Legislature(2003 - 2004)

10/28/2003 03:15 PM House EDT

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
        HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT,                                                                      
                INTERNATIONAL TRADE AND TOURISM                                                                               
                       Anchorage, Alaska                                                                                        
                        October 28, 2003                                                                                        
                           3:15 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Cheryll Heinze, Chair                                                                                            
Representative Lesil McGuire, Vice Chair                                                                                        
Representative Nancy Dahlstrom                                                                                                  
Representative Vic Kohring (via teleconference)                                                                                 
Representative Sharon Cissna                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Pete Kott                                                                                                        
Representative Harry Crawford                                                                                                   
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SUBJECT:  SECURITY OF THE RAILBELT POWER GRID                                                                                   
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JIM POSEY, General Manager                                                                                                      
Municipal Light and Power (ML&P)                                                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Gave a presentation on the state of the                                                                    
Railbelt power grid, its susceptibility to blackouts, and the                                                                   
projected demand in the next 10 years.                                                                                          
                                                                                                                                
JOE GRIFFITH, Chief Executive Officer                                                                                           
Chugach Electric Association (CEA)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Introduced John Cooley and answered                                                                        
questions during the hearing on the security of the Railbelt                                                                    
power grid.                                                                                                                     
                                                                                                                                
JOHN COOLEY, Manager of Power Control                                                                                           
Chugach Electric Association (CEA)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Gave a  presentation on  the state  of the                                                               
Railbelt  power grid,  its susceptibility  to blackouts,  and the                                                               
projected demand in the next 10 years.                                                                                          
                                                                                                                                
TUCKERMAN BABCOCK, Manager                                                                                                      
Government/Strategic Affairs                                                                                                    
Matanuska Electric Association (MEA)                                                                                            
Eagle River, Alaska                                                                                                             
POSITION  STATEMENT:   Gave a  presentation on  the state  of the                                                               
Railbelt  power grid,  its susceptibility  to blackouts,  and the                                                               
projected demand in the next 10 years.                                                                                          
                                                                                                                                
HENRI DALE, Power System Manager                                                                                                
Golden Valley Electric Association (GVEA)                                                                                       
Fairbanks, Alaska                                                                                                               
POSITION  STATEMENT:   Gave a  presentation on  the state  of the                                                               
Railbelt  power grid,  its susceptibility  to blackouts,  and the                                                               
projected demand in the next 10 years.                                                                                          
                                                                                                                                
ERIC YOULD, Executive Director                                                                                                  
Alaska Power Association (APA)                                                                                                  
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Gave a  presentation on  the state  of the                                                               
Railbelt  power grid,  its susceptibility  to blackouts,  and the                                                               
projected demand in the next 10 years.                                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-13, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
CHAIR  CHERYLL  HEINZE  called the  House  Special  Committee  on                                                               
Economic Development, International Trade  and Tourism meeting to                                                               
order at  3:15 p.m.   Representatives Heinze,  Dahlstrom, Cissna,                                                               
McGuire,  and Kohring  (via teleconference)  were present  at the                                                               
call to order.                                                                                                                  
                                                                                                                                
SUBJECT:  SECURITY OF THE RAILBELT POWER GRID                                                                                 
                                                                                                                                
CHAIR HEINZE  gave a speech  before hearing presentations  on the                                                               
security  of  the Railbelt  power  grid.    She stated  that  the                                                               
September 11  [2001] attacks  on New  York and  Washington, D.C.,                                                               
forced  the  nation's  energy business  and  policy  bodies  that                                                               
oversee the  nation's energy establishment  to reassess  many old                                                               
assumptions.   For the first  time, a relatively small  number of                                                               
people who  had concerned themselves  with securing  the nation's                                                               
energy  infrastructure  were  thrust  into  prominence.    Energy                                                               
security had  entered the  lexicon of all  those involved  in the                                                               
energy  industry.    Soon  after,  policy  makers,  state  energy                                                               
officials,   public   utility    commissioners,   and   emergency                                                               
management  officials discovered  a  renewed  drive to  cooperate                                                               
with  electric,  gas,  and petroleum  companies  to  improve  the                                                               
security  of  systems  that generate,  transmit,  and  distribute                                                               
energy.                                                                                                                         
                                                                                                                                
