Legislature(2011 - 2012)BARNES 124

01/26/2012 03:00 PM House ENERGY


Download Mp3. <- Right click and save file as

Audio Topic
03:04:24 PM Start
03:05:37 PM Presentation: Status of Aea Projects, Specifically the Susitna Project, by the Alaska Energy Authority (aea)
04:34:18 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Status of Alaska Energy Authority (AEA) Projects, TELECONFERENCED
Specifically the Susitna Project
Presentations by:
- Sara Fisher-Goad, Executive Director
- Sandra Moller, Deputy Director, Rural Energy
- Wayne Dyok, Lead Project Manager
- Emily Ford, Public Outreach Liason
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                        January 26, 2012                                                                                        
                           3:04 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:  STATUS OF AEA PROJECTS~ SPECIFICALLY THE SUSITNA                                                                 
PROJECT~ BY THE ALASKA ENERGY AUTHORITY (AEA)                                                                                   
                                                                                                                                
     - 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:  Answered questions during the presentation                                                               
on the status of the Susitna-Watana Hydroelectric Project.                                                                      
                                                                                                                                
WAYNE DYOK, Lead Project Manager                                                                                                
Susitna-Watana Hydroelectric Project                                                                                            
Alaska Energy Authority (AEA)                                                                                                   
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:     Provided   a   PowerPoint   presentation                                                            
entitled, "Susitna-Watana  Hydroelectric Project,"  dated 1/26/12,                                                              
and answered questions.                                                                                                         
                                                                                                                                
BRIAN BJORKQUIST, Senior Assistant Attorney General                                                                             
Labor and State Affairs Section                                                                                                 
Department of Law                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Answered  questions during the  presentation                                                            
on the status  of the Susitna-Watana Hydroelectric  Project by the                                                              
Alaska Energy Authority.                                                                                                        
                                                                                                                                
MICHAEL SWIGER, Attorney at Law                                                                                                 
Van Ness Feldman, P.C.                                                                                                          
Washington, D.C.                                                                                                                
POSITION STATEMENT:   Answered  questions in  his capacity  as the                                                          
Federal  Energy Regulatory  Commission  (FERC) licensing  attorney                                                              
on  contract  to the  Alaska  Energy  Authority for  the  Susitna-                                                              
Watana Hydroelectric Project.                                                                                                   
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:04:24 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  NEAL  FOSTER  called  the  House  Special  Committee  on                                                            
Energy  meeting to  order at  3:04 p.m.   Representatives  Foster,                                                              
Pruitt, Olson,  Saddler, Petersen,  and Tuck  were present  at the                                                              
call to  order.  Representative  Lynn arrived  as the  meeting was                                                              
in progress.                                                                                                                    
                                                                                                                                
^PRESENTATION:   Status of AEA Projects, Specifically  the Susitna                                                              
Project, by the Alaska Energy Authority (AEA)                                                                                   
PRESENTATION:  Status of AEA Projects, Specifically the Susitna                                                             
         Project, by the Alaska Energy Authority (AEA)                                                                      
                                                                                                                              
3:05:37 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FOSTER  announced that the  only order of  business would                                                              
be a presentation  on the status of Alaska Energy  Authority (AEA)                                                              
Projects, specifically  the Susitna-Watana Hydroelectric  Project,                                                              
and he introduced Sara Fisher-Goad, Executive Director of AEA.                                                                  
                                                                                                                                
3:06:16 PM                                                                                                                    
                                                                                                                                
SARA   FISHER-GOAD,  Executive   Director,   AEA,  Department   of                                                              
Commerce,  Community &  Economic  Development (DCCED),  introduced                                                              
staff  members and  reviewed the  qualifications  of the  Susitna-                                                              
Watana Hydroelectric Project manager, Wayne Dyok.                                                                               
                                                                                                                                
