Legislature(2001 - 2002)

01/23/2001 08:05 AM House CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                 ALASKA STATE LEGISLATURE                                                                                     
   HOUSE COMMUNITY & REGIONAL AFFAIRS STANDING COMMITTEE                                                                      
                     January 23, 2001                                                                                           
                         8:05 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
OVERVIEW: AK INDUSTRIAL DEV & EXPORT AUTHORITY                                                                                  
                                                                                                                                
TAPES                                                                                                                         
                                                                                                                                
01-3, SIDES A & B                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                                 
                                                                                                                              
REPRESENTATIVE  KEVIN MEYER,  CO-CHAIR,  convened the  House                                                                    
Community  & Regional  Affairs  Standing  Committee at  8:05                                                                    
a.m.                                                                                                                            
                                                                                                                                
PRESENT                                                                                                                       
                                                                                                                              
Committee  members   present  were   Representatives  Meyer,                                                                    
Morgan, Halcro, Murkowski, Guess, and Kerttula.                                                                                 
                                                                                                                                
SUMMARY OF INFORMATION                                                                                                        
                                                                                                                                
ROBERT  G.   POE,  Executive  Director,   Alaska  Industrial                                                                    
Development and  Export Authority (AIDEA) and  Alaska Energy                                                                    
Authority (AEA), gave  an overview of AIDEA and  AEA with an                                                                    
emphasis   on   AEA   programs,   specifically   bulk   fuel                                                                    
consolidation   projects   and   rural   power   enhancement                                                                    
projects.   Handouts were provided.   Mr. Poe  explained the                                                                    
organizational  structure of  AEA since  the breakup  of the                                                                    
Department  of Community  and Regional  Affairs.   The Rural                                                                    
Energy  Programs  include  Bulk Fuel  Storage  Upgrades  and                                                                    
Consolidations,  Rural  Power  System Upgrades,  Power  Cost                                                                    
Equalization.  The program has  two active loan funds, which                                                                    
are the Bulk Fuel Revolving  Loan Fund and the Power Project                                                                    
Fund.    There   is  one  inactive  loan   fund,  the  Rural                                                                    
Electrification  Loan Fund,  which still  has active  loans.                                                                    
Other  AEA  programs  include Alternative  Energy  Programs,                                                                    
Preventative  Maintenance  Rural Energy  Systems,  emergency                                                                    
response to  power outages and  bulk fuel  systems, training                                                                    
of local utility personnel and tank farm operators.                                                                             
                                                                                                                                
MR. POE  said there  are 1,000 storage  tank farms  in rural                                                                    
Alaska and that  AEA has been to 167  communities where they                                                                    
are  located.    Most  [storage   tank  farms]  are  not  in                                                                    
compliance  according  to   the    Environmental  Protection                                                                    
Agency  (EPA) and  the United  States  Coast Guard's  (USCG)                                                                    
criteria.   He  pointed out  that [storage  tank farms]  are                                                                    
prioritized  in a  database according  to maintenance  needs                                                                    
and  problems  with  the  tanks.    The  Bulk  Fuel  Program                                                                    
includes evaluation  of existing facilities.   Alaska Energy                                                                    
Association  repairs, builds,  designs, and  constructs code                                                                    
compliant  facilities.    Alaska  Industrial  Development  &                                                                    
Export Authority tries to  accomplish consolidation in order                                                                    
to gain  economy of scale  for containment of  possible fuel                                                                    
spills  and  to  build  in additional  capacity.    Mr.  Poe                                                                    
reviewed the handouts as well  as the funding applied to AEA                                                                    
projects  in rural  Alaska.   He pointed  out that,  through                                                                    
Senator  Stevens and  the Denali  Commission,  a great  deal                                                                    
more  money  has  been  made available  to  respond  to  the                                                                    
problem in Alaska.  The  challenge for AEA is to effectively                                                                    
use  and  apply  the  funds  to  deal  with  rural  Alaska's                                                                    
problems in a timely manner.                                                                                                    
                                                                                                                                