CHAIR  HEINZE  said state  policy  makers  [legislators] serve  a                                                               
crucial role in  partnership with industry and  local and federal                                                               
officials in addressing  energy-security vulnerabilities.  Energy                                                               
security  refers  to  the  resilience of  energy  systems.    The                                                               
resilient  system  would  be   capable  of  withstanding  threats                                                               
through  a combination  of active,  direct security  measures and                                                               
passive   or  more   indirect   measures   such  as   redundancy,                                                               
duplication  of  critical  equipment, diversity  in  fuel,  other                                                               
sources   of   energy,   and    reliance   on   less   vulnerable                                                               
infrastructure.                                                                                                                 
                                                                                                                                
CHAIR HEINZE  added that  the Homeland Security  Act and  the USA                                                               
Patriot  Act  define  critical  infrastructure  as  "systems  and                                                               
assets  so vital  to the  United  States that  the incapacity  or                                                               
destruction   of  such   systems  and   assets  would   have  ...                                                               
debilitating  impact  on  security, national  economic  security,                                                               
national public  health or  safety, or  any combination  of those                                                               
matters."  State policy makers  must understand the effect that a                                                               
security  breach could  have on  the economy,  public health  and                                                               
safety, and  the environment.   For example, water pumps  rely on                                                               
electricity to  operate; electricity relies  on natural gas  as a                                                               
fuel, which  may in turn, if  needed, rely on electricity  to run                                                               
the  compressors.   Telecommunications systems  serve as  a vital                                                               
support  system  for  the  power grid,  and  they,  too,  require                                                               
electricity.    She  said  the  nation's  new  high-tech  economy                                                               
demands  reliable petroleum-and-electricity  based energy  system                                                               
to meet  its needs.   The nation's power plants  and transmission                                                               
and distribution  systems are among the  more critical facilities                                                               
that are vulnerable to a breach of security.                                                                                    
                                                                                                                                
CHAIR  HEINZE  continued, saying  each  part  of the  electricity                                                               
system has  different characteristics and  should be seen  on its                                                               
own   merits.      The  network   of   electricity   transmission                                                               
infrastructure is an  asset of the systems, but  that network can                                                               
sometimes come  cascading down.   Power lines  could be  a target                                                               
for  terrorists.   Transmission  lines are  almost impossible  to                                                               
physically  protect.    Because  the  electric  power  system  is                                                               
interlinked,  a failure  on a  single important  power lines  can                                                               
quickly  cascade through  the transmission  system, causing  wide                                                               
electrical outages.   Electrical  substations are a  crucial part                                                               
of any  power delivery systems.   The threat that results  from a                                                               
loss of  a substation  is primarily  economic.   Transformers are                                                               
the largest and  most expensive components of  a substation, with                                                               
each one  costing in  the vicinity  of $2  million, and  can take                                                               
nine  to eighteen  months to  build  and deliver.   The  nation's                                                               
energy system  of power plants,  power lines, gas  pipelines, and                                                               
power facilities  is exposed to  terrorists' threats.   The scope                                                               
of the  threat is great, but  lawmakers can take steps  to reduce                                                               
the risks.                                                                                                                      
                                                                                                                                
CHAIR  HEINZE  noted  that  the   bulk  of  the  nation's  energy                                                               
infrastructure  has  some  level  of risk.    The  question  that                                                               
legislators and the industry need to  address is:  What risks are                                                               
unacceptable?   The vast  majority of power  lines fall  into the                                                               
category  of  an  acceptable  risk.   Where  multiple  paths  are                                                               
sustainable if one  power line went down, power  could be shipped                                                               
over   other   lines  while   that   one   was  being   repaired.                                                               
Unfortunately, multiple  paths are not the  characteristic of the                                                               
Railbelt system.  Attacks on  some other facilities such as large                                                               
power generators,  major pipelines, transmission lines,  and fuel                                                               
storage facilities may qualify as unacceptable risks.                                                                           
                                                                                                                                
