Legislature(2009 - 2010)BUTROVICH 205

02/25/2010 04:00 PM RESOURCES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Scheduled But Not Heard
Moved CSSB 203(RES) Out of Committee
Bills Previously Heard/Scheduled
Moved CSSB 277(RES) Out of Committee
        SB 277-PUB. UTILITY EXEMPTION: RENEWABLE ENERGY                                                                     
4:16:54 PM                                                                                                                    
CO-CHAIR  WIELECHOWSKI announced  the next  order of  business to                                                               
come before the committee was SB 277.                                                                                           
SENATOR FRENCH  moved to adopt the  proposed committee substitute                                                               
(CS) for SB 277, labeled  26-LS1353\P, as the working document of                                                               
the committee.                                                                                                                  
SENATOR WIELECHOWSKI objected for discussion purposes.                                                                          
MICHAEL  PAWLOWSKI, Staff  to Senator  McGuire,  said changes  in                                                               
Section 3  [on page 2, version  P] respond to concerns  about the                                                               
size  of the  projects  that could  be  exempted from  regulation                                                               
under SB 277.  On page 2, lines 9-10 specify  that SB 277 applies                                                               
to  facilities placed  into service  before January  1, 2016.  On                                                               
page  2, line  11  limits the  size of  the  facilities to  those                                                               
generating  less  than  65  megawatts  of  electricity.  He  said                                                               
Senator  Stedman had  been concerned  about large  hydro-projects                                                               
being built,  particularly with state money,  without regulation.                                                               
Mr.  Pawlowski explained  that on  page 2,  Section 3,  paragraph                                                               
(3),  lines 14-19  state that  the exemption  from regulation  is                                                               
appropriate  if the  facility  is not  receiving  tax credits  or                                                               
state grants.                                                                                                                   
He said the fundamental point of  SB 277 is maintained on page 2,                                                               
lines 12-13 of  Version P. The power sales  agreement between the                                                               
power  producer and  the consumers  is regulated  at the  utility                                                               
level. The power  producer will sell power to a  utility and that                                                               
power sales agreement must go up for approval by the commission.                                                                
4:20:18 PM                                                                                                                    
He  explained  that  Section  3  [page 2,  version  P]  was  also                                                               
redrafted  to apply  to the  plant  or facility  rather than  the                                                               
SENATOR  STEVENS  asked   for  a  point  of   reference  to  help                                                               
understand the magnitude of 65 megawatt plant.                                                                                  
MR.  PAWLOWSKI said  much of  the larger  generation in  the Rail                                                               
Belt is about 60 megawatts, such  as the North Pole Extension. He                                                               
said  under   a  provision  in  the   Federal  Energy  Regulatory                                                               
Commission (FERC), an 80 megawatt  plant generated from renewable                                                               
energy can apply for exemptions to regulations.                                                                                 
4:22:48 PM                                                                                                                    
SENATOR STEVENS asked how many megawatts Bradley Lake is.                                                                       
CO-CHAIR WIELECHOWSKI said  he believes Bradley Lake  is over 100                                                               
megawatts. Chakachumna  is proposed to be  360 megawatts, Susitna                                                               
is proposed  to be  from 400  to 1600 megawatts  and Mt.  Spur is                                                               
proposed to be 100 or 150  megawatts. He said SB 277 is contained                                                               
to the smaller renewable plants.                                                                                                
SENATOR MCGUIRE said 65 megawatts  would be around 5,000 to 6,000                                                               
households. She said  the massive projects are not  covered in SB
277,  which  should  ease  concerns  about  large  hydro-electric                                                               
facilities.  She  said  she worries  that  the  renewable  energy                                                               
companies  attracted to  Alaska  may be  discouraged  by the  RCA                                                               
4:25:14 PM                                                                                                                    
SENATOR MCGUIRE reiterated  that the philosophy behind  SB 277 is                                                               
to get as much power produced  in Alaska as possible, coming into                                                               
the  utilities, with  RCA overseeing  the ultimate  contract with                                                               
consumers. An  extra layer of  government could end up  killing a                                                               
project.  She  encouraged  committee   members  to  consider  the                                                               