MR.  POE  said   that  on  January  18,   2001,  the  Denali                                                                    
Commission awarded  AEA $7 million  of additional  funds, $6                                                                    
million of which will go to  bulk fuel storage projects.  To                                                                    
date, $36  million has  gone into  that effort.     He noted                                                                    
that, in the  future, $20 million may  be available annually                                                                    
to  deal with  bulk fuel  storage tanks.   Therefore,  AEA's                                                                    
challenge  is to  effectively use  the money  to solve  this                                                                    
problem.                                                                                                                        
                                                                                                                                
MR. POE  turned to the  Rural Power System  Upgrade program.                                                                    
He  noted that  90 percent  of rural  communities in  Alaska                                                                    
generate  electricity through  diesel generation.   Projects                                                                    
are expensive and take a long  time to amortize and pay off.                                                                    
He remarked that  a gallon of diesel fuel is  still the most                                                                    
easily handled  and best-priced package  of energy  that can                                                                    
be brought to rural Alaska.   Diesel will be around for some                                                                    
time  to come.    Mr.  Poe informed  the  committee that  90                                                                    
percent   of  rural   electric  utilities   in  Alaska   are                                                                    
generating electricity  through diesel.  There  are very few                                                                    
interties.   Of 100  electric utilities,  80 serve  a single                                                                    
community and  thus there  are often  not many  economies of                                                                    
scale  or other  efficiencies  because  communities are  far                                                                    
apart.   Mr. Poe cited  four opportunities for  reducing the                                                                    
cost of generation in rural  Alaska:  evaluation of existing                                                                    
power    plants    and   distribution    systems,    design,                                                                    
construction, and repair and replacement of power projects.                                                                     
                                                                                                                                
MR. POE addressed AEA's response  to emergencies relating to                                                                    
the loss  of diesel generation.   He noted that  the defunct                                                                    
Rural  Electrification Loan  Fund  still has  loans out  and                                                                    
pays for emergency response.   This is commonly known as the                                                                    
Circuit  Rider  program,  which  also  does  training.    He                                                                    
pointed  out  that  AEA works  with  the  Alaska  Vocational                                                                    
Technical  Center  (AVTEC)  in   Seward  to  provide  onsite                                                                    
training  to  run  power  plants.   This  training  is  also                                                                    
provided  by  the  circuit  riders.     The  [Alaska  Energy                                                                    
Authority]  also  works  with  AVTEC to  provide  bulk  fuel                                                                    
operator  training,  as  well   as  utility  clerk  training                                                                    
associated with the Power Cost Equalization Program (PCEP).                                                                     
                                                                                                                                
MR.  POE  reviewed the  Alternative  Energy  Program.   This                                                                    
program   includes  wind,   fuel  cells,   batteries,  coal,                                                                    
biomass/wood   waste,   natural  gas,   hydroelectric,   and                                                                    
conservation.                                                                                                                   
                                                                                                                                
MR.  POE  addressed  Power   Cost  Equalization  (PCE)  that                                                                    
provides rate  reduction to 193  communities in Alaska.   He                                                                    
explained a two-step process,  which involves the Regulatory                                                                    
Commission of  Alaska (RCA) setting  the PCE rates  for each                                                                    
community  and considering  fuel expenses,  operating costs,                                                                    
and  overhead in  order  to  determine the  true  cost of  a                                                                    
kilowatt hour  in a community.    After  that determination,                                                                    
the  Rural Energy  Group defines  the amount  of electricity                                                                    
eligible for PCE.  Mr. Poe  gave a simple explanation of PCE                                                                    
calculations.                                                                                                                   
                                                                                                                                
MR. POE  explained the two previously  mentioned loan funds.                                                                    
The  Rural Electric  Group  has two  loan  funds: the  Power                                                                    
Project  Fund and  the Bulk  Fuel Revolving  Loan Fund,  (as                                                                    
well  as the  defunct Rural  Electrification Revolving  Loan                                                                    
Fund).    The  Power   Project  Fund  provides  funding  for                                                                    
electric utilities,  primarily bulk fuel  storage associated                                                                    
with the  electric utilities and potable  water.  Currently,                                                                    
there is $3  million available for loans each year.    There                                                                    
are  43 active  loans, and  about $22.3  million is  already                                                                    
"placed,"  while about  $3.7 million  is  committed but  not                                                                    
"out and  placed."  He noted  that there is $7.6  million in                                                                    
cash and the delinquency rate is 3.9 percent ($867,000).                                                                        
                                                                                                                                