CHAIR HEINZE  pointed out that  at least 20 states  have proposed                                                               
legislation that addresses the issue  of open records.  The bills                                                               
look at  keeping secret any evacuation  plans, emergency response                                                               
plans, security  measures, or emergency health  procedures.  Some                                                               
states    have   proposed    exemptions   from    public   record                                                               
infrastructure such as utility plants,  bridges, water lines, and                                                               
transportation systems.   Across the country  there is discussion                                                               
at the  local level about what  should be included in  the public                                                               
records.  She mentioned the  review of statues governing freedom-                                                               
of-information laws  and said there are  regulations that provide                                                               
exemptions for security-related information.                                                                                    
                                                                                                                                
Number 0050                                                                                                                     
                                                                                                                                
JIM  POSEY, General  Manager, Municipal  Light and  Power (ML&P),                                                               
informing  members  on  the  current  state  and  future  of  the                                                               
Railbelt power  line, stated that ML&P  generates, transmits, and                                                               
distributes electricity to 30,000 customer accounts in a 20-                                                                    
square-mile radius.  Municipal Light  and Power has four physical                                                               
plants  and one  natural  gas  field.   Power  purchased in  2002                                                               
equaled  968,3776,278  kWh, and  economy  energy  sales to  other                                                               
utilities  totaled 79,625,000  kWh,  with  total assets  equaling                                                               
$368,460,050.                                                                                                                   
                                                                                                                                
MR. POSEY  indicated future  challenges in  three groups.   Long-                                                               
term,   challenges  include   development  of   a  robust   grid,                                                               
implementing an integrated resources  plan, developing a reliable                                                               
source of natural gas, developing  wind power, and green pricing.                                                               
The   three-year    horizon   involves   replacing    the   aging                                                               
infrastructure,    maintaining   competitive    rates,   military                                                               
privatization,  maintaining value  of interest  in Bradley  Lake,                                                               
and replacing the  aging workforce.  Immediate  challenges are to                                                               
acquire property  for Plant III  and working with  the governor's                                                               
energy task force.                                                                                                              
                                                                                                                                
Number 0165                                                                                                                     
                                                                                                                                
MR. POSEY then went on  to point out that Alaska's infrastructure                                                               
is  old:   30  percent  of  thermal  generating capacity  in  the                                                               
Railbelt is more than 30 years  old and 50 percent is 20-30 years                                                               
old.  This  makes them both more expensive and  more difficult to                                                               
run.    The  Anchorage-to-Eklutna transmission  line  is  50-plus                                                               
years old.                                                                                                                      
                                                                                                                                
MR. POSEY stressed the need to  upgrade the Eklutna line for many                                                               
reasons.   It is critical  to the transmission network  and would                                                               
provide  an  alternate  connection   linking  the  ML&P  and  CEA                                                               
transmission systems.  Also important  was the fact that it would                                                               
be  a more  reliable and  redundant power  source from  Palmer to                                                               
Anchorage,  upgrading  a  vulnerable  system.    The  legislature                                                               
appropriated $19.3  million to complete this  upgrade, which ML&P                                                               
is managing.                                                                                                                    
                                                                                                                                
Number 0203                                                                                                                     
                                                                                                                                
MR. POSEY  discussed ML&P's Integrated Resources  Plan (IRP) that                                                               
compares  new  technology  to  "repowering"  existing  generation                                                               
assets as well as the future  of Plant I, dual fuel capacity, and                                                               
supervisory control and  data acquisition (SCADA) needs.   Due to                                                               
the IRP,  several recommendations are being  made and implemented                                                               
involving investments in new generation;  the closure of Plant I;                                                               
elimination  of   dual  fuel  capacity;  postponement   of  SCADA                                                               
enhancements;  and replacement  of  aging underground,  overhead,                                                               
and substation infrastructure.                                                                                                  
                                                                                                                                
MR. POSEY  next went  on to outline  various plans  for upgrading                                                               
and  improving   ML&P's  ability   to  provide   cheap,  reliable                                                               
electricity  to   its  customers.    These   plans  included  new                                                               
generation, military privatization, use  of the Beluga River Unit                                                               
gas  field and  re-evaluation  of current  gas  contracts.   Also                                                               
mentioned was  the Southern Intertie  project and  its importance                                                               
to ML&P.                                                                                                                        
                                                                                                                                
