if  Mr. Janorschke  does  not support  the                                                               
current committee substitute before the committee.                                                                              
                                                                                                                                
MR. JANORSCHKE  replied that the  letter states HEA's  support of                                                               
GRETC and is trying to encourage minimal changes to it.                                                                         
                                                                                                                                
SENATOR FRENCH  said he  agrees with Mr.  Janorschke but  the 2nd                                                               
paragraph  of HEA's  letter says  "recent amendments  and changes                                                               
being proposed  will significantly alter the  GRETC legislation".                                                               
And then it says, "the  HEA board cannot support these amendments                                                               
without a  thorough review and  consideration of the  effect they                                                               
will have".  Senator French said  that it looks like HEA does not                                                               
support the committee substitute.                                                                                               
                                                                                                                                
MR. JANORSCHKE replied that HEA did  agree to one change from the                                                               
original  GRETC  legislation  pertaining to  RCA  regulation.  He                                                               
knows  further  changes  have been  requested  to  AS  42.50.170,                                                               
regarding the  authority for oil and  gas leases. One of  the key                                                               
components of SB  143 that the Task Force agreed  to was allowing                                                               
GRETC to pursue that. He hopes the clause will remain in SB 143.                                                                
                                                                                                                                
5:08:51 PM                                                                                                                    
CO-CHAIR MCGUIRE asked Mr. Janorschke  what he opposes in Version                                                               
S that is before the committee.                                                                                                 
                                                                                                                                
MR. JANORSCHKE replied  that HEA's request is  that the authority                                                               
for oil and gas leases remain in the GRETC legislation.                                                                         
                                                                                                                                
CO-CHAIR  MCGUIRE confirmed  that this  is Mr.  Janorschke's only                                                               
"hang up".                                                                                                                      
                                                                                                                                
MR. JANORSCHKE replied, "affirmative".                                                                                          
                                                                                                                                
CO-CHAIR  MCGUIRE  asked Mr.  Janorschke  for  a letter  to  that                                                               
effect.                                                                                                                         
                                                                                                                                
MR. JANORSCHKE replied that he will provide such a letter.                                                                      
                                                                                                                                
PETER BRUSHELL,  director, Matanuska Electric  Association (MEA),                                                               
said Bradley Lake is a  success story and is operated effectively                                                               
without RCA. The  Joint Utility Task Force argued  and things got                                                               
heated but  the Task  Force also realized  and admitted  not much                                                               
could be accomplished without working together.                                                                                 
                                                                                                                                
5:12:05 PM                                                                                                                    
The state's support and leadership  is also needed. Over the past                                                               
year,  the  Task  Force has  built  compromise,  examination  and                                                               
cooperation  with  the  state.  The  document  presented  to  the                                                               
Legislature includes the best ideas  and intentions for meeting a                                                               
crisis. He  noted that he has  never heard what the  cost will be                                                               
to MEA commercial  and residential consumers if a  bullet line or                                                               
a main line with a spur is built.                                                                                               
                                                                                                                                
5:15:22 PM                                                                                                                    
CAITLIN HIGGINS,  executive director, of the  Alaska Conservation                                                               
Alliance (ACA), encouraged statutory  language requiring GRETC to                                                               
evaluate   and   enact   cost-effective   conservation   in   the                                                               
development  of its  Integrated  Resource  Plan (IRP).  Renewable                                                               
energy with a  stable long-term price is the  region's best long-                                                               
term  economic interest.  The ACA  supports the  committee's goal                                                               
that  Alaska should  generate at  least 50  percent of  its power                                                               
from  renewables. GRETC's  statutory language  could support  the                                                               
goal  as part  of the  new  utilities IRP.  ACA supports  ongoing                                                               
regulatory and financial  oversight of GRETC, with  no sunset, as                                                               
it  ensures that  individual rate  payers, business  and industry                                                               
have  access to  reliable,  safe utility  services. Rate  payers'                                                               
voices are an  essential aspect of utility  governance; the board                                                               
of  directors of  the new  utility should  include a  significant                                                               
portion of citizen representatives  or a separate citizen utility                                                               
board    should   overseeing    utilities   activities.    Public                                                               
representation  and  oversight should  be  a  meaningful part  of                                                               
GRETC.  So  that ACA  may  support  SB  143, ACA  encourages  the                                                               
committee  to   consider  language   to  address   financial  and                                                               
regulatory oversight, public input and energy efficiency.                                                                       
                                                                                                                                