MR. POE  explained that  the Bulk  Fuel Revolving  Loan Fund                                                                    
helps communities  buy all  the fuel they  need for  a year.                                                                    
This fund is  available to communities with  a population of                                                                    
less than 2000.  [The  communities pay] less than $100,000 a                                                                    
year, which [the  fund] recovers through rate  recovery.  He                                                                    
specified   that  there   are  52   active  loans   with  an                                                                    
outstanding balance  of $1.4 million  and there  is $522,000                                                                    
in cash.   He noted that approximately $800,000  was used in                                                                    
emergency funds to  make bulk fuel loans  to salmon disaster                                                                    
communities.  Mr. Poe indicated  that "they" are looking for                                                                    
a $5  million federal grant to  enhance this loan fund.   He                                                                    
informed   the  committee   that  there   are  still   Rural                                                                    
Electrification  loans being  paid  off.   Eleven loans  are                                                                    
being  paid   off,  which  amounts  to   approximately  $2.4                                                                    
million.    He  pointed  out  that  there  is  $60,000  [in]                                                                    
delinquency.                                                                                                                    
                                                                                                                                
MR.  POE remarked  that  the challenge  is  to leverage  the                                                                    
funds  "they"  have.   He  related  his belief  that  "they"                                                                    
shouldn't hire  new employees.   Mr.  Poe noted  the private                                                                    
sector idea  of using points,  as opposed to a  bid process,                                                                    
as a means for the  private sector to help deliver services.                                                                    
For example,  there might  be apprenticeship  programs [that                                                                    
do] two  or three  projects in  a region  over a  few years.                                                                    
The  private sector  could  help  with designing,  building,                                                                    
training, and career  development opportunities.  Therefore,                                                                    
a  point   system  [could  allow  the   private  sector]  to                                                                    
accomplish things that might not otherwise be possible.                                                                         
                                                                                                                                
REPRESENTATIVE  HALCRO recalled,  from last  year, [that  it                                                                    
would take] $100 million to  bring stand alone power systems                                                                    
up to  compliance.  He  asked if  "we" are $90  million away                                                                    
from meeting [that] goal.                                                                                                       
                                                                                                                                
MR.  POE  said  we  are  a long  way  from  getting  systems                                                                    
upgraded.   He  related his  view  that since  money is  now                                                                    
available,  it is  critical  to effectively  apply  it.   He                                                                    
turned to  the Denali  Commission's question  as to  why the                                                                    
money can't be  placed if the need exists  and expressed the                                                                    
need for community support.                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO  asked if  AEA  has  come up  with  a                                                                    
complete list  of the needs  that exist.   He also  asked if                                                                    
there  is some  kind  of target  schedule  to address  those                                                                    
needs over the next five to ten years.                                                                                          
                                                                                                                                
MR. POE replied  there is a complete list of  the rural bulk                                                                    
fuel  projects  as well  as  a  prioritized list  that  gets                                                                    
updated  periodically.   A  full  listing  of power  project                                                                    
conditions  in  rural Alaska  should  be  completed by  next                                                                    
month.   He  noted that  they are  six communities  short of                                                                    
having visited every  rural community (167 exist).   He also                                                                    
noted  that the  Denali  Commission may  provide some  grant                                                                    
funds and  thus there  could be a  combination of  grant and                                                                    
loan funds for particular projects.                                                                                             
                                                                                                                                
REPRESENTATIVE MURKOWSKI  stated support for  community buy-                                                                    
in [programs].  She discussed  wind power issues.  She asked                                                                    
about loan funds  and fish disasters and whether  there is a                                                                    
link between the two.                                                                                                           
                                                                                                                                
MR. POE  explained that  loans are  reviewed by  a committee                                                                    
and each [loan] is considered  separately.  The loan program                                                                    
is  not  well  known.    He noted  that  the  United  States                                                                    
Department of Agriculture (USDA)  loans will help capitalize                                                                    
the fund.                                                                                                                       
                                                                                                                                
