Legislature(2011 - 2012)BARNES 124
02/17/2011 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| Overview: Alaska Energy Authority | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
February 17, 2011
8:06 a.m.
MEMBERS PRESENT
Representative Cathy Engstrom Munoz, Chair
Representative Neal Foster, Vice Chair
Representative Alan Austerman
Representative Alan Dick
Representative Dan Saddler
Representative Sharon Cissna (via teleconference)
Representative Berta Gardner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
OVERVIEW: ALASKA ENERGY AUTHORITY
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
SARA FISHER-GOAD, Executive Director
Alaska Energy Authority (AEA)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Presented an overview of the AEA.
JIM STRANDBERG, Project Manager
Alaska Energy Authority (AEA)
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: During the AEA overview, answered
questions.
MICHAEL HARPER, Deputy Director
Rural Energy
Alaska Energy Authority (AEA)
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: During the AEA overview, answered
questions.
CHRIS MELLO
Program Manager RPSU & BF
Alaska Energy Authority
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: During the AEA overview, answered
questions.
PETER CRIMP, Deputy Director
Alternative Energy & Energy Efficiency
Alaska Energy Authority
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: During the AEA overview, answered
questions.
ACTION NARRATIVE
8:06:01 AM
CHAIR CATHY ENGSTROM MUNOZ called the House Community and
Regional Affairs Standing Committee meeting to order at 8:06
a.m. Representatives Foster, Austerman, Dick, Saddler, Gardner,
Cissna (via teleconference), and Munoz were present at the call
to order.
^Overview: Alaska Energy Authority
Overview: Alaska Energy Authority
8:06:16 AM
CHAIR MUNOZ announced that the only order of business would be
an overview of the Alaska Energy Authority.
8:07:26 AM
SARA FISHER-GOAD, Executive Director, Alaska Energy Authority
(AEA), Department of Commerce, Community & Economic Development
(DCCED), began by noting other staff that are on line. She then
informed the committee that she has been with AEA and the Alaska
Industrial Development and Export Authority (AIDEA) for
approximately 10 or 11 years. She noted that in her prior
capacity as deputy director she was the legislative liaison for
AEA and AIDEA. Ms. Fisher-Goad further informed the committee
that she has a Bachelor's degree from the University of Alaska
Fairbanks (UAF) and a Masters from the University of Alaska
Anchorage (UAA). She opined that it's going to be a challenging
and exciting time to be the executive director of AEA. Ms.
Fisher-Goad then turned attention to the presentation,
specifically slide 2 entitled "AEA's Mission: Reduce the Cost of
Energy in Alaska". The AEA manages several programs and
projects. In fact, AEA has been the lead agency for statewide
energy planning, developed large infrastructure, assisted rural
communities, reduced energy waste and use local resources, and
finance projects. She pointed out that AEA owns the Bradley
Lake Hydroelectric Project and the Alaska Intertie. As some may
have heard, AEA is interested in pursuing the Susitna
Hydroelectric project. The Susitna Hydroelectric Project was
one that had been developed in the 1980s and recently AEA
received a decision document that has recommended the Susitna
Low Watana Project be pursued in the Railbelt area. The
assistance to rural communities has been with the power cost
equalization (PCE) program, tank farm and power system
construction, and training to support local operators in rural
communities.
8:11:49 AM
REPRESENTATIVE DICK inquired as to the details between Susitna
and Chakachamna that resulted in choosing the Susitna project.
MS. FISHER-GOAD explained that last year AEA received a $10
million appropriation to evaluate several projects, including
the Susitna Hydroelectric Project and the Chakachamna Project.
The appropriation legislation specified that if a project had a
"fatal flaw," then the funds should be utilized for the project
that made more sense. She noted that AEA has about 3,000
documents regarding all the studies performed on the Susitna
Hydroelectric Project. The Chakachamna Project had significant
environmental issues that would require further study, although
they weren't necessarily a fatal flaw. Therefore, it became a
risk analysis to determine which project made sense to move
forward. To learn more about Chakachamna and its issues would
require an expenditure of about $30 million. Furthermore, to
address the environmental issues a significant flow reduction
would be required in order to permit and license the project.
Therefore, to meet the state's goal of producing 50 percent of
the state's electricity with a renewable energy source by 2025,
the Susitna Hydroelectric project made the most sense. She
noted that the preliminary document with the details of this
choice is on AEA's website.