broader question of renewable energy.                                                                                           
SENATOR FRENCH  asked what the  difference is between  having the                                                               
RCA regulate  a facility and  having the RCA regulate  a contract                                                               
between  a facility  that produces  electricity  and the  utility                                                               
that buys the electricity.                                                                                                      
STUART  GOERING, Assistant  Attorney  General, representing  RCA,                                                               
Department of Law,  Anchorage, replied that AS  42.05, the Public                                                               
Utility Regulatory Act, generally  speaks in terms of activities,                                                               
such as furnishing  electricity, not in terms  of facilities. The                                                               
process  begins  with a  Certificate  of  Public Convenience  and                                                               
Necessity  (CPCN)  which  requires   a  showing  that  a  utility                                                               
operator is fit, willing and able  to provide the service and the                                                               
service  is  in  the  public's convenience  and  necessity.  Once                                                               
certificated,  the utility  files a  tariff for  approval by  the                                                               
commission that specifies the terms,  rules and regulations under                                                               
which service is provided to the public.                                                                                        
4:30:02 PM                                                                                                                    
CO-CHAIR WIELECHOWSKI called a short at  ease at 4:30 p.m. due to                                                               
static over the sound system.                                                                                                   
SENATOR  FRENCH  asked  if  the   issuance  of  a  CPCN  is  more                                                               
comprehensive than passing on a wholesale power agreement.                                                                      
4:32:02 PM                                                                                                                    
CO-CHAIR WIELECHOWSKI  called another at  ease from 4:32  to 4:33                                                               
due to static over the sound system.                                                                                            
4:33:35 PM                                                                                                                    
MR.  GOERING said  that a  contract for  the supply  of wholesale                                                               
power between a utility and  non-regulated vendor is covered by 3                                                               
AAC 52.470(e) which  requires that the utility  file the contract                                                               
with the commission. Prior approval is not required.                                                                            
SENATOR FRENCH asked how many  vendors in Alaska sell electricity                                                               
without having themselves applied for and gotten a CPCN.                                                                        
MR. GOERING replied that he does  not have a firm answer but they                                                               
are  typically  small projects.  He  said  wholesale power  sales                                                               
agreements   are  usually   between   regulated  utilities.   The                                                               
assumption is  that the vendor  is unregulated because  these are                                                               
smaller projects. Under existing  law, anybody who provides power                                                               
to a  public utility  for compensation  becomes a  public utility                                                               
themselves and  the only  way to  not be a  public utility  is if                                                               
they  are a  Public  Utility Regulatory  Policies Act  Qualifying                                                               
Facility (PURPA QF).  That regulation would have  to be revisited                                                               
if SB 277 is enacted into law.                                                                                                  
4:36:31 PM                                                                                                                    
CO-CHAIR WIELECHOWSKI closed public testimony.                                                                                  
4:36:45 PM                                                                                                                    
CO-CHAIR WIELECHOWSKI  called an at  ease from 4:36 p.m.  to 4:39                                                               
4:39:30 PM                                                                                                                    
CO-CHAIR  WIELECHOWSKI said  the  committee  had a  comprehensive                                                               
list of  questions that had been  raised by Mr. Goering,  many of                                                               
which are legal  in nature and better addressed  by the judiciary                                                               
CO-CHAIR  WIELECHOWSKI removed  his objection  and version  P was                                                               
before the committee.                                                                                                           
4:40:11 PM                                                                                                                    
SENATOR MCGUIRE moved to report  CS for SB 277, 26-LS1353\P, from                                                               
committee  with   individual  recommendations   and  accompanying                                                               
fiscal notes. There  being no objection CSSB  277(RES) moved from                                                               
the Senate Resources Standing Committee.                                                                                        

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