DAVID E.  GERMER, Deputy Director, Business  Development and                                                                    
Rural  Energy,  Alaska  Industrial  Development  and  Export                                                                    
Authority  (AIDEA),  pointed  out  that AEA  does  not  help                                                                    
communities apply for the Bulk  Fuel Revolving Loan Program.                                                                    
However,  after the  fish disaster  [AEA] received  $800,000                                                                    
from  the Department  of Military  of Veterans  in order  to                                                                    
make  emergency loans.    He noted  that  although a  credit                                                                    
analysis  is generally  done, a  normal credit  analysis was                                                                    
not done  for loans associated  with fish disaster  and thus                                                                    
the   loans  were   provided  quickly.     The   funds  were                                                                    
distributed in about 3.5 weeks.                                                                                                 
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked about loan payback.                                                                              
                                                                                                                                
MR.  GERMER   replied  that  payback  parallels   bulk  fuel                                                                    
revolving loan program regulations.                                                                                             
                                                                                                                                
MR. POE commented on wind  energy issues in Kotzebue, Wales,                                                                    
and  Selawik.   He acknowledged  that there  are other  wind                                                                    
opportunities.  He also  cited four  efficiencies to  reduce                                                                    
the  cost of  energy  generation in  rural  Alaska:   diesel                                                                    
efficiency and  efficiencies in  switching gear,  waste heat                                                                    
recovery, conservation measures, and alternative energy.                                                                        
                                                                                                                                
MR. POE  replied, in  response to  Co-Chair Meyer,  that the                                                                    
big capital cost would have  to be amortized through utility                                                                    
rates.   He   reviewed   other  gas   [pipeline]   potential                                                                    
throughout Alaska.                                                                                                              
                                                                                                                                
CO-CHAIR MORGAN  asked what technical assistance  is offered                                                                    
to  communities  that  have qualified  for  construction  of                                                                    
rural energy  projects, but lack the  technical expertise to                                                                    
get a higher compliance ranking in the list.                                                                                    
                                                                                                                                
BRUCE   TIEDEMAN,  Acting   Rural  Energy   Manager,  Alaska                                                                    
Industrial   Development  and   Export  Authority   (AIDEA),                                                                    
replied that AIDEA first meets  with communities to find out                                                                    
what  their needs  are.   After 35  percent [of  the] design                                                                    
[work]  [is done],  AIDEA goes  back to  the communities  to                                                                    
discuss what more is needed  to get the project constructed,                                                                    
such as resolutions  for site selection.   Often, AIDEA uses                                                                    
community  meetings to  explain  what the  program is,  what                                                                    
considerations  are needed  to  develop consolidation,  code                                                                    
compliance factors,  and economies  of scale.   Mr. Tiedeman                                                                    
explained  that   the  high  turnover  of   city  government                                                                    
officials [in rural areas] can  create problems, so there is                                                                    
a  need to  go back  and talk  to communities  on a  regular                                                                    
basis.                                                                                                                          
                                                                                                                                
CO-CHAIR  MORGAN  further  asked  if a  community  with  low                                                                    
ranking  needed   to  go   back  and   work  on   the  whole                                                                    
application, or just areas that caused the low ranking.                                                                         
                                                                                                                                
MR.  TIEDEMAN replied  that AIDEA  meets with  the community                                                                    
and  explains  the current  situation  as  well as  how  the                                                                    
community  can  develop  a  code  complaint  facility;  they                                                                    
explain  potential deficiencies  and  possible solutions  to                                                                    
correct  foreseeable problems.   Thus,  in cooperation  with                                                                    
communities, code compliant facilities are developed.                                                                           
                                                                                                                                
CO-CHAIR   MORGAN  then   asked  about   the  2000   project                                                                    
development  plan that  included 16  bulk fuel  [facilities]                                                                    
and 12 power [facilities]  in various stages of construction                                                                    
and  upgrade.   He noted  that on  this list  are Upper  and                                                                    
Lower Kalskag,  which are  just now  in the  design [stage],                                                                    
though two  years ago  there was  enough money  to construct                                                                    
them.   Stating  that one  of them  had $1  million and  the                                                                    
other  had   $900,000,  he  wondered   why  this   year  the                                                                    
projection is still just in the design phase.                                                                                   
                                                                                                                                
