Legislature(1993 - 1994)
01/18/1994 01:00 PM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
January 18, 1994
1:00 p.m.
MEMBERS PRESENT
Representative Harley Olberg, Chairman
Representative Jerry Sanders, Vice-Chair
Representative Con Bunde
Representative John Davies
Representative Cynthia Toohey
Representative Ed Willis
MEMBERS ABSENT
Representative Bill Williams
COMMITTEE CALENDAR
Overview of Division of Energy, Department of Community and
Regional Affairs
WITNESS REGISTER
EDGAR BLATCHFORD, Commissioner
Department of Community and Regional Affairs
P.O. Box 112100
Juneau, AK 99811
Phone: 465-4700
Position Statement: Testified on behalf of the Department
of Community and Regional Affairs
BRUCE GERAGHTY, Deputy Commissioner
Department of Community and Regional Affairs
P.O. Box 112100
Juneau, AK 99811
Phone: 465-4700
Position Statement: Testified on behalf of the Department
of Community and Regional Affairs
ROBERT E. HARRIS, Director
Division of Energy
Department of Community and Regional Affairs
3333 W. 4th Street, Suite 220
Anchorage, AK 99501
Phone: 269-4500
Position Statement: Testified on behalf of the Department
of Community and Regional Affairs
LINDA THOMAS, Deputy Director
Division of Energy
Department of Community and Regional Affairs
3333 W. 4th Street, Suite 220
Anchorage, AK 99501
Phone: 269-4500
Position Statement: Testified on behalf of the Department
of Community and Regional Affairs
ACTION NARRATIVE
TAPE 94-1, SIDE A
Number 001
CHAIRMAN HARLEY OLBERG called the meeting to order at 1:05
p.m. He noted for the record Representatives Willis,
Toohey, Sanders, Bunde and Davies were present and noted for
the record a quorum was present.
Number 027
EDGAR BLATCHFORD, Commissioner, Department of Community and
Regional Affairs (DCRA), introduced the DCRA's employees who
were present. He began, "BRUCE GERAGHTY is the Deputy
Commissioner. He has headed the transition program since
August 12 which is when we took official control over the
energy programs, amalgamated the programs into a division
within DCRA. ROBERT HARRIS is the Director of the Division.
He was appointed about two months ago. LINDA THOMAS is the
Deputy Director of the Division. Both of them were brought
into DCRA to head a division that we feel must be done in a
total professional manner, absolutely ethical."
COMMISSIONER BLATCHFORD continued, "Our instructions from
the Office of the Governor are very simple, Mr. Chairman,
are to develop an energy policy for the State of Alaska,
paying particular attention to rural energy needs. We've
come close to resolving the energy questions in the railbelt
system, Southeast Alaska, now we have the big void out there
and that is rural Alaska."
Number 105
BRUCE GERAGHTY, Deputy Commissioner, DCRA, said, "You
adopted a piece of legislation last year that basically put
the what used to be the Alaska Energy Authority (AEA),
consolidated it within the DCRA. We went with the
independent division approach. We did quite a bit of work
with various members of the legislature and the Governor's
Office on how to interpret various aspects of the
legislation. There's a clause in there that was paramount
in our minds about contracting to the greatest extent
possible... functions formerly done in-house by the energy
authority... we ended up after we took control in August...
was moving in the direction of identifying programs that fit
that mandate..."
MR. GERAGHTY continued, "For one reason or another, there
was some very critical decisions that we were having a tough
time making. Those basically ended up in the commissioner's
office. And as a result of those decisions, we had a change
in our initial plan... that all occurred in October.
Although it may not seem to be, it is a major reorganization
of state government, provision of service... Some of the
processes that are in place within state government that
have to do with laws on the books, administrative procedures
things, procurement, personnel, make this type of
reorganization very difficult. It's hard on the employees
that are involved and it's very difficult from a management
perspective. It seems like at every turn, you have to ask
legal advice and that just impedes the decision making
process and things start slowing down... In these times of
austere revenues or declining revenues, I think as
legislators looking at various proposals, that you keep that
in the back of your mind..."