REPRESENTATIVE DICK expressed concern with resource development
in Western Alaska. He opined that he would rather consider both
[projects] versus an either or situation. He also mentioned the
Donlin Creek situation.
MS. FISHER-GOAD said she would be happy to discuss those issues
further with Representative Dick.
8:15:38 AM
MS. FISHER-GOAD returned to her presentation and reviewed the
ways in which AEA seeks to reduce energy waste and use local
resources. The aforementioned is accomplished through energy
efficiency, biomass, geothermal, hydroelectric, and wind
projects. She noted that AEA also finances projects through the
Renewable Energy Fund, Energy Tech Fund, the Bulk Fuel Revolving
Loan Fund, and the Project Power Fund. She then moved on to
slide 3 entitled "Statewide Energy Planning," which lists
several initiatives regarding energy planning over the years.
The prior executive director of AEA was instrumental in putting
together the Alaska Energy Pathway, which relates local
information communities can use when developing their own local
resources. The Rural Energy Plan was produced in 2002. She
pointed out that most recently, AEA is working on energy
statistic updates in order to have good data available for
communities and utilities. The AEA is committed to performing
regular updates, at least every other year. The AEA has been in
partnership with the Department of Natural Resources (DNR)
regarding the Alaska energy inventory. The maps at the bottom
of slide 3 were developed with information from DNR and AEA's
staff in order to identify the location of energy resources in
Alaska. Referring to slide 4 entitled "Alaska Energy Pathway,"
she informed the committee that AEA is reviewing regional and
community planning and project development. This year the
effort is to work on a regional level to help communities and
the regions of the state develop projects that make sense, which
are projects that develop and use local resources. She then
directed attention to slide 5, which relates more details
regarding the Alaska Energy Inventory. Moving on to slide 6
entitled "Regional Energy Plan," she explained that the Railbelt
Integrated Resource Plan (IRP) was sponsored by the state while
AEA, Railbelt utilities, and other stakeholders developed a list
of projects that make sense to pursue for the Railbelt region.
The IRP helps establish the estimated costs of these projects.
Ms. Fisher-Goad opined that it has been an extremely complicated
effort, particularly since the utilities have come together and
formed an organization for regional projects. Referring to
slide 7, she informed the committee that the Southeast IRP is
currently underway. Although the process is similar to that
undertaken with the Railbelt, Southeast is a bit different due
to the lack of [connected road] transportation in the region.
The AEA is working with the Southeast Conference to help
identify a regional approach in terms of projects that make
sense for the Southeast region and specific communities in the
region.
8:21:13 AM
REPRESENTATIVE FOSTER related his understanding that the Alaska
Railbelt Cooperative Transmission and Electric Company (ARCTEC)
is comprised of five of the six Railbelt utilities. He
requested a general assessment of ARCTEC in terms of having one
Railbelt utility not involved in the organization.
MS. FISHER-GOAD deferred to Mr. Strandberg who has been most
involved with ARCTEC.
8:22:08 AM
JIM STRANDBERG, Project Manager, Alaska Energy Authority (AEA),
Department of Commerce, Community & Economic Development,
Municipal Light & Power (ML&P) has a business structure of a
municipality; it's an enterprise organization that's part of the
overall Municipality of Anchorage business. The entities in
ARCTEC are electrical cooperatives that worked hard to develop
an approach with which they all agreed. However, ML&P faced
real limitations joining ARCTEC in terms of ML&P's tax exempt
status. Mr. Strandberg related his understanding that all the
utilities continue to talk and ML&P has been at the meetings,
which have had a collegial atmosphere. In response to
Representative Saddler, Mr. Stranberg clarified that the
municipality has the ability to obtain tax exempt financing.
However, one of the bond conditions is that the benefits of
those funds have to flow directly to the people of the
municipality. If the benefits stray from the people of the
municipality, then the tax exempt status is in question.
8:24:47 AM
CHAIR MUNOZ turned attention to Southeast planning efforts and
the fact that the Canadian government is moving forward with the
extension of the Northwest power line to within about 20 miles
of the Alaska-Canadian border near Wrangell. She inquired as to
how Mr. Strandberg foresaw the relationship with Canada.
MR. STRANDBERG confirmed that [AEA] does want to keep
communication open with Canada. In fact, there are colleagues
with whom AEA has maintained contact with over the last three
years. The concept of the potential for importing energy has
been discussed by those in Southeast. The entities with which
AEA has had contact are BC Hydro's business development group
and Power X, which is BC Hydro's power marketing entity.