3:07:51 PM                                                                                                                    
                                                                                                                                
WAYNE  DYOK, Lead  Project Manager,  Susitna-Watana  Hydroelectric                                                              
Project,  AEA, DCCED,  said he  would  provide a  synopsis of  the                                                              
project,  brief comments  on the  progress of  the past year,  and                                                              
plans  for  the  future.    He  began  a  PowerPoint  presentation                                                              
entitled, "Susitna-Watana  Hydroelectric Project,"  dated 1/26/12.                                                              
Slide 1  was a map  of the project  location and its  proximity to                                                              
the  Anchorage/Fairbanks  Electrical  Intertie.   The  project  is                                                              
located at river  mile (RM) 184 on the Susitna  River above Devils                                                              
Canyon.   The proposed dam is  approximately 700 feet high  with a                                                              
reservoir  39 miles  long and  2 miles  wide at the  widest.   The                                                              
project will provide  about 50 percent of the  Railbelt electrical                                                              
demand  by  a  capacity  of 600  megawatts  (MWs)  and  an  annual                                                              
average  energy production  of  2,500,000  megawatt hours  (MWhs).                                                              
The project's  life  will exceed  100 years,  and it will  provide                                                              
long-term  and stable  electric rates.   Slide  2 illustrated  the                                                              
project  location relative  to  river miles,  and  he pointed  out                                                              
that the middle river  area from RM 98 to RM 184  will be the most                                                              
impacted.   Studies  will also  be  conducted on  the lower  river                                                              
area from  RM 98 to  RM 0.   Slide 3 was  a map that  showed three                                                              
proposed  access corridors:   the  Denali corridor  from north  to                                                              
south; the Chulitna  corridor north of the Susitna  River; and the                                                              
Gold  Creek corridor  south  of  the Susitna  River.   The  access                                                              
corridor  will  house  the  access  road  and  transmission  line.                                                              
Slide  4  was  a  map of  the  project  area  including  the  dam,                                                              
powerhouse,  reservoir,  roads,   camps,  air  strip,  and  quarry                                                              
areas.  Slide 5  illustrated the conceptual site plan  of the dam,                                                              
upstream  and  downstream  diversion structures,  roads,  and  the                                                              
flow-through  area for the  river during  construction.   Mr. Dyok                                                              
stated that the  primary operating objectives of  the project are:                                                              
maximize firm  power generation  from November to  April; generate                                                              
power while meeting  the minimum flows required  for environmental                                                              
purposes;  maximize  power generation  from  May  to October;  and                                                              
generate power  to meet the electrical  Railbelt demand.   Slide 7                                                              
was a graph that  showed the fluctuation during  a typical 24-hour                                                              
period of  the anticipated  Railbelt energy demand  in 2025.   The                                                              
project seeks  to provide  a load-following  mode that  allows on-                                                              
line gas-fired  plants and other  electrical generation to  run on                                                              
a constant, cost-effective basis.                                                                                               
                                                                                                                                
3:13:56 PM                                                                                                                    
                                                                                                                                
MR.  DYOK continued  to explain  that  this mode  of operation  is                                                              
dependent upon  the results of  the environmental studies  such as                                                              
the  amount  of  water  needed when  salmon  are  spawning.    The                                                              
average  daily  power generation  is  anticipated  to  be 250  MW;                                                              
however,  the advantage  of  hydroelectric  (hydro)  power is  the                                                              
flexibility  and  responsiveness  to  energy  demand,  and  in  an                                                              
emergency  the system  could run  at 600  MW "for  whatever it  is                                                              
that we need"  as long as  there is no violation  of environmental                                                              
requirements established for the dam.                                                                                           
                                                                                                                                
3:15:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK  understood this  is  an expandable  dam  and                                                              
asked for the reasons not to build the "full dam" now.                                                                          
                                                                                                                                
MR.  DYOK explained  that the  primary  reasons are  cost and  the                                                              
existing demand of  the system.  A study this  year will determine                                                              
the optimum size  of the dam; in fact, it is not  unusual to build                                                              
a dam and then  raise the height at some point in  the future.  At                                                              
this time the  agency is anticipating that one-half  of the energy                                                              
needed can be  accommodated.  He acknowledged that  this is taking                                                              
a relatively  conservative  approach as AEA  forecasted a  decline                                                              
in  demand  in the  near  future  due to  conservation,  and  then                                                              
increases of .5 percent per year until 2023.                                                                                    
                                                                                                                                