Number 230
REPRESENTATIVE CYNTHIA TOOHEY said, "When you see something
that obviously needs a change, can the commissioner call me
and say, "Look, we need a statutory change, this is what
will help us... If we can't help you in that field, how
else can we do it?"
MR. GERAGHTY replied, "Like on personnel issues. DCRA
doesn't typically take the lead on that framework, that's
the Department of Administration. And quite frankly, we
haven't had the time, other than to throw up our hands from
time to time, and stick our head out the window and scream.
We really haven't had a chance to get into some of the nuts
and bolts, details of how it would effect other departments.
But, for instance in the case of this legislation, when you
pass something as comprehensive as that, a clause in the
bill that would identify what we're supposed to do with the
employees, how we're supposed to deal with the employees, I
think there's some general language that would give us a
little more leeway and, basically, limit our liabilities and
allow us to make the types of management decisions and then
ultimately, be more responsible to you and your intentions
in passing that legislation as administrators. We spend a
great deal of time explaining how come it doesn't work that
quickly. And to avoid some of that, some clarifying
language as to what you do with the people, what do you do
with the existing contracts, what do you do with the
procurement items in the transition period. If those types
of things were included in the legislation, then I think it
would occur a little smoother."
Number 284
REPRESENTATIVE TOOHEY added, "If there's a need, please let
us help."
ROBERT HARRIS, DIRECTOR, DIVISION OF ENERGY, DCRA, testified
and referenced the handout he distributed to the
legislators. (A copy of this handout may be found in the
House Community and Regional Affairs Committee Room, Capitol
Room 126, and after the adjournment of the second session of
the 18th Alaska State Legislature, in the Legislative
Reference Library). He briefly described the programs in
the Division of Energy.
MR. HARRIS continued, "We are involved with Rural Utility
Training. That's where we work with operators of rural
utilities and try to get them to a point which they can
operate and maintain the physical plant of their utilities.
We see that as a key component of being able to eventually
ward of emergencies where a gen-set catches on fire. It
saves money down the road." He proceeded to describe the
Metering and Data Acquisition, Operation Support, and the
Bulk Fuel programs in order throughout the handout. "We're
also looking at site specific coal-fired plant to see if we
can have a small coal fired plant and then connect a number
of villages with an intertie," he said.
Number 388
CHAIRMAN OLBERG asked, "Are you looking at any place in
particular for this project?"
MR. HARRIS said, "Little Tonzona. It's in the Doyon Region,
I believe. We've been working with some folks in the Doyon
Region. The project right now consists of taking some of
the coal out, sending it down for analysis to determine it's
heat value, some of the chemical properties of it."
REPRESENTATIVE TOOHEY confirmed that they have a local coal
source in the Doyon Region and asked if the Denali coal
plant, "clean coal," was presently operating.
REPRESENTATIVE JOHN DAVIES said, "It's a go. They satisfied
the requirements by reducing the pollution levels from the
existing plant sufficiently."
Number 415
MR. HARRIS continued, "Another area of alternate applied
energy is... we're looking at wind powered generation
particularly around the coastal areas. I know in the past
it was tried with limited success in some areas because the
technology that was brought up was perhaps more applicable
to some areas of California but I know in recent times a
good amount of work has been done in the arctic
environment." He continued through the handout with the
Biomass program, which he indicated was matched with federal
funds.
MR. HARRIS added, "Rural Power Systems Upgrades are where we
receive information on particular systems that need
upgrading to REA (Rural Electric Authority) standards or to
improve efficiency or the National Electrical Safety Codes
standards need to be met, we will be able to provide the
local utility or contractor with money in order to go out
and do that. For FY 94 we have 19 proposed projects
totaling two million dollars and priority is given to
communities that contribute matching funds."
Number 440
REPRESENTATIVE CON BUNDE commented, "I appreciate your
taking into account local match and all the positives that
that does as far as ownership and pride of accomplishment."
MR. HARRIS then spoke about the Life, Health and Safety
Improvements program. "A good example might be a village
where the transformer sits on the ground and the electrical
conductors going into it are exposed." He then proceeded
with descriptions of the Electrical Service Extension Grant
Program and the Alaska Electric Power Statistics program.