Furthermore, AEA has maintained a close connection with the
Alaska-Canada Energy Coalition (ACE Coalition) in Southeast
Alaska.
CHAIR MUNOZ inquired as to the rate on the Canada side.
MR. STRANDBERG answered that there are various rates. He
offered to obtain the specific rate of the power being bought
and purchased by Power X.
CHAIR MUNOZ related her understanding that the rate on the
Canada side is quite low. She acknowledged the export
potential, but suggested there could be the opportunity for
import potential as well as the ensuing development.
MR. STRANDBERG noted that the aforementioned has been part of
the Southeast IRP process to actively evaluate the impacts of an
electrical intertie with Canada's system and the ability to
import inexpensive energy into the region for the benefit of the
ratepayers.
8:27:28 AM
MS. FISHER-GOAD, returning to her presentation, told the
committee that AEA's regional efforts also include working with
the University of Alaska and the Denali Commission to coordinate
support. The current focus is on the Yukon-Kuskokwim Delta and
the Interior. With the development of the Energy Pathway, AEA
doesn't want to have a plan that isn't used. The desire is to
continue to provide the technical assistance for local
communities and regions with respect to how to take a plan and
develop the projects. Referring to slide 9 entitled
"Infrastructure and Large Projects," Ms. Fisher-Goad explained
that the Bradley Lake Hydro Project is a great model project.
The state contributed approximately 50 percent of the costs to
build the project, which produces 10 percent of the energy in
the Railbelt area. Furthermore, the Bradley Lake Hydro Project
is currently the low cost energy producer. Although the Susitna
Project financing will definitely garner discussion, the
[Bradley Lake Hydro Project] concept of state ownership and
utilities paying a portion of the cost through a power sales
agreement is a valid model to use. There are some things that
could be done in the 1980s that couldn't be today. However, she
pointed out that although the bonds for the [Bradley Lake Hydro
Project] will be paid in about 10 years, the utilities are
obligated to continue to pay the state for another 20 years in
roughly the amount of the debt service. "It's somewhat of a
recoupment of the capital contributions that the state put in up
front, receiving that on the backend of the project," she said.
She then turned to the Alaska Intertie, which is wholly owned by
the state through AEA and is operated by the Railbelt utilities.
Currently, the Alaska Intertie agreement is under renegotiation.
She clarified that the Alaska Intertie wasn't financed by debt,
but rather through cash capital appropriations. The Alaska
Intertie is the way in which the Interior and the Golden Valley
Electric Association (GVEA) receives Bradley Lake Hydro power.
8:31:02 AM
REPRESENTATIVE FOSTER related his understanding that the
financing of the Bradley Lake Hydro Project was 50 percent from
the state and the remaining 50 percent from the ratepayers. He
inquired as to how the state contribution was funded.
MS. FISHER-GOAD related that there were a series of
appropriations that AEA received to move forward with the
construction of the Bradley Lake Hydro Project. She noted that
arbitrage earnings on bonds were used to help pay for
construction. However, the aforementioned is no longer
available due to tax code changes in 1986. At the point the
Bradley Lake Hydro Project was going to be funded by bonds,
power sales agreements were developed with the utilities in
order to have the revenue to pay for the project. She related
her understanding that they're general obligations of AEA with a
moral obligation of the state. Still, [per] the power sales
agreement, the utilities pay for the debt service of the bonds.
The debt service amounts to about $12 million annually. She
noted that AEA's preliminary decision document includes a
detailed description of the concepts that could be used with the
large Bradley Lake Project as well as limitations by which [the
Bradley Lake Hydro Project model] may not work. In further
response to Representative Foster, she agreed to provide the
aforementioned document.
8:34:21 AM
MS. FISHER-GOAD, in response to Representative Saddler,
clarified that for the Bradley Lake Hydro Project the state paid
50 percent through appropriations to AEA and the remaining 50
percent was through bonds paid for by the utilities. She noted
that the earlier mentioned document includes a schedule with
regard to the state's contributions and the debt service.
8:35:03 AM
REPRESENTATIVE DICK directed attention to slide 8, and inquired
as to the details regarding AEA's regional energy plans focus on
the Yukon-Kuskokwim Delta.