MR.  POE  stated  that  community   agreement  is  a  really                                                                    
important  part  of  a successful  project  but  until  they                                                                    
[AIDEA] get  agreement between  the communities,  they can't                                                                    
go  in there;  that is  the situation  with Upper  and Lower                                                                    
Kalskag.    Mr.  Poe  said  they would  like  to  build  the                                                                    
projects, but  community agreement  is needed first,  and he                                                                    
doesn't know how to get these communities to agree.                                                                             
                                                                                                                                
CO-CHAIR  MORGAN  asked  if the  communities  had  lost  the                                                                    
construction dollars.                                                                                                           
                                                                                                                                
MR. POE responded  that the communities have  not lost their                                                                    
place on  the list and  there are more  construction dollars                                                                    
coming,  but  the  [current]  dollars  were  reallocated  to                                                                    
projects that were ready.  This  is due to pressure from the                                                                    
Denali  Commission to  get  the money  placed.   The  Denali                                                                    
Commission  is not  able to  go to  DC [Washington]  and get                                                                    
more money if there are  still unplaced funds.  They [Denali                                                                    
Commission] have put  pressure on AEA to  work with projects                                                                    
that are  ready.  Mr. Poe  requested Representative Morgan's                                                                    
help [in getting community agreement].                                                                                          
                                                                                                                                
MR.  TIEDEMAN   acknowledged  that  because  of   the  close                                                                    
proximity of  the two communities [Upper  and Lower Kalskag]                                                                    
AIDEA felt that consolidation  of projects would save costs.                                                                    
This  idea  was  explored but  ultimately,  the  communities                                                                    
decided  they  didn't want  this  type  of consolidation  to                                                                    
happen.    This  decision  was   based  on  issues  such  as                                                                    
available land,  who owned it,  and how it was  connected to                                                                    
both  communities.   The current  leadership wanted  certain                                                                    
sites  but  these proved  problematic;  there  was also  the                                                                    
issue  of who  was going  to participate.   The  communities                                                                    
found that  for every  change, there  was a  cost.   Now the                                                                    
conceptual design  is done and  the costs have proven  to be                                                                    
more than  what was  first allocated.   The  communities now                                                                    
have a better handle on costs for each individual site.                                                                         
                                                                                                                                
REPRESENTATIVE GUESS  asked how much progress  down the list                                                                    
AEA has made.                                                                                                                   
                                                                                                                                
MR. POE  said they  are at  White Mountain  on the  list, or                                                                    
about number 50 out of 167.                                                                                                     
                                                                                                                                
REPRESENTATIVE GUESS  asked if  the bulk fuel  projects from                                                                    
the   school  construction   major  maintenance   list  were                                                                    
included on the AEA list.                                                                                                       
                                                                                                                                
MR. TIEDEMAN  said they have  been working with  schools and                                                                    
school districts to the greatest extent possible.                                                                               
                                                                                                                                
MR. POE  added that  consolidation of several  facilities is                                                                    
best but  agreement in  the community  is sometimes  hard to                                                                    
get.                                                                                                                            
                                                                                                                                
REPRESENTATIVE  KERTTULA asked  if AIDEA  had looked  at the                                                                    
ADEC water  management program, with  its model  of training                                                                    
the people in the communities  to run the plants themselves;                                                                    
is AIDEA trying to institute similar training programs?                                                                         
                                                                                                                                
MR. POE cited a Village  Safe Water example of training more                                                                    
than one  person at a time.   Mr. Tiedeman added  that AIDEA                                                                    
was  coordinating with  the U.S.  Department of  Housing and                                                                    
Urban Development  (HUD) and the Village  Safe Water Program                                                                    
(VSWP), and vice versa.                                                                                                         
                                                                                                                                