3:17:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK  opined the demand should be  built for future                                                              
-  not current  -  demand because  more  industry and  development                                                              
will come  to the  state.   He asked  how much  more the full  dam                                                              
will cost and why gas turbines are a factor to consider.                                                                        
                                                                                                                                
MR.  DYOK explained  that combustion  turbines and  combined-cycle                                                              
units  for  electrical  generation  need  to  keep  running  at  a                                                              
constant level  to be efficient.   The goal of the project  is for                                                              
maximum  flexibility  for  the Railbelt  utilities.    In  further                                                              
response  to Representative  Tuck, Mr.  Dyok said  AEA intends  to                                                              
use energy  from the project in  the system first,  and generation                                                              
from gas-fired turbines  will be added to meet peak  demand.  Thus                                                              
the hydro  project is run  to meet the  varying load and  the gas-                                                              
fired units are run at a constant level.                                                                                        
                                                                                                                                
REPRESENTATIVE  TUCK said, "I  would think that  we would  like to                                                              
be  able to  make  gas  turbines  obsolete through  hydro  power."                                                              
He expressed his  belief that limiting the size  of hydro projects                                                              
to only  meet current demand  may be catering  to the oil  and gas                                                              
industry, and he  reminded the committee of the  state's policy to                                                              
generate 50  percent of its energy  by renewable sources  by 2025.                                                              
He  cautioned  against losing  the  vision  of "building  the  big                                                              
dam."                                                                                                                           
                                                                                                                                
3:21:09 PM                                                                                                                    
                                                                                                                                
MR.  DYOK  explained  AEA's  feasibility  report,  which  will  be                                                              
available  at the  end  of this  year, will  define  a study  area                                                              
including  all of  the  different elevations  and  "will have  all                                                              
this information laid out" so an informed decision can be made.                                                                 
                                                                                                                                
REPRESENTATIVE LYNN  assumed the  proposed dam will  be engineered                                                              
to allow for future expansion.                                                                                                  
                                                                                                                                
MR.  DYOK   explained  that  the   powerhouse  is  sited   at  the                                                              
downstream end  and will accommodate  expansion; in  addition, the                                                              
roller-compacted  concrete (RCC)  construction  allows for  access                                                              
to the  back side of  the dam where  an additional 180  feet could                                                              
be added.                                                                                                                       
                                                                                                                                
3:23:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PETERSEN asked  whether wind  power could  also be                                                              
easily integrated with hydro power.                                                                                             
                                                                                                                                
MR. DYOK said  yes.  The project  can utilize wind energy  that is                                                              
available;  in  fact,  hydroelectric  generation  allows  improved                                                              
integration of wind projects.                                                                                                   
                                                                                                                                
MS.  FISHER-GOAD  added that  AEA  is  working with  the  Railbelt                                                              
utilities  in  order  to  develop a  wind  integration  study  and                                                              
maximize the renewable power that is available.                                                                                 
                                                                                                                                
CO-CHAIR  PRUITT  assumed  that   the  Federal  Energy  Regulatory                                                              
Commission (FERC)  application filed  by AEA will  include several                                                              
different options regarding the size of the project.                                                                            
                                                                                                                                
3:25:13 PM                                                                                                                    
                                                                                                                                
MR. DYOK  said AEA filed a  preliminary application  document that                                                              
allows full flexibility,  although the goal is to  make a decision                                                              
as to  the size of  the dam by  the end of  2012.  If  AEA chooses                                                              
the smaller  project, but later  decides to build the  larger one,                                                              
it must file a license amendment.                                                                                               
                                                                                                                                
MS.  FISHER-GOAD,  in  response   to  Co-Chair  Pruitt,  said  the                                                              
decision will be  made by the team, which is led  by Mr. Dyok, and                                                              
includes  the AEA  Board of  Directors, Ms.  Fisher-Goad, and  the                                                              
administration.                                                                                                                 
                                                                                                                                
3:27:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR PRUITT  surmised AEA  has the  authority, along  with the                                                              
administration,   to  make  the   determination  without   further                                                              
legislation.                                                                                                                    
                                                                                                                                
MS. FISHER-GOAD  assured  the committee the  process will  involve                                                              
the legislature because  it must authorize funding  after the plan                                                              
is recommended by AEA and the administration.                                                                                   
                                                                                                                                