Number 0288                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA asked if there was a prioritizing of                                                                      
vulnerability.                                                                                                                  
                                                                                                                                
MR. POSEY responded, noting that it was a tough question:                                                                       
                                                                                                                                
     Our vulnerability  is something we  look at as  a group                                                                    
     but  also through  our APA  [Alaska Power  Association]                                                                    
     organization  and individually  for us  because of  the                                                                    
     security  concepts  that  we as  a  city  consider  our                                                                    
     vulnerabilities.   We  have so  many  diverse forms  of                                                                    
     generation of power, from Bradley  to Eklutna, to Plant                                                                    
     I to  Plant II.   There  is no one  huge plant  here in                                                                    
     Anchorage other  than Plant  II that  one could  say is                                                                    
     vulnerable, but even  that is backed up by  what we can                                                                    
     get from  other sources-fairly  difficult to  knock out                                                                    
     but not impossible.  Our  tie lines connecting the city                                                                    
     to our two hydro powers.   Some of our lines are fairly                                                                    
     remote  and might  be  easy to  do  some activity  that                                                                    
     could knock them out.   But, once again, you have these                                                                    
     other diverse  pieces, so to  knock out the  whole city                                                                    
     in  power  distribution  or  to  knock  out  the  whole                                                                    
     Railbelt is difficult,  and the keys to  doing that are                                                                    
     not  readily available  to anyone,  but  they could  do                                                                    
     damage to  the system.   And that  is what we  work at;                                                                    
     making sure  we can  depend on each  other and  that we                                                                    
     have  crews that  can  repair those  are  the kinds  of                                                                    
     things that we do.                                                                                                         
                                                                                                                                
     We do  not run our control  systems, especially between                                                                    
     Chugach [CEA]  and ourselves,  on a  web-based program.                                                                    
     Ours is SCADA  based and not connected to the  web.  So                                                                    
     we've done  a lot of  things and kept  things separated                                                                    
     to keep the kind of things  that they talk about in the                                                                    
     Lower  48  from  being  reality  here-nothing  like  in                                                                    
     Northern California  and Southern Washington  last week                                                                    
     where someone was taking bolts  out of the transmission                                                                    
     towers.   You  will find  that that  kind of  damage is                                                                    
     possible  anywhere.    But,  once  again,  you  have  a                                                                    
     diverse  flow  of  energy   and  a  diverse  generation                                                                    
     capacity  from many  different places.   The  one-punch                                                                    
      knockout becomes more difficult for one to use as a                                                                       
     symbol, I suppose, and that we work on very seriously                                                                      
     up and down the Railbelt.                                                                                                  
                                                                                                                                
Number 0403                                                                                                                     
                                                                                                                                
JOE   GRIFFITH,  Chief   Executive  Officer,   Chugach  Electric,                                                               
introduced  John   Cooley  as   the  person   who  will   give  a                                                               
presentation on the current state and future of the Railbelt.                                                                   
                                                                                                                                
JOHN  COOLEY,   Manager  of   Power  Control,   Chugach  Electric                                                               
Association,  began by  giving an  explanation of  basic electric                                                               
terms and processes.                                                                                                            
                                                                                                                              
TAPE 03-13 SIDE B                                                                                                             
                                                                                                                                
MR.  COOLEY  then  discussed  the  four types  of  fuel  and  the                                                               
percentage of total  power that each generates  for the Railbelt,                                                               
namely,  natural   gas,  63  percent;   fuel  oil,   14  percent;                                                               
hydroelectric, 14 percent;  and coal, 9 percent.   Also mentioned                                                               
was the fact that all the  generating areas must keep their loads                                                               
in balance  or the whole system  will fail.  This  is why partial                                                               
blackouts occur.  When a  generator goes off-line, some load must                                                               
be shed to keep the frequency at a usable level.                                                                                
                                                                                                                                
Number 0042                                                                                                                     
                                                                                                                                
MR.  COOLEY  also pointed  out  that  the control  area  dispatch                                                               
centers at  GVEA, ML&P, and  CEA are  used to schedule  the power                                                               
among them  to make sure the  load matches the need  in any given                                                               
area.  The control  areas are staffed 24 hours a  day, 365 days a                                                               
year.  The systems are also monitored for secure operation.                                                                     
                                                                                                                                