REPRESENTATIVE HALCRO,  regarding the  HB 40 [merger  of the                                                                    
Department  of  Community  and  Regional  Affairs  with  the                                                                    
Department of Commerce  And Economic Development] transition                                                                    
process,  asked Mr.  Tiedeman if  he  felt communities  were                                                                    
being kept  in the  decision-making process on  rural energy                                                                    
relationships and were also made  to feel they [communities]                                                                    
were involved in these decisions.                                                                                               
                                                                                                                                
MR. TIEDEMAN answered that the  transition was difficult but                                                                    
feels it  has turned the corner.   There is a  new building,                                                                    
with  services  in one  facility.    They [DCED]  have  good                                                                  
accounting and loan  staff, and this has  taken pressure off                                                                    
of  them in  serving rural  communities.   The new  staff is                                                                    
learning  what  has been  done  in  the past  and  utilizing                                                                    
suggestions  to maintain  a  good program.    There is  more                                                                    
travel to communities  and [DCED is] better  able to respond                                                                    
to community  needs.  The  transition has really  helped and                                                                    
there are no major problems,  except spending the money from                                                                    
the Denali Commission.                                                                                                          
                                                                                                                                
REPRESENTATIVE HALCRO inquired about outreach programs.                                                                         
                                                                                                                                
MR.  POE  said  more  outreach  for  bulk  fuel  would  have                                                                    
resulted  in AEA  not  being able  to meet  the  need.   The                                                                    
[Alaska Energy  Authority] has  tried to  target communities                                                                    
that  don't  have any  other  alternative  to get  the  fuel                                                                    
purchased.  The $5 million  grant may allow outreach to make                                                                    
more sense.  He cited some outreach efforts they had done.                                                                      
                                                                                                                                
REPRESENTATIVE  HALCRO  referred  to  delinquent  loans  and                                                                    
asked what,  if anything,  was being  done to  recover these                                                                    
loan?                                                                                                                           
                                                                                                                                
MR.  POE  responded that  with  the  AIDEA Rural  Bulk  Fuel                                                                    
Program and  the Power  Project Fund they  try to  work with                                                                    
the  communities.   Usually  communities  do  pay.   It's  a                                                                    
cooperative   effort.      With   regard   to   AIDEA   loan                                                                    
participations, "they"  are a little less  cooperative and a                                                                    
lot more like a banker.                                                                                                         
                                                                                                                                
REPRESENTATIVE HALCRO  asked about PCE funding  and the Four                                                                    
Dam  Pool  endowment.    He  inquired  about  the  projected                                                                    
shortfall this year.                                                                                                            
                                                                                                                                
MR.  POE predicted  a shortfall  of  $7.8 million,  although                                                                    
that won't  be known until  around February 21,  2001, [when                                                                    
the] revised number is submitted.                                                                                               
                                                                                                                                
CO-CHAIR MORGAN asked if the $7.8 is for FY02 or FY03.                                                                          
                                                                                                                                
MR.  GERMER answered  that FY03  is  projected at  $2.2-$2.3                                                                    
million based  on the Four  Dam Pool sale, which  will occur                                                                    
at the end of this year.                                                                                                        
                                                                                                                                
MR. POE said if the  sale doesn't happen, then the shortfall                                                                    
will  be in  the "same  ballgame."    However,  he indicated                                                                    
that he is  convinced the transfer will occur by  the end of                                                                    
the year.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  HALCRO   asked  about  the   Alaska  Seafood                                                                    
International Plant.                                                                                                            
                                                                                                                                
MR. POE gave an overview  of the plant's location, products,                                                                    
and investors.                                                                                                                  
                                                                                                                                
CO-CHAIR  MEYER   asked  if  Federal  Express   or  UPS  was                                                                    
expanding and adding people.                                                                                                    
                                                                                                                                
MR. POE said  he had heard the announcements,  but could not                                                                    
confirm their accuracy.                                                                                                         
                                                                                                                                
CO-CHAIR MEYER  added that he  was happy to see  the seafood                                                                    
processing  in  Anchorage  since   it  helps  diversify  the                                                                    
economy.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  MURKOWSKI asked  what is  being produced  at                                                                    
the plant and if the plant was producing now.                                                                                   
                                                                                                                                
MR. POE replied that it  is not producing now and production                                                                    
is [dependent upon] a fourth investor.                                                                                          
                                                                                                                                