8:35:34 AM
MICHAEL HARPER, Deputy Director, Rural Energy, Alaska Energy
Authority (AEA), Department of Commerce, Community & Economic
Development, said that AEA has worked with the major
stakeholders in the region, including the Association of Village
Council Presidents (AVCP), AVCP Housing, Yukon-Kuskokwim Health
Corporation, Calista Corporation, and Alaska Village Electric
Cooperative, Inc. (AVEC). He noted that AVEC is the major
utility in the region as it serves 23 of the 56 villages in the
region. Mr. Harper then explained that [AEA's] notion is to
review other reports that the legislature has already funded.
There are at least 15 such energy reports, the list for which he
offered to provide to the committee. Those reports discuss ways
in which to produce less expensive power. He informed the
committee that there is a large hydro power potential in
Chikumunik, which is located above the lakes in the Bristol Bay
area and within 110 or so miles of Bethel. There have been
studies on the potential at Chikumunik, including a recent study
from Montgomery Watson. The potential at Chikumunik would power
Bethel and the surrounding 15 communities. Although AEA is
pursuing the Chikumunik potential, more resources are necessary
to ensure the information is up to date.
8:38:11 AM
REPRESENTATIVE DICK inquired as to whether anything is being
done for the mid Yukon region, such as for Galena or Kaltag.
MR. HARPER replied yes, and informed the committee that AEA has
partnered with the University of Alaska Fairbanks Alaska Center
for Energy and Power (ACEP) for the last two years to develop an
[energy] plan for the Interior. He explained that AEA provided
funds through ACEP that has partnered with the Tanana Chiefs
Conference (TCC) to begin the planning for alternative and
renewable energy sources in the Interior. There are biomass
possibilities in the Interior, such as the Tok project that he
said holds great promise. Wind energy is very limited in the
Interior as hydro seems as well, but heat recovery systems may
be beneficial, he related.
8:39:37 AM
REPRESENTATIVE FOSTER related his understanding that Mr. Harper
mentioned hydro in Representative Dick's area. He then asked if
there's a summary sheet regarding hydro in more Arctic
environments.
MR. HARPER offered to research that. He noted that AEA has good
reports regarding the Yukon-Kuskokwim Delta, but there aren't
similar reports for the Northwest area. However, he noted that
AEA has received a letter from Kawerak, Inc., and there is the
desire to move forward with regional energy planning in the
Northwest and Nome areas.
8:40:39 AM
MS. FISHER-GOAD, referring to slide 11 entitled "Infrastructure
and Large Projects," informed the committee that the Susitna -
Watana site is expected to generate 50 percent of the Railbelt
energy. At this point, there would seem to be a minimal
fisheries impact and it would provide a long-term stable price
of energy for the Railbelt area. She then turned attention to
slide 12 entitled "Rural Energy Construction." She related that
since 2000 AEA has partnered with the Denali Commission
initially to fund the construction of bulk fuel tank farms.
Rural communities need a year's supply of fuel delivered because
there typically isn't a delivery system that allows the delivery
of a monthly or daily supply as is the case in larger
communities. Therefore, tank farms are necessary. Many years
ago the Environmental Protection Agency (EPA) and the U.S. Coast
Guard were concerned with the state of the tank farms and there
was concern with regard to possible fuel spills. The Denali
Commission was funded to lead [an upgrade of the bulk fuel tank
farms and rural power systems] and AEA became the primary
partner. The AEA spent hundreds of millions of federal funds in
rural Alaska to upgrade tank farm projects. To date, 67 bulk
fuel tank farm projects competed, another 9 projects are in
progress, and 29 projects remain. The Denali Commission
requires sustainability criteria in order to ensure a community
will be able to maintain the infrastructure. Of those 29
projects remaining, typically there may not be the capability
for communities to move up the list and construct a project. To
date, 48 rural power projects have been completed. The
powerhouses include the electrical distribution and there are
integrated systems to ensure there is heat recovery capability.
Depending upon the community, there is integration with
hydroelectric. Currently, 16 of the aforementioned projects are
underway and 45 remain.
8:44:29 AM
REPRESENTATIVE DICK inquired as to who owns the bulk fuel tank
farm projects once completed.
MR. HARPER explained that AEA works with those in the community,
including a utility or small cooperative, schools, and the
village/city council. The goal is to form a cooperative of
sorts to operate the bulk fuel tank farm once it's constructed.
REPRESENTATIVE DICK related that he has heard concerns from
private enterprises in communities that feel as if they're
competing against federal dollars.
