Legislature(2011 - 2012)BARNES 124

02/08/2011 03:00 PM House ENERGY


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03:14:00 PM Start
03:14:34 PM Presentation(s) on Reports Required by the Alaska Sustainable Energy Act of 2010.
03:16:06 PM Office of the Governor or Designee, "how Best to Structure State Energy Programs"
03:24:34 PM Department of Transportation & Public Facilities, "retrofitting State Buidings to Improve Energy Efficiency" & "using Compressed Natural Gas to Power Vehicles"
03:52:07 PM Department of Revenue, "creating a Municipal Energy Improvements Financing Program"
04:00:57 PM Office of Management & Budget, "standardized Way to Collect Data on Energy Consumption and Costs"
04:05:10 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentations on reports required by the TELECONFERENCED
Alaska Sustainable Energy Act of 2010 by:
- Office of the Governor or designee, "How Best
to Structure State Energy Programs"
- Dept. of Transportation & Public Facilities,
"Retrofitting State Buildings to Improve Energy
Efficiency" & "Using Compressed Natural Gas to
Power Vehicles"
- Dept. of Revenue, "Creating a Municipal Energy
Improvements Financing Program"
- Office of Management & Budget, "A Standardized
Way to Collect Data on Energy Consumption and
Costs"
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                        February 8, 2011                                                                                        
                           3:14 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Lance Pruitt, Co-Chair                                                                                           
Representative Bob Lynn                                                                                                         
Representative Kurt Olson                                                                                                       
Representative Dan Saddler                                                                                                      
Representative Pete Petersen                                                                                                    
Representative Chris Tuck                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION(S) ON REPORTS REQUIRED BY THE ALASKA SUSTAINABLE                                                                   
ENERGY ACT OF 2010.                                                                                                             
                                                                                                                                
OFFICE OF THE GOVERNOR OR DESIGNEE~ "HOW BEST TO STRUCTURE STATE                                                                
ENERGY PROGRAMS"                                                                                                                
                                                                                                                                
DEPARTMENT OF TRANSPORTATION & PUBLIC FACILITIES~ "RETROFITTING                                                                 
STATE BUIDINGS TO IMPROVE ENERGY EFFICIENCY" & "USING COMPRESSED                                                                
NATURAL GAS TO POWER VEHICLES"                                                                                                  
                                                                                                                                
DEPARTMENT OF REVENUE~ "CREATING A MUNICIPAL ENERGY IMPROVEMENTS                                                                
FINANCING PROGRAM"                                                                                                              
                                                                                                                                
OFFICE OF MANAGEMENT & BUDGET~ "STANDARDIZED WAY TO COLLECT DATA                                                                
ON ENERGY CONSUMPTION AND COSTS"                                                                                                
                                                                                                                                
     -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:   Testified on  the Office  of the  Governor                                                             
report titled, "How Best to Structure State Energy Programs."                                                                   
                                                                                                                                
JOEL ST. AUBIN, Chief-Statewide Public Facilities                                                                               
Office of the Commissioner                                                                                                      
Department of Transportation & Public Facilities (DOTPF)                                                                        
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:      Testified   on   the   Department   of                                                             
Transportation  &   Public  Facilities  (DOTPF)   report  titled,                                                               
"DOT&PF Retrofitting of State Facilities."                                                                                      
                                                                                                                                
DIANA ROTKIS, Manager-Statewide Equipment Fleet                                                                                 
Office of the Commissioner                                                                                                      
Department of Transportation & Public Facilities (DOTPF)                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Testified  on the  State of  Alaska Vehicle                                                             
Fleet Compressed Natural Gas Pilot Program.                                                                                     
                                                                                                                                
BOB BREAN, Director                                                                                                             
Research & Rural Development                                                                                                    
Alaska Housing Finance Corporation (AHFC)                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Offered to  provide written  information on                                                             
the Alaska Energy-Efficiency Revolving Loan Fund program.                                                                       
                                                                                                                                