5:18:58 PM                                                                                                                    
RICK  SCHIKORA, treasurer,  Golden  Valley Electric  Association,                                                               
said Golden Valley represents 43,000  members in the Interior and                                                               
has participated  in the  GRETC task force  since April  2009. SB
143 would allow at least 4 of  the 6 Railbelt utilities to form a                                                               
company  to  provide  wholesale   power  to  Railbelt  utilities.                                                               
Participation  would be  voluntary  and rates  for  power out  of                                                               
those  projects would  be on  a non-discriminatory  basis between                                                               
those participants. GRETC is designed  to be a wholesale electric                                                               
company  providing electricity  and  other  services to  Railbelt                                                               
utilities, all of whom, except  the city of Seward, are regulated                                                               
by the RCA. Due to the  rate payer protections built in the GRETC                                                               
legislation, GRETC should  not be subjected to  RCA regulation. A                                                               
compromise of five years of  regulation has been reached with the                                                               
governor. The  board members of  GRETC are either elected  by the                                                               
ratepayers of  member utilities  or appointed  by those  who are.                                                               
All six  Railbelt utilities worked  on SB 143 and  all provisions                                                               
were agreed  to by representatives  of the governor's  office and                                                               
Alaska Energy Authority  (AEA). SB 143 works and  allows GRETC to                                                               
make electricity by people who know how to do it.                                                                               
                                                                                                                                
5:22:26 PM                                                                                                                    
RICH  WILSON, Alaska  Ratepayers, said  his group  is made  up of                                                               
grassroots  ratepayers from  Fairbanks down  through Southcentral                                                               
with the  goal of pursuing  affordable and predictable  rates. SB
143 is a  way to achieve regional cooperation  in an organization                                                               
that can get the job done.  Ratepayers should be given a right to                                                               
participate  in the  process.  Long-term  benefits to  ratepayers                                                               
must include  projects that are  too big  for any one  utility in                                                               
the Railbelt.  The financial cost  and size of solutions  such as                                                               
Susitna   or  Chakachamna   hydro-facility  require   a  regional                                                               
solution.                                                                                                                       
                                                                                                                                
5:25:28 PM                                                                                                                    
TOM LAKOSH,  representing himself, said utilities  cooperation is                                                               
needed,   not  only   to  plan   and   purchase  generation   and                                                               
transmission, but  to have a  regional distribution  utility. The                                                               
language allows certain assets to  be withheld from the group and                                                               
does  not  ensure  proper  control of  the  grid  to  incorporate                                                               
intermittent  renewables. To  get to  the renewable  standard set                                                               
out  in policy,  a single  dispatch utility  for wholesale  power                                                               
from Fairbanks  to Homer  is needed. The  ability to  put certain                                                               
assets  into the  GRETC  coffer seems  suspicious  in that  aging                                                               
facilities with outstanding  debt are most likely to  be paid off                                                               
by GRETC where the most  efficient and valuable to the individual                                                               
utility  will be  withheld possibly  even  from distribution  and                                                               
dispatch.  Policies for  conservation and  renewables need  to be                                                               
clearly stated for  GRETC. A unified utility should  not only buy                                                               
new generation  but effectively conserve throughout  the Railbelt                                                               
and plan for proper dispatch for intermittent renewables.                                                                       
                                                                                                                                
5:28:38 PM                                                                                                                    
CO-CHAIR  MCGUIRE   closed  public  testimony  and   thanked  all                                                               
utilities that  testified. She said she  would try to get  SB 143                                                               
out as  soon as  possible. A  meeting will  be scheduled  to talk                                                               
about the issue of regulation.                                                                                                  
                                                                                                                                
5:28:57 PM                                                                                                                    
CO-CHAIR MCGUIRE, seeing no further business to come before the                                                                 
committee, adjourned the meeting at 5:28 p.m.                                                                                   

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