MR. HARPER said that it's not AEA's intent to put a private
business out of business, and therefore AEA takes great efforts
to avoid such. He offered to speak with Representative Dick
regarding any problems.
8:46:48 AM
REPRESENTATIVE CISSNA asked if there has been any cost analysis
regarding what's occurring in smaller communities. Many of the
smaller communities she has visited have energy systems that are
far too complex for the locals to operate and thus have very
little oversight of the equipment. She related her observation
that there have been large expenditures on the infrastructure in
communities. Furthermore, review of the health costs in these
communities illustrates a disconnect between what's really
happening in communities in terms of the large amount of funds
going in for diesel requirements and not enough help to the
community to start private [energy] businesses. She questioned
whether there is a way to rank communities by their real needs
today and not think big for those small communities.
MR. HARPER agreed that these systems aren't simple to operate,
but pointed out that AEA has a good cadre of utility managers
for communities with a population of 50 residents. He
acknowledged that there won't always be a well trained operator
in every instance. However, there is a training program that
AEA has operated for over a decade. Usually the Vocational
Training Center in Seward is used to train the bulk fuel tank
operators as well as the power plant operators and now the
renewable energy operators to operate the systems in a manner
that will sustain the community. Renewable energy systems, such
as wind turbines, are being utilized and they're not simple
systems to manage. He informed the committee that AVEC and
Kotzebue Electric have been in business for about 10-15 years
and are the pioneers with this. Still, the transition from wind
to diesel is not a simple operation. The AEA is continuing to
work on that. Mr. Harper opined that the AVEC model works well
for the 53 communities, which have populations of 1,000 or so,
for which it provides power. Although AVEC isn't involved in
the smaller communities that have 50 or so residents, smaller
cooperatives are able to operate in a sustainable fashion. He
highlighted the Middle Kuskokwim Electric Cooperative with
Sleetmute, Stony River, and three small communities as it's able
to operate systems in a sustainable fashion, although the costs
are higher.
8:53:01 AM
REPRESENTATIVE GARDNER related her understanding that the state
has addressed [upgrades] for about two-thirds of the state's
tank farms. She asked if the tank farms that haven't yet been
addressed are more complex or more costly.
MS. FISHER-GOAD explained that over 10 years ago, AEA and the
Denali Commission developed a deficiency list that ranked the
projects worst to best. She noted that there is a directive
from the Denali Commission that specifies when there is a
problem with a particular project, then AEA would move down the
list. At the peak of using federal funds, there would be a
certain number in design, a certain number in final design, and
a certain number under construction. She likened the
aforementioned to a pipeline that fed the projects. [Some of
the problems] that would cause a project to stall could be
contamination or land ownership issues. Of the projects
remaining on the list, she requested that staff describe those.
8:55:26 AM
CHRIS MELLO, Program Manager RPSU & BF, Alaska Energy Authority,
Department of Commerce, Community & Economic Development,
informed the committee that in terms of bulk fuel the remaining
communities on the list were unable to get the stakeholders to
come to an agreement. There has to be a clear grantee and
operator. Although some communities require tank farms, the
village council and village corporation can't come to an
agreement. Since a business plan and the participation of the
grantee and stakeholders in that business plan is required, when
they are unwilling to do so the project can't move forward.
There are some communities that simply aren't interested in
participating in this program. In other communities there isn't
a clear grantee as some communities don't have the
infrastructure and aren't capable of legally entering into a
grant. Mr. Mello related that there are many communities in the
queue that are waiting for funds. In fact, AEA is currently
working with Alakanuk, which is the first AVEC village in which
AEA has agreed to construct a tank farm. The expected date of
completion of a tank farm in Alakanuk is 2012. With regard to
the rural power systems upgrade (RPSU) programs there are a
number of projects in which the grantees are moving forward very
well, although much of it is a matter of the availability of
funding. Currently, AEA is working in Angoon and Ruby. In some
cases, there are communities that don't pass due diligence and
may have problems with the Internal Revenue Service (IRS) and/or
bulk fuel loans, and may be unwilling/unable to participate in
the business plan.
8:57:52 AM
REPRESENTATIVE SADDLER inquired as the longevity of the bulk
fuel tank farms and the rural power systems.
MR. MELLO responded that the bulk fuel facilities are designed
for a 40-year life cycle. When this program began, the emphasis
was to reach compliance with the Oil Pollution Act of 1990.