JERRY BURNETT, Deputy Commissioner                                                                                              
Treasury Division                                                                                                               
Department of Revenue (DOR)                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Testified  on the  report titled,  "Alaska                                                             
Department  of Revenue  Municipal  Energy Improvements  Financing                                                               
Report January 31, 2011."                                                                                                       
                                                                                                                                
CRAIG KAHKLEN, Policy Analyst                                                                                                   
Office of Management & Budget (OMB)                                                                                             
Office of the Governor                                                                                                          
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Testified  on  the  report titled,  "SB220                                                             
Alaska Sustainable Energy Act," dated January 31, 2011.                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:14:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  NEAL  FOSTER  called the  House  Special  Committee  on                                                             
Energy meeting  to order  at 3:14  p.m.   Representatives Foster,                                                               
Saddler, Petersen,  Tuck, Olson, and  Pruitt were present  at the                                                               
call to  order.  Representative  Lynn arrived as the  meeting was                                                               
in progress.                                                                                                                    
                                                                                                                                
3:14:34 PM                                                                                                                    
                                                                                                                                
^PRESENTATION(S) ON  REPORTS REQUIRED  BY THE  ALASKA SUSTAINABLE                                                               
ENERGY ACT OF 2010.                                                                                                             
 PRESENTATION(S) ON REPORTS REQUIRED BY THE ALASKA SUSTAINABLE                                                              
                      ENERGY ACT OF 2010.                                                                                   
                                                                                                                              
3:14:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FOSTER announced that the  first order of business would                                                               
be presentations  on reports required  by the  Alaska Sustainable                                                               
Energy Act of 2010, beginning  with the executive director of AEA                                                               
reporting on how best to structure state energy programs.                                                                       
                                                                                                                                
3:15:03 PM                                                                                                                    
                                                                                                                                
^OFFICE  OF THE  GOVERNOR  OR DESIGNEE,  "HOW  BEST TO  STRUCTURE                                                               
STATE ENERGY PROGRAMS"                                                                                                          
 OFFICE OF THE GOVERNOR OR DESIGNEE, "HOW BEST TO STRUCTURE STATE                                                           
                        ENERGY PROGRAMS"                                                                                    
                                                                                                                              
3:16:06 PM                                                                                                                    
                                                                                                                                
SARA  FISHER GOAD,  Executive Director,  Alaska Energy  Authority                                                               
(AEA), Department  of Commerce, Community &  Economic Development                                                               
(DCCED), informed  the committee  the report from  the governor's                                                               
office  titled "How  Best to  Structure  State Energy  Programs,"                                                               
required an examination  of the powers and duties of  AEA and its                                                               
relationship  with the  Alaska  Industrial  Development &  Export                                                               
Authority (AIDEA).  She said AEA  has become a key agency for the                                                               
planning  of energy  infrastructure financing  by issuing  grants                                                               
through  the  Renewable  Energy  Grant  Fund  and  Recommendation                                                               
Program and the  Emerging Energy Technology Fund  program.  Also,                                                               
AEA   has  managed   the  construction   of  many   rural  energy                                                               
infrastructure  projects, and  provided technical  assistance and                                                               
training  to local  power  plant  and bulk  fuel  operators.   In                                                               
partnership with  the Regulatory Commission of  Alaska (RCA), AEA                                                               
also  manages   the  Power   Cost  Equalization   (PCE)  program.                                                               
However, AEA  does not have  the ability  to own and  operate new                                                               
energy projects  or to hire  staff; in fact, AIDEA  staff manages                                                               
most  AEA programs.    Ms. Fisher  Goad  stated that  authorizing                                                               
statutes in proposed  HB 103 would restore AEA's  power and allow                                                               
it  to  hire  staff.    She  provided  a  brief  history  of  the                                                               
governance of  AIDEA and  AEA by their  boards of  directors, and                                                               
advised that AIDEA and AEA are  now allowed "to move forward with                                                               
their  separate   and  distinct  missions  as   State  of  Alaska                                                               
corporations."    The   aforementioned  pending  legislation,  if                                                               
enacted, will provide  the next step and allow AEA  to hire staff                                                               
for the purpose  of managing its programs.  She  pointed out that                                                               
the  report makes  two recommendations:   1.  The Bulk  Fuel Loan                                                               
fund  - managed  by AEA  -  and the  Bulk Fuel  Bridge Loan  Fund                                                               
(BFBLF) - managed  by DCCED - should be merged  into one program;                                                               
2. AEA, working  with AIDEA and DCCED, should  explore options to                                                               
address  the  energy  efficiency needs  of  commercial  buildings                                                               
through the Alaska  Commercial Energy Audit Program.   The report                                                               
also  directed that  coordination  between commissioners,  staff,                                                               
the Office  of Management  and Budget  (OMB), and  the governor's                                                               
office for the  management of energy programs is  provided by the                                                               
Energy Policy Coordinator (EPC), whose  mission is to help ensure                                                               
that  the  state's  energy  resources  and  energy  programs  are                                                               
devoted to  advance the  state's energy  policy priorities.   Ms.                                                               
Fisher   Goad  concluded   that   the   governor's  report   also                                                               
recommended that  the EPC further evaluate  services and programs                                                               
to  measure  their  results  and   make  additional  changes,  if                                                               
necessary.   She opined the  overall message is that services and                                                               
programs   should  be   reevaluated   and   reviewed  for   their                                                               
effectiveness in providing value to the residents of the state.                                                                 
                                                                                                                                