MR. COOLEY  next addressed  the question  of how  susceptible the                                                               
Railbelt  power   grid  was   to  blackout.     He   stated  that                                                               
transmission infrastructure  hasn't kept  up with load  growth or                                                               
market changes  and that the  system is operated  under different                                                               
conditions  than  what  it  was designed  for.    The  underlying                                                               
problems  behind  these issues  were  too  many people  in  areas                                                               
without  power plants  due  to  the NIMBY  [not  in my  backyard]                                                               
effect and the fact that security  monitors are unable to see the                                                               
level  of  detail  needed  to   know  whose  load  a  failure  is                                                               
associated with.                                                                                                                
                                                                                                                                
Number 0234                                                                                                                     
                                                                                                                                
MR. COOLEY  then described  the recent  Northeast blackout.   The                                                               
exact cause has  yet to be determined but the  sequential loss of                                                               
several  345  Kilovolt  transmission   lines  in  Ohio  may  have                                                               
overloaded others,  or perhaps  poor vegetation  management could                                                               
be the reason.  Operators were  unable to adjust power flows over                                                               
other lines before the system became unstable.                                                                                  
                                                                                                                                
MR. COOLEY explained  how the Railbelt system  was different from                                                               
the power  grid in the Lower  48.  The Railbelt  is much smaller.                                                               
All Railbelt [utilities] are  nonprofit, valuing reliability over                                                               
profitability.   Their  spinning  reserves also  allow a  quicker                                                               
restoration, and  the utilities  control from generation  to load                                                               
making the system easier to manage.   Even so, [a blackout] could                                                               
still  happen here.    In July  1996 Anchorage  and  much of  the                                                               
Railbelt blacked out.   This happened because one  of CEA's three                                                               
generators  was  taken off-line  for  maintenance.   One  of  the                                                               
remaining two generator's lines sagged  into a tree and went off-                                                               
line as  well.  The third  generator was unable to  cope with the                                                               
load  and tripped,  causing the  blackout.   When the  Kenai line                                                               
tried to pick up the load, it tripped as well.                                                                                  
                                                                                                                                
MR.  COOLEY   wrapped  up  his  presentation   by  outlining  the                                                               
projected  demand on  the  Railbelt  power grid  in  the next  10                                                               
years.   From  the current  usage of  4.5 billion  kWh, use  will                                                               
increase to  around 5.5 billion  kWh in the  next 10 years.   Mr.                                                               
Cooley  then  indicated  that  both   he  and  Mr.  Griffin  were                                                               
available to answer questions                                                                                                   
                                                                                                                                
Number 0345                                                                                                                     
                                                                                                                                
REPRESENTATIVE  DAHLSTROM asked  whether  or not  there were  any                                                               
industry prohibitions to keep new companies from producing gas.                                                                 
                                                                                                                                
MR. GRIFFITH  responded that there  were no barriers  to drilling                                                               
for gas, outside of the state permitting process.                                                                               
                                                                                                                                
REPRESENTATIVE HEINZE  asked whether  or not CEA  participated in                                                               
demand-side management.                                                                                                         
                                                                                                                                
MR.  GRIFFITH  replied  that  they  participated  in  demand-side                                                               
management  to  an extent.    Demand  side  works best  with  big                                                               
industrial loads.   In effect,  it means  that they can  buy back                                                               
energy  when they  need  power.   On occasion  they  have to  use                                                               
[demand-side  management],  usually  in an  emergency  situation.                                                               
They initiate  this by  calling up  a sector  and asking  them to                                                               
reduce power  usage to lighten  the load on  the grid.   They had                                                               
one  case  a few  years  ago  when they  had  to  ask the  Agrium                                                               
facility and  the liquefied  natural gas  (LNG) facility  to back                                                               
down  when  one  of  the  compressors  failed  on  the  steelhead                                                               
platform out in  the inlet, so they were unable  to supply enough                                                               
gas to meet  demand.  Chugach Electric Association  was forced to                                                               
ask the major producers on the Kenai to reduce its use of gas.                                                                  
                                                                                                                                