Although the aforementioned didn't particularly resonate with
members of the community, U.S. Senator Ted Stevens called for
sustainability and thus he called for the development of
business plans. When AEA worked with the communities on the
business plans, there was a change in the attitude. The
communities started to view the tank farm as a community asset
rather than a project. The business plan can be as simple as
two bank accounts: an O&M account and a repair & replacement
(R&R) account, which is funded by a surcharge on the throughput
of the fuel in a particular facility. Communities contribute to
the R&R account monthly and it helps pay for large ticket items,
such as painting the facility or new fencing. Most of the
communities are fairly loyal to the [R&R account], which extends
the life of the facilities. He highlighted that there has been
an increase in the level of best business practices in these
communities. Therefore, AEA is fairly optimistic that these
facilities will be able to exist for their useful life. He also
highlighted that communities are beginning to understand that
these tank farms aren't just a place where they store fuel but
also a tool along with best businesses practices that will
enable these communities to manage their bulk fuel inventory to
the greatest economic advantage. The aforementioned, he
remarked, is a huge step forward.
9:00:06 AM
REPRESENTATIVE DICK said that he is trying to reconcile the
reality in communities with this [program]. He recalled a
community in which the state fire marshal closed the local fuel
vendor until the tanks met state requirements. That fuel vendor
couldn't sell fuel to cover his operating costs, much less to
obtain the funds to bring his tank farm into compliance. He
inquired as to what could've been done in that situation.
MR. MELLO explained that the fuel vendors in the communities are
not the grantees, rather the grantee is usually the village
council. However, all the stakeholders are included in the
facility and participate in the same business plan. Therefore,
a fuel vendor that's located in a community that's unable or
unwilling to participate in the program leaves AEA with little
it can do. He clarified that AEA doesn't enter communities and
select one stakeholder and build a bulk fuel facility for that
vendor as it doesn't meet the economies of scale, rather AEA
[works] for the entire community. He acknowledged that there
are communities in Representative Dick's district that are in
the above discussed category, AEA can continue conversations
with these communities and the potential grantees regarding
what's necessary to come together on a project. In some
communities, AEA hasn't success with the aforementioned.
9:03:38 AM
CHAIR MUNOZ mentioned that today there is an energy conference
at Centennial Hall in Juneau. She then requested more in depth
information on the Susitna Hydro and Chakachamna projects.
[Chair Munoz passed the gavel to Vice Chair Foster.]
9:04:25 AM
MS. FISHER-GOAD, returning to her presentation and slide 13,
provided the committee with an example of the bulk fuel upgrades
done in Ruby. She then directed attention to slide 14, which
highlights the rural power system upgrades of Tuluksak.
9:05:12 AM
VICE CHAIR FOSTER inquired as to the details of the R&R account
and the effectiveness of it.
MR. HARPER said that upon the creation of the Denali Commission
in 2000 or so, [the R&R account] was clearly addressed in order
to avoid an unsustainable project. A business plan that was
developed with the community and all the major stakeholders was
required. Funds were to be established in order to prepare for
future major repairs. Mr. Harper related that AEA is glad these
business plans were required at the beginning of the process
because it's coming to the fore at this point, particularly as
community leaders change over time. For the most part, the
process is working well, he stated. In response to
Representative Saddler, Mr. Harper confirmed that theoretically,
the [R&R account] funds would be used to replace the facility
when necessary. However, he acknowledged that it might not
cover the entire cost of replacement.
9:09:25 AM
REPRESENTATIVE CISSNA pointed out that although there is concern
with regard to sustainability, most of the facilities and
equipment the state is placing in rural Alaska are fueled by
diesel. Even Anchorage is becoming more dependent on natural
gas, yet questions remain about the long-term success of natural
gas. She recalled that in community council meetings [in
Anchorage] the natural gas folks said that other forms of
renewable energy couldn't be considered because the equipment in
homes makes it economically dangerous to go to any other form of
energy. She then recalled that in the past these smaller
communities used biomass for thousands of years, but then there
was a shift to petroleum, specifically diesel. Representative
Cissna opined that the rural and urban worlds don't match [in
terms of energy]. Therefore, she indicated the need to review
more appropriate alternatives versus making people dependent on
one form of energy.