3:22:21 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FOSTER asked  for Ms. Fisher Goad's  opinion on creating                                                               
a department of energy.                                                                                                         
                                                                                                                                
3:22:54 PM                                                                                                                    
                                                                                                                                
MS. FISHER GOAD said:                                                                                                           
                                                                                                                                
     What we have found is  that, you know, any coordination                                                                    
     of  the variety  of  projects and  programs for  energy                                                                    
     across several, several state  agencies, and creating a                                                                    
     department of  energy, may  not provide  any additional                                                                    
     services and enhancements of those  services to the, to                                                                    
     the  communities  and the  residents  of  the state  of                                                                    
     Alaska.  And  so I think the  Energy Policy Coordinator                                                                    
     in the  governor's office -  and the  governor's office                                                                    
     has also always  played the role of  the coordination -                                                                    
     would be able to,  to coordinate those programs without                                                                    
     making  a restructuring  process that  would move,  for                                                                    
     example, AEA programs or commerce programs, into some                                                                      
     type of other entity.                                                                                                      
                                                                                                                                
^DEPARTMENT OF TRANSPORTATION  & PUBLIC FACILITIES, "RETROFITTING                                                               
STATE BUIDINGS TO IMPROVE ENERGY  EFFICIENCY" & "USING COMPRESSED                                                               
NATURAL GAS TO POWER VEHICLES"                                                                                                  
DEPARTMENT OF TRANSPORTATION & PUBLIC FACILITIES, "RETROFITTING                                                             
 STATE BUIDINGS TO IMPROVE ENERGY EFFICIENCY" & "USING COMPRESSED                                                           
                 NATURAL GAS TO POWER VEHICLES"                                                                             
                                                                                                                              