Number 0460                                                                                                                     
                                                                                                                                
TUCKERMAN  BABCOCK, Manager,  Government  and Strategic  Affairs,                                                               
Matanuska Electric Association (MEA),  gave a presentation on the                                                               
current state and future of the Railbelt.                                                                                       
                                                                                                                                
MR. BABCOCK  gave an overview  of MEA, emphasizing  his company's                                                               
rapid growth in miles of  power line, new services, and customers                                                               
served.   Conversely, it has  scaled back its workforce  from 149                                                               
in 1994 to 121 in 2002.  This  allows MEA to lower its rates when                                                               
most Alaskan utilities are increasing their rates.                                                                              
                                                                                                                                
MR. BABCOCK then went on  to outline MEA's relationship with CEA.                                                               
Matanuska  Electric Association  gets  all of  their power  needs                                                               
from CEA, purchasing 25 percent of  all of CEA's output.  Chugach                                                               
Electric  Association manages  MEA's  shares in  the Eklutna  and                                                               
Bradley Lake hydroelectric plants.   The contract between CEA and                                                               
MEA was started in 1989 and ends  in 2014.  Mr. Babcock also said                                                               
that  relationships   between  his  company  and   CEA  had  been                                                               
strained.   He stated that CEA  attempted to acquire MEA  in 1994                                                               
and 1995  and that MEA  attempted to take over  CEA in 1998.   He                                                               
also  stated  that he  believed  that  CEA's rates  are  contract                                                               
violations and are too high.                                                                                                    
                                                                                                                                
Number 0530                                                                                                                     
                                                                                                                                
MR.  BABCOCK then  outlined the  differences between  his company                                                               
and CEA.   Differences in rates, miles of  distribution line, and                                                               
number  of consumers  were discussed.   Mr.  Babcock also  talked                                                               
about  the Regulatory  Commission of  Alaska's (RCA's)  order for                                                               
CEA  to cut  MEA's rates  by 12  percent and  refund millions  of                                                               
dollars.  Chugach Electric Association  took the matter to court,                                                               
where it is currently being decided.                                                                                            
                                                                                                                                
MR. BABCOCK went on to  explain the governor's energy policy task                                                               
force,  which is  made up  of  nine people.   Matanuska  Electric                                                               
Association's general  manager, Wayne  Carmony, was  appointed to                                                               
the  board.   The task  force's goal  is to  develop a  long-term                                                               
energy plan for Alaska.  The  deadline for a Railbelt energy plan                                                               
is December  31, 2003.   A non-Railbelt  energy plan has  a March                                                               
31, 2004, deadline.                                                                                                             
                                                                                                                                
TAPE 03-14, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
MR. BABCOCK outlined what he  thought a comprehensive energy plan                                                               
should include.  The plan  should provide interconnected electric                                                               
utility service  to regions that  don't have it and  should lower                                                               
the  costs  for regions  that  do  have  it.   Mr.  Babcock  also                                                               
proposed that all electric utilities  share proportionally in the                                                               
benefits  of  state  and  federal   subsidies.    Also,  existing                                                               
generation  and transmission  facilities should  be grandfathered                                                               
in.  Power pooling was also  offered as a capital plan to improve                                                               
electricity generation in Alaska.   The Edison Electric Institute                                                               
defines  power pooling  as two  or  more interconnected  electric                                                               
systems  planned  and  operated  to  supply  power  in  the  most                                                               
reliable   and  economical   manner  for   their  combined   load                                                               
requirements and maintenance, he reported.                                                                                      
                                                                                                                                
Number 0194                                                                                                                     
                                                                                                                                
REPRESENTATIVE   DAHLSTROM  asked   whether  MEA   has  had   any                                                               
preliminary  discussions with  any  of the  other utilities  that                                                               
have  been mentioned  or with  the RCA  to see  if they  would be                                                               
amenable to this idea.                                                                                                          
                                                                                                                                
MR.  BABCOCK  replied that  MEA  had  been making  presentations.                                                               
They presented  to RCA  on Friday  and to  other groups  as well.                                                               
Matanuska  Electric Association  plans on  continuing to  present                                                               
its idea until a solution is found.                                                                                             
                                                                                                                                