He concluded with the Rural Utility Regionalization
Consolidation and Business Management programs.
REPRESENTATIVE TOOHEY asked if the Electrical Service
Extension Grant program was federally funded.
Number 465
MR. HARRIS indicated it was state funded.
CHAIRMAN OLBERG added, "The utility has to be agreeable. We
found out if the local utility's not interested in doing the
extension, apparently it doesn't happen."
Number 475
MR. HARRIS described the waste heat recovery facilities
currently operating. He then proceeded with Power Cost
Equalization (PCE). "The purpose of Power Cost Equalization
is to equalize the cost of power statewide during FY 94. I
think the program is funded at approximately 17 and a half,
18 million dollars to 66,000 rural Alaskans. We have
programs that have been in place in the past to help fund
upgrades to utilities so that they could lower their power
cost equalization receipts and those programs we will
continue to look at." He then described some loan programs
available to communities.
Number 494
REPRESENTATIVE DAVIES asked, "Are there programs in place
providing incentives within PCE to go to more efficient
technologies?"
MR. HARRIS replied, "One of the criteria we would be looking
at in providing the grant under the Rural Power Systems
Upgrade program would be if it's going to impact Power Cost
Equalization."
REPRESENTATIVE DAVIES added, "I think on the other side of
the coin, too, I hope that there is coordination with the
folks that are working on conservation on energy. Better
insulation, better quality buildings, those kinds of
considerations. But also somehow have incentives within the
PCE program."
CHAIRMAN OLBERG asked, "Is there an off-the-shelf small coal
fired generator that one could just go buy? I'm thinking
two, three, 500 KW. Is that the range we're looking at?"
Number 525
MR. HARRIS said, "The facilities that we've looked at here
are in order of a megawatt. And that would serve a number
of communities. I don't personally know of any smaller
units."
MR. GERAGHTY added, "One of the other areas that shows some
promise that we're coordinating on with DNR (Department of
Natural Resources) is the potential for gas to supply
various regions, groups of villages, with power. There is
the potential there for that and it may not be what the oil
companies term as commercially viable because you don't have
enough there to ship it but it might supply 15 or 20
villages with fuel for 200 years. It's a matter of
identifying where those potentials are getting some sort of
agreement worked out where somebody will put down a couple
of wells and find out what's there."
CHAIRMAN OLBERG added, "Maybe a tax credit for ARCO or BP or
somebody for drilling a well."
MR. GERAGHTY said, "Actually, the Governor does have a piece
of legislation in on block leasing for exploration that I
think would lend itself to the type of exploration we're
looking for here."
Number 561
CHAIRMAN OLBERG asked, "Does Barrow use gas off the naval
petroleum reserves?"
MR. GERAGHTY replied, "Yes, they're totally powered by gas."
CHAIRMAN OLBERG continued, "Then we'd be looking at tapping
off a gas line if it were to be built."
MR. GERAGHTY said, "Typically, Mr. Chairman, what we'd need
is a well and a gas turbine and then intertie lines. For
example, in the Bethel area you have somewhere in the
neighborhood of 15 villages which are all within a 20 or 30
mile radius."
CHAIRMAN OLBERG clarified, "I wasn't suggesting we would
only use the pipeline if it were to be built but it would be
a natural source of power for some villages I'm sure."
REPRESENTATIVE ED WILLIS asked if any hydro installations
were used in Alaska.
Number 589
MR. HARRIS said, "I've talked to some people. I know that
there's some interest. But as of right now we don't have
any programs looking at small hydro. We do continue to
gather geological data, hydrological data on some streams."
CHAIRMAN OLBERG said, "A good local example is at
Eaglecrest. Eaglecrest actually generates its own summer
electricity off a little hydro plant."
MR. HARRIS described some Division of Energy loan programs.
MR. GERAGHTY added, "Some of these loan programs actually
were in existence in AEA but the names were changed, some of
the criteria was changed or modified somewhat, but typically
these were already in existence. The Bulk Fuel Revolving
Loan Fund, I don't believe has changed at all. The Power
Project Fund, I cannot remember what it's original name
was."