3:24:34 PM                                                                                                                    
                                                                                                                                
JOEL ST. AUBIN, Chief-Statewide  Public Facilities, Office of the                                                               
Commissioner,  Department of  Transportation &  Public Facilities                                                               
(DOTPF),  informed the  committee the  Alaska Sustainable  Energy                                                               
Act  requires DOTPF  retrofit at  least 25  percent of  all state                                                               
public facilities  that are  in excess of  10,000 square  feet no                                                               
later than January 1, 2020.   As a first step, DOTPF is gathering                                                               
utility  bills for  the past  two years  for all  state buildings                                                               
that  meet  the criterion.    Most  agencies have  provided  this                                                               
information and  his department is generating  energy-use indices                                                               
in  order  to prioritize  need.    The  department and  AEA  have                                                               
collaborated on  this approach to  prioritize the  facilities and                                                               
to  group projects  by location  if  feasible; however,  grouping                                                               
facilities may mean improvements are  not made in the exact order                                                               
of need based  on the baseline energy-use index.    Mr. St. Aubin                                                               
advised that  DOTPF has issued  a request for proposal  (RFP) for                                                               
energy performance  contracting and  has begun  negotiations with                                                               
energy service  companies.  The  retrofit process will  take many                                                               
years, although the initial costs of  $10 million will be paid by                                                               
the  American Recovery  and Reinvestment  Act (ARRA)  through the                                                               
U.S.  Department of  Energy, and  must  be spent  by March  2012.                                                               
After the  initial funds are  committed, additional  funding will                                                               
be  through  the  Alaska Energy-Efficiency  Revolving  Loan  Fund                                                               
program administered  by the  Alaska Housing  Finance Corporation                                                               
(AHFC), but he anticipated that some  projects may be funded by a                                                               
combination of these, and other  sources.  Mr. St. Aubin recalled                                                               
that retrofit  projects prior to  the passage of  the Sustainable                                                               
Energy Act  were completed using energy  performance contracting.                                                               
The phase of these projects  completed in 2006 resulted in energy                                                               
cost avoidance of  $366,000 during the following  year; the phase                                                               
completed in 2009  resulted in $793,000 of  cost avoidance during                                                               
the following year.  Finally,  he noted that 16 facilities, equal                                                               
to  10  percent of  the  buildings  affected by  the  Sustainable                                                               
Energy  Act,   have  already  been  retrofitted   either  by  the                                                               
Department of  Administration (DOA), DOTPF, or  the Department of                                                               
Corrections (DOC).                                                                                                              
                                                                                                                                
3:28:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK  asked  for   the  amounts  of  energy  cost                                                               
avoidance in 2007 and 2008.                                                                                                     
                                                                                                                                
MR. ST. AUBIN  responded that the energy  savings are continuing,                                                               
but  the report  indicates  the dollar  savings  just during  the                                                               
first year after.                                                                                                               
                                                                                                                                
3:29:27 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  PRUITT  asked  whether  additional money  to  fund  the                                                               
program after ARRA  funds are expended, is set aside,  or will be                                                               
sought from federal or state government.                                                                                        
                                                                                                                                
MR.  ST. AUBIN  advised the  future  funding source  is the  $250                                                               
million  Energy-Efficiency Revolving  Loan  Fund managed  through                                                               
AHFC.                                                                                                                           
                                                                                                                                
3:30:27 PM                                                                                                                    
                                                                                                                                
DIANA ROTKIS,  Manager-Statewide Equipment  Fleet, Office  of the                                                               
Commissioner,  Department of  Transportation &  Public Facilities                                                               
(DOTPF), discussed a report produced  by Mercury Associates, Inc.                                                               
titled  "State   of  Alaska  Vehicle  Fleet   CNG  Pilot  Program                                                               
Recommendations/Cost," dated  January 2011.  She  said the report                                                               
concluded that  compressed natural gas  (CNG) is a  feasible fuel                                                               
for certain Alaska  fleets and expansion of the  program would be                                                               
beneficial  towards Alaska's  sustainability efforts  required by                                                               
the  Alaska Sustainable  Energy Act  of 2010.     Phase 1  of the                                                               
pilot program would enhance the  existing fuel infrastructure and                                                               
increase the  number of vehicles  and equipment using CNG  by the                                                               
Municipality of  Anchorage (MOA),  the Anchorage  School District                                                               
(ASD), and  the state.   Some of the  provisions of Phase  1 are:                                                               
upgrading  the  five  existing CNG  stations;  acquiring  a  fuel                                                               
management  system  for  state bulk  fuel  tanks;  conversion  of                                                               
twenty-five state  light-duty vehicles,  four school  buses, four                                                               
solid-waste trucks, and two transit  buses; designating an inter-                                                               
government  program coordinator  to find  and administer  federal                                                               
grants for  future phases, to  acquire U.S. Department  of Energy                                                               
(DOE) Clean  Cities status  for Anchorage,  and to  garner public                                                               
support for  the program.   Ms. Rotkis  noted a complete  copy of                                                               
the report  and her one-page  summary on the  economic advantages                                                               
and disadvantages  of the program  are provided in  the committee                                                               
packet.                                                                                                                         
                                                                                                                                