MS. FISHER-GOAD related that in terms of rural communities and
the renewable energy grant recommendation program, AEA's primary
measure for these projects is diesel replacement. She opined
that through biomass, energy efficiency, and renewable energy
projects AEA is experiencing a significant reduction of diesel
being imported into communities. Furthermore, AEA is reviewing
local long-term solutions for communities to meet their long-
term energy needs. She opined, however, that it will always be
a combination or energy sources in which communities aren't
completely independent of diesel.
9:13:51 AM
MS. FISHER-GOAD reviewed AEA's capital request of $10 million of
state funds, of which $6 million would be used for power system
upgrades, $3 million for bulk fuel upgrades, and $1 million for
a continuation of the agency's regional planning efforts for
energy projects and planning. Although since the creation of
the Denali Commission there has been a reduction in federal
funds, there has been a commitment from the state to place more
funds toward these projects in order to make progress with the
deficiency lists and address the rural energy infrastructure
needs. Returning to the presentation, Ms. Fisher-Goad turned
attention to slide 15 entitled "Technical Assistance." She
highlighted that when AEA installs a new system, it also
installs a remote monitoring system and Supervisory Control And
Data Acquisition (SCADA) system. The aforementioned allows
AEA's technical staff in Anchorage to help troubleshoot with the
local operator. If an onsite visit is necessary, then AEA staff
would be informed with regard to how the plant is run. Moving
on to slide 16 she informed the committee that the PCE Program
is an approximately $32 million grant program that AEA operates
in conjunction with the Regulatory Commission of Alaska (RCA).
The RCA establishes the PCE rate, AEA manages the funds and
issues the grants to the communities based upon the PCE level.
The PCE Program is available for community facilities and
residents in PCE eligible communities. She explained that AEA
reimburses the utilities up to 500 kilowatt hours per
residential customer per month, whereas the amount of reimbursed
funds for the community facilities is based upon a calculation
of the number of kilowatt hours and the community's population.
The low cost energy enhances the life of rural residents, who
face some very high costs in these small communities. In fact,
with and without PCE the costs are still significantly higher
than more urban areas of the state. Referring to slide 17, Ms.
Fisher-Goad informed the committee that AEA offer various
training opportunities. As mentioned earlier, AEA partners with
the Department of Labor & Workforce Development (DLWD) and AVTEC
to help communities send their power plant operators to Seward
for hands on training with the systems and the generators.
Onsite training is also provided. She noted that the operating
budget includes a request for $200,000 of state funds since the
long-time Denali Commission training funds are no longer
available. Therefore, the funding request is to maintain a
quality training program. She then noted that AEA is involved
in various conferences, including the Wind-Diesel Conference in
Girdwood and the Wood Energy Conference in Fairbanks. With
regard to wood energy for heat, AEA would like to continue to
focus more on heat issues since AEA believes it has a relatively
good handle on electricity with the power house and PCE in terms
of good energy efficient systems. However, heating issues are
more complicated and they usually aren't a centralized system.
She then informed the committee that over the last several years
AEA in coordination with the University of Alaska Fairbanks has
sponsored the Rural Energy Conference, which will be held in
Juneau this September. Moving on to slide 18, she highlighted
the state's efficiency and conservation goal of up to 15 percent
by 2020. The AEA manages the Energy Efficiency (EE)
Conservation Block Grants, which is a $9 million federal
stimulus fund project. The AEA has developed the Commercial
Audit Program, which has received good feedback from the
businesses that have applied for that program. The AEA has also
developed the Industrial Audit Program, which is currently
focusing on the fish processors. She then told the committee
that AEA heads up an EE Conservation Working Group, which is a
partnership of 20 plus organizations. The aforementioned allows
AEA to organize with some of the nonprofits, the communities,
and the utilities in order to achieve a comprehensive energy
efficiency effort. Directing attention to the map on slide 19,
she pointed out that it illustrates where much of the funds for
the Energy Efficiency Conservation Block Grants (EECBG) are
utilized as well as highlights the Village End-Use Efficiency
Program (VEEP) projects. She noted that some communities
receive both EECBG and VEEP funds. The average payback for
these efficiency upgrades is about three years and the savings
reach about $3 million per year throughout the state.
9:20:27 AM
REPRESENTATIVE GARDNER asked if the block grants are only
available for private homes not businesses.
MS. FISHER-GOAD clarified that these are actually community
block grants, a block of American Recovery and Reinvestment Act
of 2009 (ARRA) funds. The community received an amount based on
the size of the community and then there was a block of funds
that were to be distributed to the smaller communities. She
further clarified that this isn't residential assistance but
rather municipal and community assistance. Each community
applied for a grant and developed a plan for what it would use
the money.