LINDA THOMAS, DEPUTY DIRECTOR, DIVISION OF ENERGY, DCRA,
said, "PDRL. Power and Development Revolving Loan."
MR. HARRIS said, "The Rural Electrification Revolving Loan
Fund. Currently we don't have any requests for money from
that loan fund and in fact, there's no money to loan." He
summed up his presentation with, "The last legislative
session where money was appropriated for the Sutton-
Glennallen Intertie, the Division of Energy took over the
function from the Alaska Energy Authority of performing a
feasibility study of that intertie so that's one other
activity that we're presently engaged with and it's
suspected that the draft feasibility study would be released
sometime near the end of the month. Followed by a public
comment period thirty days after release of the draft."
Number 633
REPRESENTATIVE JERRY SANDERS asked for clarification of the
financial status of the Rural Electrical Revolving Loan
Fund. He asked, "Are you phasing it out then?"
MR. HARRIS replied, "Essentially the function has been
replaced by the Electric Service Extension Grant program,
Rural Power Systems Upgrades, so some of the functions that
were done in that earlier program are now being done in
other programs we have."
REPRESENTATIVE SANDERS asked, "As this money is repaid, the
original fund, what happens to it?"
MR. GERAGHTY indicated any funds would go into the general
fund.
REPRESENTATIVE DAVIES asked regarding the Alternate and
Applied Energy program, "How much money's involved in this?
Is it your expectation? Then you might free up money to
take on the examination of other possibilities under
Alternate Energy?"
Number 672
MR. GERAGHTY said, "Right now we have two development
specialists. But, I think what we've talked about here
today, the potential for gas, coal, wind, hydro, those types
of things are going to be paramount to their daily
activities. I know one of the things that Robert (has) been
working on with the engineering staff is determining how
many projects can we deal with in-house, which types, levels
of projects does it make economic sense to do in-house,
which ones contract out. To some extent, we're doing the
same thing with all the other positions including the
development specialists. Where does it make sense to target
our limited resources for potential for gas; where does it
make sense to do a pilot project for coal?."
REPRESENTATIVE DAVIES said, "There are a number of
opportunities in the State of Alaska to encourage those
kinds of things. What I would hope is that one of the major
things that these development specialists would do is to
highlight those things."
MR. GERAGHTY acknowledged saying, "We are working with
Alaska Science and Technology Foundation. Our director of
Community and Rural Development, where our economic
development specialists are, he is from the university
system. We utilized him to make some inroads in."
TAPE 94-1, SIDE B
Number 001
MR. GERAGHTY continued, "There's a wealth of knowledge up
there and the university system for one reason or another
hasn't, in my mind, how would I say, applied its expertise
as fully as I think it could to assist the state in the
development of its resources. Whatever we can do from the
administrative side of things, as a department, to kind of
draw this out of them because there is interest."
Number 030
REPRESENTATIVE DAVIES said, "Oftentimes, it's not a question
of not being willing to do, it's just simply not being aware
that there's a need out there in the state. That's why I'm
encouraging your new division to jawbone these folks because
I'm sure they would be more than willing to do that, and
there's many opportunities with the support that your
division could give them to go for federal engineering funds
to support the initial research."
Number 072
REPRESENTATIVE TOOHEY pointed out that Mr. Harris probably
had "a conduit" with Massachusetts Institute of Technology
where he attended school.
MR. HARRIS offered some financial figures on the scale of
the projects they oversee and explained the division's
working relationship with the Alaska Council on Science and
Technology.
CHAIRMAN OLBERG said, "Fires are definitely a problem. Is
there any typical generator fire, anything you can do on a
broad scale to limit these fires or is it something that
happens with diesel fuels and electricity?"
MR. HARRIS said, "The village has to as a first step, clean
that unit up, that's the biggest single preventer of a
fire."
ADJOURNMENT
REPRESENTATIVE OLBERG thanked DCRA's staff for their
attendance and adjourned the meeting at 2:15 p.m.
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