3:33:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK  asked whether the state  light-duty vehicles                                                               
selected for the pilot program were high-mileage vehicles.                                                                      
                                                                                                                                
MS.  ROTKIS  said  the   identified  vehicles  were  high-mileage                                                               
vehicles limited  to travel within  the municipal  boundaries, so                                                               
that they could refuel at CNG stations.                                                                                         
                                                                                                                                
3:34:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PETERSEN  agreed that CNG is  a proven technology;                                                               
however, the  supply of natural  gas in Southcentral  is tenuous.                                                               
He questioned whether it is wise to encourage the use of CNG.                                                                   
                                                                                                                                
MS. ROTKIS  acknowledged that one  of the  economic disadvantages                                                               
identified by the  report is the need for  additional natural gas                                                               
storage in Cook Inlet to meet peak winter natural gas demand.                                                                   
                                                                                                                                
3:35:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  pointed out natural gas  is a hydrocarbon                                                               
and asked how it qualifies as a sustainable source of energy.                                                                   
                                                                                                                                
MS.  ROTKIS expressed  her belief  that the  study looked  at the                                                               
effect on greenhouse gases and  the future availability of CNG as                                                               
a "two-sided coin."   She opined sustainability  is going forward                                                               
with a fleet that uses less  regular fuel, costs less, has higher                                                               
engine performance, and longer-lasting vehicles.                                                                                
                                                                                                                                
3:36:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  surmised CNG  vehicles cost less  and run                                                               
better than those fueled by gasoline or diesel.                                                                                 
                                                                                                                                
MS. ROTKIS clarified that natural  gas vehicles do not cost less;                                                               
in fact, there  is a premium on hybrid-type  vehicles of $16,000-                                                               
$24,000  for a  light-duty vehicle.   However,  they have  a much                                                               
cleaner  engine,  so  there   is  less  preventative  maintenance                                                               
needed, and a longer engine life.                                                                                               
                                                                                                                                
3:37:39 PM                                                                                                                    
                                                                                                                                
CO-CHAIR PRUITT  asked where  the natural  gas fuel  stations are                                                               
located and whether they are open to the public.                                                                                
                                                                                                                                
MS. ROTKIS  said there is one  public station in Spenard  and the                                                               
others belong to MOA or Elmendorf Air Force Base.                                                                               
                                                                                                                                
3:38:31 PM                                                                                                                    
                                                                                                                                
CO-CHAIR PRUITT asked whether the goal  of the program is to only                                                               
establish a CNG program for state  vehicles, or also to show that                                                               
this is a feasible option  for personal-use vehicles in the long-                                                               
term.                                                                                                                           
                                                                                                                                
MS. ROTKIS advised  the long-term goal of the pilot  program is a                                                               
public-private  partnership that  will  create  enough demand  so                                                               
that CNG  fueling stations -  which cost between $500,000  and $1                                                               
million  to build  - will  turn a  profit.   To accomplish  that,                                                               
demand  beyond  state  use  is required.    The  Municipality  of                                                               
Anchorage  is seeing  success  with CNG  school  buses; in  fact,                                                               
other  states with  solid-waste  truck and  transit bus  programs                                                               
that  use  large  amounts  of   fuel,  have  proven  to  pay  for                                                               
themselves over the life of the  equipment.  This type of savings                                                               
is harder  to achieve with  light-duty equipment in an  area with                                                               
limited CNG fueling stations.                                                                                                   
                                                                                                                                
