Legislature(2011 - 2012)BUTROVICH 205
02/21/2011 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB24 | |
| SB44 | |
| SB42 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 24 | TELECONFERENCED | |
| += | SB 44 | TELECONFERENCED | |
| += | SB 42 | TELECONFERENCED | |
SB 42-POWER PROJECT; ALASKA ENERGY AUTHORITY
3:39:39 PM
CO-CHAIR PASKVAN announced the consideration of SB 42. Since the
last committee meeting the Department of Law, on behalf of the
bill sponsor, submitted answers to the questions raised by the
committee but their proposed amendment was not received in time
to take action.
3:40:30 PM
CO-CHAIR PASKVAN said he would not entertain an amendment but
the sponsor's representatives could discuss their responses. He
asked Ms. Fischer-Goad and Mr. Bjorkquist to walk the committee
through the document titled, "Response to Committee Questions
and Concerns."
3:42:00 PM
SARA FISHER-GOAD, Executive Director, Alaska Energy Authority
(AEA), introduced herself and Brian Bjorkquist, Senior Assistant
Attorney General, Civil Division, Department of Law (DOL),
introduced himself.
MS. FISHER-GOAD said the proposed language does several things.
First, it would remove the authority for AEA to adopt
regulations for procurement purposes. Second, it would change
the language on page 3, line 4, deleting "the authority may use"
and inserting "the legislature may appropriate." This section
relates to the Railbelt Energy Fund and the new Alaska Railbelt
Energy Fund essentially having the same legislative oversight
and authority for appropriation as exists with the current
Railbelt Energy Fund. The one fund would be repealed and the
Alaska Railbelt Energy Fund would be created as an AEA fund.
Page 4, line 22, corrects an oversight and deletes the extra
construction that was added in the legislation. The additional
changes allow legislative authority for AEA to create one
specific subsidiary; this would be the subsidiary needed for
development of the Watana project on the Susitna River.
3:45:14 PM
AEA would remain exempt from Regulatory Commission of Alaska
(RCA) oversight for this project. The change would allow AEA to
hire employees and the fiscal notes address the transfer of
existing employees as AEA employees. It's appropriate for AEA to
have employees again.
3:46:18 PM
CO-CHAIR PASKVAN asked if this response was sufficient to get
the Watana project to the Federal Energy Regulatory Commission
(FERC).
MS. FISHER-GOAD answered yes.
SENATOR WIELECHOWSKI asked about the policy of building Susitna
hydro. Perhaps there should be discussion about this versus
alternatives.
CO-CHAIR PASKVAN questioned his intent in asking.
SENATOR WIELECHOWSKI replied the Legislature would be removed
from oversight under this bill, so he wondered if there should
be more discussion of ramifications.
CO-CHAIR WAGONER said he agreed with regard to fish issues and
the amount of land covered by water.
CO-CHAIR PASKVAN stated this bill won't decide all the issues
that need to be decided.
3:49:40 PM
SENATOR WIELECHOWSKI asked what would be the role of the
Legislature if this bill were to pass.
MS. FISHER-GOAD answered this bill starts the preliminary permit
application and gets FERC attention. AEA could then zero in on
the studies needed and the potential design limitations. There
is also a $65 million appropriation bill but that won't get the
project through the entire FERC process, just three years. The
Legislature fits in the appropriation process through the
capital budget.
3:51:52 PM
SENATOR WIELECHOWSKI asked if this would give AEA authority to
bond.
MS. FISHER-GOAD replied AEA can issue bonds now but wouldn't
have a project to bond for until this process is worked through.
CO-CHAIR PASKVAN asked Mr. Bjorkquist to comment on or respond
to the question.
BRIAN BJORKQUIST, Senior Assistant Attorney General, Civil
Division, Department of Law (DOL), said through this process,
the issues will be studied in the FERC licensing process.
Entities will then use the information when deciding whether to
go forward. FERC will use the information, utilities will use
it, and the RCA will use it. The Legislature will also look at
the information and decide whether to appropriate additional
funds.
CO-CHAIR PASKVAN asked if AEA would be able to bond without
action by the legislature.
MR. BJORKQUIST replied they could, but it's not something that
could be done without the other components in place, including
power source agreements and revenue sources.
3:55:03 PM
SENATOR WIELECHOWSKI said it seems there will be an
Environmental Impact Statement and a finding decision, possibly
about impacts to fish, and that becomes the policy call. He
asked who would make that policy call about going forward.
MR. BJORKQUIST said FERC has an obligation to deal with the fish
and wildlife issues and put them into the license. There is also
a dispute resolution process.
3:56:45 PM
CO-CHAIR PASKVAN asked if the committee should hold hearings on
those issues now.
MS. FISHER-GOAD answered through this process AEA has provided
overviews of the project. Further conversations wouldn't provide
more information until there is a dialogue with the federal
agency. If SB 42 becomes law and the application process is
complete she believes that AEA will be back before the committee
next year.
3:58:50 PM
CO-CHAIR WAGONER said it's up to the committee to decide what
information it wants to follow up on. He said he had already
asked the Commissioner of Fish and Game to start thinking about
this project and follow it very closely. The committee should
not wait too long to get information and do the studies. Lots of
work can be done but the committee could direct the departments
to do this.
4:00:04 PM
SENATOR FRENCH said he appreciated the changes on page 3
regarding authority to spend money, but asked how much AEA
expected to draw from the fund to do business for the next year;
what would be the draw on the fund for Watana.