MR. POE  gave a  brief overview  of the  Ketchikan Shipyard.                                                                    
Built  in 1985,  it  hasn't  had much  success  in terms  of                                                                    
operators,  but the  current  operators  from Department  of                                                                    
Transportation  and  Public  Facilities (DOT/PF)  have  been                                                                    
very successful in providing good  jobs.  The department has                                                                    
an average  payroll of 110  people and  last week it  was at                                                                    
153  people.    Revenues  are in  the  neighborhood  of  $19                                                                    
million. He spoke  to the need for a second  ship-lift.  The                                                                    
shipyard  is a  success  story on  the economic  development                                                                    
side,  although  not  a  financially  successful  story  for                                                                    
AIDEA.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  HALCRO  asked  about   the  critics  of  the                                                                    
Ketchikan Shipyard, and, in particular,  the higher costs of                                                                    
taking vessels there as opposed to the Pacific Northwest.                                                                       
                                                                                                                                
MR. POE replied  that he has heard the critics  and there is                                                                    
no truth to  what [the critics] say.  He  went on to mention                                                                    
that the Ketchikan Shipyard has won competitive bids.                                                                           
                                                                                                                                
REPRESENTATIVE  MURKOWSKI  asked  if  there  are  plans  for                                                                    
expansion of a second ship pullout.                                                                                             
                                                                                                                                
MR. POE said there definitely  are plans, but funding is the                                                                    
challenge.   He spoke  of different  ways to  accomplish the                                                                    
construction.    The operators  are  looking  at these,  but                                                                    
funding is the challenge.                                                                                                       
                                                                                                                                
ERIC  YOULD,  Executive   Director,  Alaska  Rural  Electric                                                                    
Cooperative Association  (ARECA), gave  a brief  overview of                                                                    
ARECA,  the  trade  association  for  the  electric  utility                                                                    
industry in Alaska.   He stated he supported  AEA's focus on                                                                    
energy  sources  and  noted that  diesel  remains  the  most                                                                    
efficient  energy  source available.    He  agreed with  the                                                                    
concept  of alternative  energy  evaluation.   He  concurred                                                                    
with  AEA's  focus  on  increased  efficiency.    Mr.  Yould                                                                    
commented   that   Alaska  Village   Electric   Cooperative,                                                                    
Incorporated (AVEC) is a tremendously great success story.                                                                      
                                                                                                                                
REPRESENTATIVE HALCRO  asked, from the viewpoint  of the co-                                                                    
ops,  if  the department  merger  affected  the delivery  of                                                                    
energy and working relationships with rural Alaska.                                                                             
                                                                                                                                
MR. YOULD said  that Division of Energy's focus  has been on                                                                    
those communities that cannot  provide for themselves.  Some                                                                    
communities  could never  have had  a viable  utility system                                                                    
had not  PCE allowed them to  get up and operating.   Alaska                                                                    
Energy Authority  is looking  to the  more chronic  areas of                                                                    
Alaska and are providing a very good service.                                                                                   
                                                                                                                                
[End  of tape  and second  tape would  not start  recording.                                                                    
Meeting ended approximately five minutes later.]                                                                                
                                                                                                                                
ANNOUNCEMENTS                                                                                                                 
                                                                                                                                
No announcements were made.                                                                                                     
                                                                                                                                
COMMITTEE ACTION                                                                                                              
                                                                                                                                
The committee took no action.                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
CO-CHAIR MEYER  adjourned the  House Community  and Regional                                                                    
Affairs Standing Committee at 9:45 a.m.                                                                                         
                                                                                                                                
                                                                                                                                
NOTE:   The meeting was  recorded and handwritten  log notes                                                                    
were taken.   A  copy of  the tape(s) and  log notes  may be                                                                    
obtained  by contacting  the House  Records Office  at State                                                                    
Capitol, Room  3, Juneau, Alaska   99801  (mailing address),                                                                    
(907) 465-2214, and after adjournment  of the second session                                                                    
of   the  Twenty-Second   Alaska   State  Legislature   this                                                                    
information may  be obtained  by contacting  the Legislative                                                                    
Reference Library at (907) 465-3808.                                                                                          

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