3:40:43 PM                                                                                                                    
                                                                                                                                
CO-CHAIR PRUITT  observed that some school  buses and solid-waste                                                               
trucks are run  by private companies.  He asked  whether there is                                                               
an  understanding  that  the  state  will  provide  subsidies  to                                                               
private companies.                                                                                                              
                                                                                                                                
MS. ROTKIS stated  that the pilot program school  buses belong to                                                               
ASD and the  solid-waste trucks and transit buses  belong to MOA.                                                               
She said  the study suggests  that the  Phase 1 "up-fit"  will be                                                               
funded by government grants or legislative dollars.                                                                             
                                                                                                                                
3:42:33 PM                                                                                                                    
                                                                                                                                
MS.  ROTKIS,  in  response  to   Co-Chair  Pruitt,  advised  that                                                               
private-sector  interest   in  the  pilot  program   is  only  in                                                               
providing  fuel.   In further  response, she  noted that  Mercury                                                               
Associates, Inc.  talked with local  bus companies, but  they are                                                               
"cautiously awaiting to see what will happen."                                                                                  
                                                                                                                                
3:43:13 PM                                                                                                                    
                                                                                                                                
BOB  BREAN,  Director,  Research   &  Rural  Development,  Alaska                                                               
Housing Finance  Corporation (AHFC),  offered to  provide written                                                               
information on  the Alaska Energy-Efficiency Revolving  Loan Fund                                                               
program to which Mr. St. Aubin referred.                                                                                        
                                                                                                                                
3:44:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK recalled  that  ENSTAR  Natural Gas  Company                                                               
used natural  gas vehicles  in its  fleet.   He pointed  out that                                                               
clean  natural  gas  is  two-thirds  the price  of  a  gallon  of                                                               
gasoline, and  vehicles that were originally  designed with high-                                                               
octane  engines   enjoy  higher  power  and   fuel  economy  than                                                               
retrofitted  vehicles.   He  asked whether  the  vehicles in  the                                                               
pilot program were retrofitted.                                                                                                 
                                                                                                                                
3:45:11 PM                                                                                                                    
                                                                                                                                
MS. ROTKIS affirmed the 25  light-duty vehicles in the first part                                                               
of  the study  were  converted with  an  OEM warranted  retrofit,                                                               
which is  not equal  to "something  that comes  off the  floor at                                                               
Ford  Motor  Company  or  Chevrolet,   fully  ready  to  go  with                                                               
compressed  natural gas."     The  school  buses and  solid-waste                                                               
trucks were a more advanced  retrofit, by companies such as Roush                                                               
Engineering, and the performance  and longevity of these vehicles                                                               
is superior  to that of  diesel counterparts.  The  transit buses                                                               
were also retrofitted.                                                                                                          
                                                                                                                                
3:46:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FOSTER  referred  to   Ms.  Rotkis's  written  document                                                               
provided in the  committee packet that indicated  $5.3 million is                                                               
required  from the  legislature  to accomplish  the  work of  the                                                               
pilot program.  He asked if there has been a response.                                                                          
                                                                                                                                
MS. ROTKIS reminded the committee  the report was issued 1/31/11,                                                               
thus there has been no response  yet.  In further response to Co-                                                               
Chair  Foster,  she  stated  that   the  study  did  not  address                                                               
integration into rural  areas, or even Fairbanks,  because of the                                                               
cost of moving  liquid natural gas (LNG) to  remote locations and                                                               
converting it  to CNG.   However, the  construction of  a natural                                                               
gas  pipeline providing  cost-effective  CNG  to Fairbanks  would                                                               
warrant expansion of the program.                                                                                               
                                                                                                                                
3:48:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PETERSEN related his  experience with CNG in other                                                               
cities and opined  the price of vehicles manufactured  to use CNG                                                               
will drop with increased demand.                                                                                                
                                                                                                                                