CHAIR  HEINZE  asked  if,  along with  his  presentation  of  his                                                               
pooling idea, Mr. Babcock would  be addressing the questions that                                                               
this committee asked him to address in the invitation.                                                                          
                                                                                                                                
MR. BABCOCK replied that MEA  felt that pooling would improve the                                                               
reliability and security of the  Railbelt power line.  He allowed                                                               
that  the  other  utilities  are  better  equipped  to  tell  the                                                               
committee  about where  the  Railbelt is  today  whereas, MEA  is                                                               
trying to show where the Railbelt should go in the future.                                                                      
                                                                                                                                
Number 0235                                                                                                                     
                                                                                                                                
HENRI  DALE,   Power  System  Manager,  Golden   Valley  Electric                                                               
Association (GVEA), gave a presentation  on the current state and                                                               
the future of the Railbelt.                                                                                                     
                                                                                                                                
MR.  DALE explained  that the  Railbelt is  constructed of  aging                                                               
components.   Most  of  these are  25-plus years  old.   He  also                                                               
stressed  that  redundancy  is  the  key  to  security  and  that                                                               
although there are  exceptions, most of the Railbelt  system is a                                                               
radial system.   Also, the sheer distance the  lines pass through                                                               
public  right-of-way makes  it almost  impossible to  guard every                                                               
section of power line.                                                                                                          
                                                                                                                                
MR. DALE  mentioned that  the most sensitive  parts of  the power                                                               
transmission system  are protected, both by  secure buildings and                                                               
by SCADA systems.   As much as they are  able, GVEA has protected                                                               
itself from attacks on its system.                                                                                              
                                                                                                                                
MR. DALE answered the question of  how susceptible they were to a                                                               
blackout by saying that they  probably have more blackouts due to                                                               
the fact  that they  are on  the end  of a  radial line.   Twenty                                                               
years ago a  few blackouts a year was not  uncommon, but now it's                                                               
roughly once every two years.   He said GVEA is currently testing                                                               
a battery backup system, and also has spinning reserves.                                                                        
                                                                                                                                
MR. DALE  pointed out that  their demand  is projected to  grow 2                                                               
percent  per year.   In  the  near term,  there is  a 25  percent                                                               
growth possibility  due to the missile  defense system, Alyeska's                                                               
interest in  electrifying some  of its pump  stations, and  a new                                                               
gold mine.                                                                                                                      
                                                                                                                                
Number 0409                                                                                                                     
                                                                                                                                
REPRESENTATIVE HEINZE  asked whether  or not a  cascading failure                                                               
would affect Fort Greely and whether  or not Fort Greely would be                                                               
too much of a burden on GVEA's lines.                                                                                           
                                                                                                                                
MR.  DALE responded  that no,  it wouldn't  overload GVEA's  grid                                                               
because GVEA,  and all utilities  build more  generation capacity                                                               
to  meet  their  load  needs  as  well  as  keep  their  spinning                                                               
reserves.  Mr. Dale also pointed  out that GVEA treats all of its                                                               
companies the  same, so  they wouldn't  necessarily look  at Fort                                                               
Greeley any  differently than any  other section.  Mr.  Dale said                                                               
he didn't see where Fort Greely  would be any worse off or better                                                               
off than  any other customer.   The bottom line is  that Mr. Dale                                                               
believes GVEA can reliably serve Fort Greely                                                                                    
                                                                                                                                
Number 0489                                                                                                                     
                                                                                                                                
ERIC YOULD  Executive Director,  Alaska Power  Association (APA),                                                               
gave  a presentation  on  the  current state  and  future of  the                                                               
Railbelt.                                                                                                                       
                                                                                                                                
MR. YOULD  introduced himself and  his organization,  noting that                                                               
the  APA  represents every  electrical  utility  in the  Railbelt                                                               
except for MEA, which dropped out  several years back.  Mr. Yould                                                               
also  mentioned   that  the  heads   of  the   various  utilities                                                               
cooperated  extremely well  together  compared with  a few  years                                                               
ago,  when getting  them all  in the  same room  would have  been                                                               
impossible.                                                                                                                     
                                                                                                                                