REPRESENTATIVE GARDNER asked if AEA has discussed the fact that
small business owners also want access to the energy efficiency
programs the state is offering.
MS. FISHER-GOAD answered that AEA has worked with DCCED
regarding some type of loan program for businesses. The audit
program AEA offers is a good start in terms of knowing who is
interested in the program updates. She related that AEA
believes there is a gap in the services to commercial entities,
and therefore it's something that AEA is interested in pursuing.
The Sustainable Energy Act that passed in 2010 included a loan
fund that was retooled to be commercial assistance for
alternative energy and energy efficiency. The governor's energy
report identifies this matter as something that AEA should do.
Although AEA is interested in working on this program, other
items, such as the block grants from ARRA funds, are more of a
priority due to time constraints. Ms. Fisher-Goad further
related that AEA has determined that [a commercial energy
efficiency] program is more appropriate as an AEA loan program
rather than a program within the Division of Commerce.
9:23:46 AM
MS. FISHER-GOAD, returning to her presentation, moved on to
slide 20 entitled "Renewable Energy Goal: 50% by 2025". She
reviewed the various statewide programs and told the committee
that AEA can fund, through the Renewable Energy Fund, the
following: permitting, project financing, and project
management. Turning to slide 21, she reminded the committee of
the 2008 passage of House Bill 152, which included specific
selection criteria regarding concentrating the funds in high
cost areas, matching funds, and a statewide balance for the
funds available. There is an advisory committee that helps
develop the program and make recommendations regarding where the
funds should go. She highlighted that $150 million has been
appropriated for the first three rounds. For round 4, AEA
recommends approximately $37 million worth of projects. With
regard to the Renewable Energy Fund funding, the pie chart on
slide 22 illustrates the various funding for the various
renewable energy sources. She pointed out that much of the
funding is going toward wind and hydro projects. The graph on
slide 23 relates the estimated cumulative fuel savings for the
renewable energy funded projects. For rounds 1-3, the estimated
fuel savings is about 6 million gallons of diesel per year,
which would seem to be a good measure. Ms. Fisher-Goad then
turned to slide 24 "Emerging Energy Technology Fund," which was
AEA's newest initiative and it was also in the 2010 sustainable
energy act. The emerging energy doesn't only include renewable
resources as it includes oil and gas. The goal is to expand
energy sources available to Alaskans, she stated. There is $4.8
million available and proposals are due March 2nd. The advisory
committee established for emerging energy technology is a
technical advisory committee, which will be intimately involved
in making recommendations regarding which projects should be
pursued. Ms. Fisher-Goad then pointed out that the next few
slides provide examples of projects that are on line and include
information regarding fuel displacement. She emphasized that
information is important as is continuing to work with grantees,
even after a project is constructed, in order to ensure that
projects are successful and there are returns. Furthermore,
this information is helpful in terms of determining what
projects to fund in the future.
9:28:25 AM
VICE CHAIR FOSTER suggested that the remainder of the slides
could be reviewed when Ms. Fisher-Goad returns to review the
Susitna versus Chakachamna projects.
9:28:56 AM
MS. FISHER-GOAD then quickly reviewed slides 25-34, which relate
the grant, total project cost, capacity, and fuel displaced for
various projects.
9:29:25 AM
VICE CHAIR FOSTER inquired as to the reason the Denali solar
thermal project didn't result in the expected fuel savings.
9:29:44 AM
PETER CRIMP, Deputy Director, Alternative Energy & Energy
Efficiency, Alaska Energy Authority, Department of Commerce,
Community & Economic Development, answered that there seem to be
problems with distribution for the Denali Solar Thermal project.
Therefore, it could be a need to technically work out the bugs.
Mr. Crimp clarified that AEA isn't saying that the Denali Solar
Thermal project is a bad project but rather merely relating the
statistics. The AEA is working with GVEA to determine the
problem.
9:30:24 AM
MS. FISHER-GOAD, in closing, mentioned that Mr. Harper has
decided to retire the end of April and she wanted to publicly
recognize his work and thank him. She characterized his
retirement as a loss to the agency.
9:32:02 AM
REPRESENTATIVE GARDNER, for response at the next hearing,
inquired as to why the wind turbines on St. Paul Island haven't
been used.
9:32:29 AM
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 9:32 a.m.
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