3:49:18 PM                                                                                                                    
                                                                                                                                
CO-CHAIR PRUITT asked  for the energy equivalent  of CNG compared                                                               
to gasoline or diesel fuel.                                                                                                     
                                                                                                                                
MS.  ROTKIS  said  she  was  unsure.    The  department  makes  a                                                               
comparison on  the energy savings  for an individual  vehicle and                                                               
the  cost per  gallon  equivalent of  vehicle  performance.   For                                                               
example,  school buses  fueled by  CNG perform  well except  when                                                               
going up hills.   Additionally, in the past  CNG trucks performed                                                               
well, but could not support the  installation of a snowplow.  She                                                               
stated that  many of these  problems have been overcome  by newer                                                               
retrofits, and there is no  energy loss or performance difference                                                               
in the new vehicles.                                                                                                            
                                                                                                                                
^DEPARTMENT   OF   REVENUE,    "CREATING   A   MUNICIPAL   ENERGY                                                               
IMPROVEMENTS FINANCING PROGRAM"                                                                                                 
 DEPARTMENT OF REVENUE, "CREATING A MUNICIPAL ENERGY IMPROVEMENTS                                                           
                       FINANCING PROGRAM"                                                                                   
                                                                                                                              
3:52:07 PM                                                                                                                    
                                                                                                                                
JERRY   BURNETT,   Deputy    Commissioner,   Treasury   Division,                                                               
Department  of   Revenue  (DOR),   informed  the   committee  his                                                               
department  was  tasked  with issuing  a  report  that  addresses                                                               
financing  programs for  energy efficiency  and renewable  energy                                                               
projects  on  residential,  commercial, and  industrial  property                                                               
through  property tax  assessments.     Although  this  is a  new                                                               
program in Alaska, the first program  of this type was started in                                                               
California in  2008, and  now 20 states  have such  programs that                                                               
are  known as  Property  Assessed Clean  Energy (PACE)  financing                                                               
systems.  He  explained that this type of  financing mechanism is                                                               
similar to that  of a local improvement district  (LID) where the                                                               
municipal government places a special  property tax assessment on                                                               
a  residence  for  water,  sewer,   or  for  paving  streets  and                                                               
sidewalks.   However, under  the PACE  program the  assessment is                                                               
placed  on a  voluntary  basis against  individual properties  to                                                               
allow property  owners to finance  projects that would  result in                                                               
energy savings or  clean energy projects.   Unfortunately in July                                                               
2010,  the Federal  Housing Finance  Agency (FHFA)  called for  a                                                               
pause  in PACE  programs due  to the  assessment's position  as a                                                               
first lien.   He opined that  PACE is not an  impractical program                                                               
if the first  lien risk can be worked out  with mortgage lenders.                                                               
Mr. Burnett  advised that  the suspension of  the program  at the                                                               
federal  level  presents specific  challenges  to  Alaska if  the                                                               
state chooses  to continue the program  at the state level.   For                                                               
example,  since  PACE  programs are  administered  at  the  local                                                               
level, and there are 162 local  governments in Alaska and only 38                                                               
local  governments  implement  property   taxes,  there  must  be                                                               
statewide administration of the program.   On the other hand, the                                                               
state  has   experience  with   the  weatherization   and  energy                                                               
efficiency  rebate programs  through the  Alaska Housing  Finance                                                               
Corporation (AHFC).   Moreover,  the existing rebate  program has                                                               
proven  that energy  savings are  being realized,  and a  10-year                                                               
pay-off  of the  assessment  is practical.    In conclusion,  his                                                               
department  made the  following recommendations:  A PACE  program                                                               
would  require  local governments  to  create  PACE districts  to                                                               
participate;  Local  governments  would administer  property  tax                                                               
collection and  lien implementation; A statewide  issuer of bonds                                                               
would  provide  financing;  There   would  be  uniform  statewide                                                               
standards;  The  legislature  should  consider  providing  for  a                                                               
revolving loan fund to supply  up-front capital; The state should                                                               
work  with FHFA  to  establish  standards to  allow  a PACE  type                                                               
program  that  will  conform to  national  mortgage  underwriting                                                               
standards.                                                                                                                      
                                                                                                                                