MR.  YOULD  noted  that  Mr.   Babcock  and  MEA  have  taken  an                                                               
adversarial stance.   Mr.  Yould pointed  out that  MEA is  not a                                                               
member of  the integrated  resource planning  that all  the other                                                               
utilities are participating in.                                                                                                 
                                                                                                                                
MR. YOULD  explained that the Anchorage-to-Fairbanks  intertie is                                                               
a weak, radial  system that is extremely  different from anything                                                               
in the Lower 48.  Another  reason the Railbelt is weak is because                                                               
there is  a 20-mile stretch  of transmission line that  goes from                                                               
Fairbanks to Anchorage that is owned  by MEA.  The utilities have                                                               
been trying to  work with MEA to  try to upgrade that  line or at                                                               
least to get MEA to allow them to  upgrade it for MEA.  Mr. Yould                                                               
stated that MEA  was not cooperative and the  other utilities had                                                               
to go to the legislature and  say they needed to build around MEA                                                               
system.   Without MEA's  20-mile segment,  the Railbelt  won't be                                                               
able to  transmit electricity  north and south.   Just  this year                                                               
MEA served notice  to the ADA that  it is not going  to re-up its                                                               
contract to allow  utilities to use that  transmission segment to                                                               
run  power north  and south.   This  is why  it is  imperative to                                                               
build around MEA's line.                                                                                                        
                                                                                                                                
TAPE 03-14, SIDE B                                                                                                            
                                                                                                                                
REPRESENTATIVE HEINZE  asked whether or  not there is any  way to                                                               
prevent one  of the utilities  in the Railbelt from  closing down                                                               
its section whenever it wants.                                                                                                  
                                                                                                                                
MR.  YOULD responded  that  there are  avenues  and venues  where                                                               
these problems  will be addressed.   For example, the  opening of                                                               
the  Anchorage-Fairbanks intertie  when the  contract expires  in                                                               
2004 will  probably be addressed  by the  RCA.  In  addition, one                                                               
can always go to court.                                                                                                         
                                                                                                                                
REPRESENTATIVE DAHLSTROM  invited Mr.  Babcock back to  the table                                                               
to respond to Mr. Yould's remarks.                                                                                              
                                                                                                                                
MR.  BABCOCK remarked  that  he  could see  that  when a  utility                                                               
decides not  to stay a member  of Mr. Yould's trade  group, there                                                               
are some prices to pay.  He  also stated that two years ago, when                                                               
the legislature tried to solve  that problem, the highway was too                                                               
narrow; it didn't  have enough traffic.   The legislature decided                                                               
to increase the size of that  highway so that more power could be                                                               
sent  north.   There  was  $10 million  appropriated  to build  a                                                               
frontage road.   Then-Governor Knowles vetoed  the appropriation,                                                               
leaving MEA  responsible for paying  for the upgrade and  to hold                                                               
its members harmless.                                                                                                           
                                                                                                                                
MR. BABCOCK said he also thought  that another reason is that for                                                               
the last 15  years the ratio of the tariff,  or the wheeling rate                                                               
paid, is such that  MEA pays 15 times to use  the line and others                                                               
pay 1/15  to use MEA's line.   Mr. Yould also  suggested that the                                                               
desire of the  other utilities to work together  stems from their                                                               
desire to  see that the  $20 million appropriated to  upgrade the                                                               
Anchorage-to-Fairbanks intertie, the $19  million for the Eklutna                                                               
project and the $40 million  left over from the southern intertie                                                               
gets spent on something.                                                                                                        
                                                                                                                                
Number 0644                                                                                                                     
                                                                                                                              
CHAIR   HEINZE  declared   her  intention   to  form   a  Digital                                                               
Development,   Information,    Infrastructure,   and   Management                                                               
subcommittee.      The   subcommittee  will   be   charged   with                                                               
investigating  Alaska's  transition  to a  digital  economy,  and                                                               
asked  to   make  recommendations  back  to   the  House  Special                                                               
Committee  on  Economic   Development,  International  Trade  and                                                               
Tourism  regarding   actions  [the   legislature]  can   take  to                                                               
cultivate this important sector of the Alaskan economy.                                                                       
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special  Committee on  Economic Development,  International Trade                                                               
and Tourism meeting was adjourned at 6:44 p.m.                                                                                  

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