MS. FISHER-GOAD replied the changes on page three are separate
from the appropriation process. The appropriation in the capital
budget is coming from the existing Railbelt Energy Fund. For
FY12 the potential draw is about $20 million.
SENATOR FRENCH said he understood the changes would be to push
the Watana project forward.
MS. FISHER-GOAD answered that change sets up a fund which is
similar to the existing Railbelt Energy Fund. The capital budget
this year appropriates the money to AEA as a capital
appropriation. The amendment is to make sure the new fund has
the same authority as the current fund.
4:04:14 PM
SENATOR FRENCH said he did not understand.
MS. FISHER-GOAD replied the capital appropriation is directly to
AEA, not to the new Railbelt Energy Fund.
CHAIR FRENCH asked who would oversee the expenditure of the
fund.
MS. FISHER-GOAD answered we provided information about how that
money would be spent; it is for FERC permitting and licensing
and the Susitna project.
SENATOR FRENCH said then AEA wouldn't need to ask for an
additional appropriation to the fund until the $63 million is
spent.
MS. FISHER-GOAD responded yes, but the money could come from
another source.
4:06:28 PM
SENATOR FRENCH asked if the Railbelt fund and Watana are
separate subjects.
MS. FISHER-GOAD answered yes.
SENATOR FRENCH said, at the end of this year AEA will have $63
million and the Alaska Railbelt Energy Fund will have how much.
MS. FISHER-GOAD replied that fund won't have a balance unless
there is a separate appropriation.
CO-CHAIR WAGONER said it's up to the finance committee to
appropriate for this project. That's where the Legislature has
control.
4:08:14 PM
SENATOR WIELECHOWSKI said if this bill is adopted with the
proposed amendment, it gives AEA the ability to bond for a
project as per page 4, so the legislature would give up its
oversight.
MR. BJORKQUIST answered yes, theoretically, but as a practical
reality there has to be a revenue source to repay the bond or no
one will buy the bonds.
CO-CHAIR PASKVAN said he welcomed the questions.
4:10:06 PM
SENATOR WIELECHOWSKI asked if the bill would also give AEA the
ability to acquire power projects other than Watana.
MS. FISHER-GOAD answered yes.
CO-CHAIR WAGONER said but AEA has no revenue source unless the
Legislature makes an appropriation.
MS. FISHER-GOAD said that was correct; the intent of the
legislation was not to limit the authority to one project. AEA
would look at what projects would make sense to own to
potentially reduce energy costs for ratepayers.
CO-CHAIR WAGONER mentioned Ormat's proposed geothermal project,
and said they may want to sell AEA the project. He asked how AEA
would handle that
MS. FISHER-GOAD responded AEA would look at the revenue source
to pay for that and then approach the Legislature about
financing. The Legislature would be involved.
SENATOR WIELECHOWSKI asked if the revenue source would be the
money AEA would get back from its power purchase agreement.
MS. FISHER-GOAD answered yes but there are reserve funds
associated with those bonds and AEA would need to finance those.
MR. BJORKQUIST added that AEA is also subject to annual
appropriation for operating expenses and that would be subject
to legislative oversight.
SENATOR WIELECHOWSKI said he didn't understand.
MS. FISHER-GOAD responded it would depend on the size of the
project and the structure of the financing.
MR. BJORKQUIST said the revenue source must be adequate to pay
off the bonds and fund the reserve. The FERC license would also
need to be in place first, as would the power sales agreement.
All would need to be in place prior to bonding.
4:17:06 PM
CO-CHAIR PASKVAN asked if the definition of "project" on pages 4
and 5 is appropriate for Watana on the Susitna River or for
other projects statewide.
MR. BJORKQUIST said under AS 44.83.990(6) a power project means
"a plant, works, system or facility together with necessary or
related facilities and appurtenances including a divided or
undivided interest in or a right to the capacity of a power
project that is used or is useful for the purpose of electrical
or thermal energy production." It would encompass all aspects
of hydropower, like Watana, and other types of electrical
generation projects.
CO-CHAIR PASKVAN asked if the words "if approved by law" on page
4 mean that AEA could form a subsidiary corporation from Watana
and receive funds the Legislature thought would go to Watana.
MS. FISHER-GOAD replied it's a two-part process. It gives
general authority to create a subsidiary, but requires
legislative authority to create a specific subsidiary.
CO-CHAIR PASKVAN said if just one subsidiary were formed the
money couldn't be transferred.
MS. FISHER-GOAD answered that was correct.
SENATOR FRENCH noted that 44.83.130 says AEA is on the hook for
the bonds it issues, and not the state.
MR. BJORKQUIST replied that is basically correct. Moral
obligation bonds could be issued, but these would be subject to
later appropriation.
SENATOR FRENCH added that before issuing bonds AEA must give
notice to the Legislature and the governor.
MR. BJORKQUIST agreed, saying there are no proposed amendments
to that section of the law.
4:22:45 PM
CO-CHAIR PASKVAN announced he would hold SB 42 in committee for
continued work. #
There being no further business to come before the committee, he
adjourned the meeting at 4:23 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 44 Land Ownership and Larger SE Mill Status.ppt |
SRES 2/21/2011 3:30:00 PM |
SB 44 |
| SB 44 SE Land Summary.pdf |
SRES 2/21/2011 3:30:00 PM |
|
| SB 44 SE Land Summary Backup.pdf |
SRES 2/21/2011 3:30:00 PM |
SB 44 |