3:58:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PETERSEN heard  about property  owners installing                                                               
solar panels in California through PACE programs.                                                                               
                                                                                                                                
MR. BURNETT affirmed that in  California and New York parties are                                                               
in litigation with FHFA over the  program.  He added that some of                                                               
the programs had standards that  allowed a loan-to-value of up to                                                               
110  percent,  thus  after  the mortgage  crisis,  a  burden  was                                                               
created for lenders.                                                                                                            
                                                                                                                                
4:00:19 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FOSTER asked  whether members  of the  Alaska Municipal                                                               
League have expressed interest in the program.                                                                                  
                                                                                                                                
MR. BURNETT said DOR has not heard from local governments.                                                                      
                                                                                                                                
^OFFICE  OF MANAGEMENT  & BUDGET,  "STANDARDIZED  WAY TO  COLLECT                                                               
DATA ON ENERGY CONSUMPTION AND COSTS"                                                                                           
 OFFICE OF MANAGEMENT & BUDGET, "STANDARDIZED WAY TO COLLECT DATA                                                           
                ON ENERGY CONSUMPTION AND COSTS"                                                                            
                                                                                                                              
4:00:57 PM                                                                                                                    
                                                                                                                                
CRAIG  KAHKLEN, Policy  Analyst,  Office of  Management &  Budget                                                               
(OMB), Office of the Governor, reported  on section 39 of SB 220,                                                               
the Alaska Sustainable  Energy Act of 2010, that  requires OMB to                                                               
develop standardized  methodology for the collection  and storage                                                               
of  energy consumption  cost data.      He  stated that  OMB, the                                                               
Alaska Housing Finance Corporation  (AHFC), and the Department of                                                               
Transportation &  Public Facilities  (DOTPF) worked to  develop a                                                               
module  for the  Alaska Retrofit  Information System  (ARIS) that                                                               
will allow  state employees  to enter data  for ARIS  through the                                                               
Internet.  After  the data is entered, the system  will allow the                                                               
information  to be  sorted by  various factors  such as  facility                                                               
type, facility size, occupancy,  and geographic location, and the                                                               
sorted data  will then be  used to manage energy  consumption and                                                               
costs.   It will  also allow for  the prioritization  of retrofit                                                               
opportunities.    Mr. Kahklen advised the system is  in its final                                                               
phases of testing and data entry will begin soon.                                                                               
                                                                                                                                
4:03:44 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FOSTER asked for a more specific timeline.                                                                             
                                                                                                                                
MR. KAHKLEN expressed  his understanding that the  system will be                                                               
launched "in the next month or two."                                                                                            
                                                                                                                                
4:05:10 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special Committee on Energy meeting was adjourned at 4:05 p.m.                                                                  

Document Name Date/Time Subjects
DOT&PF Report on Vehicle Fleet CNG Pilot Program.pdf HENE 2/8/2011 3:00:00 PM
Department of Transportation and Public Facilities Presentation
DOT
DOT&PF Fact Sheet for SB 220 report on CNG Fleet Use.pdf HENE 2/8/2011 3:00:00 PM
Department of Transportation and Public Facilities Presentation
DOT
SB 220
DOT&PF Retrofitting of State Facilities.pdf HENE 2/8/2011 3:00:00 PM
Department of Transportation and Public Facilities Presentation
Governor's Report on Structuring State Energy Programs, 31 January 2011.pdf HENE 2/8/2011 3:00:00 PM
Governor's Office or Designee Presentation
Department of Revenue Report on a Municipal Energy Improvements Financing program, 31, January 2011.pdf HENE 2/8/2011 3:00:00 PM
Department of Revenue Presentation
OMB - Standardized Methodology to Collect and Store Energy Consumption and Expense Data.pdf HENE 2/8/2011 3:00:00 PM
Office of Management and Budget