CO-CHAIR PRUITT clarified  that for the purpose of  filing for the                                                              
FERC permit by the end of the year, AEA will proceed.                                                                           
                                                                                                                                
3:28:40 PM                                                                                                                    
                                                                                                                                
MR.  DYOK  summarized  the  accomplishments  made in  2011.    The                                                              
project office was  opened in the fall and  highly-qualified staff                                                              
members  were   hired.    He   described  the  expertise   of  the                                                              
engineering,  environmental,   and  legal  consultants   who  were                                                              
contracted.   A  data-gap  analysis of  environmental  information                                                              
was completed  by looking  at all of  the environmental  data that                                                              
was compiled in  the '80s, to determine what  information is still                                                              
needed.    Mapping  of  the  Susitna   River  drainage  was  done,                                                              
although not  a lot  of new geotechnical  drilling was  necessary.                                                              
On 10/27/11,  AEA filed  its preliminary  permit application  with                                                              
FERC  and  continued  its  public   outreach  by  consulting  with                                                              
stakeholders  and  holding agency  workshops,  a  site visit  with                                                              
FERC,  and  presentations.   Mr.  Dyok  advised the  most  notable                                                              
accomplishment was  filing the pre-application document  with FERC                                                              
on 12/29/11,  which included  a description of  the status  of the                                                              
project's engineering,  proposals  for working with  participants,                                                              
and  information  on environmental  studies.   Slide  9  entitled,                                                              
"Licensing  Status,"   indicated  the federal  government and  AEA                                                              
have   made  critical   contacts  with   Alaska  Native   entities                                                              
regarding  cultural issues  and land ownership;  the FERC  scoping                                                              
document will  be issued  2/27/12; and  the FERC scoping  meetings                                                              
will be held from 3/27/12-3/30/12.                                                                                              
                                                                                                                                
3:33:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  asked  for  further  information  on  the                                                              
federal government's meetings with Alaska Native entities.                                                                      
                                                                                                                                
MR. DYOK explained  that FERC and the federal  government consider                                                              
this   contact  to   be  government-to-government   because   they                                                              
recognize tribes "using the Lower 48 terminology."                                                                              
                                                                                                                                
REPRESENTATIVE  SADDLER  pointed  out  this  raises  questions  of                                                              
sovereignty.     Mr.  Dyok  deferred  further  questions   to  Mr.                                                              
Bjorkquist.                                                                                                                     
                                                                                                                                
3:34:15 PM                                                                                                                    
                                                                                                                                
BRIAN  BJORKQUIST, Senior  Assistant Attorney  General, Labor  and                                                              
State  Affairs   Section,  Department  of  Law,   advised  that  a                                                              
government  to government  obligation arises  from FERC's  federal                                                              
requirements.    Using  Lower 48  parameters, tribal entities  are                                                              
villages,  but  not  the  Alaska   Native  Claims  Settlement  Act                                                              
(ANCSA)  corporations,  or the  ANCSA  village corporations.    In                                                              
further response  to Representative  Saddler, he said  one example                                                              
is  the Native  village  of Cantwell,  and  another is  Chickaloon                                                              
village,  but   not  the   ANCSA  Chickaloon-Moose   Creek  Native                                                              
Association, Inc.                                                                                                               
                                                                                                                                
REPRESENTATIVE PETERSEN  heard a  land dispute between  Cook Inlet                                                              
Region,  Inc. (CIRI)  and  Nililchik Native  Village  Association,                                                              
Inc. may slow the project.                                                                                                      
                                                                                                                                
MR. BJORKQUIST advised  that CIRI obtained title  to certain lands                                                              
involved in  the project at the  dam site and reservoir,  and also                                                              
to   land  in   the  proposed   transmission  and   transportation                                                              
corridors.  Under  ANCSA, CIRI is under obligations  to convey the                                                              
surface   estate   of  certain   lands   to  the   ANCSA   village                                                              
corporations.     Also,  ongoing  ANCSA  obligations   will  grant                                                              
entitlements   to  some   village   corporations   for  title   to                                                              
additional  land.   He said  title issues  present obligations  to                                                              
negotiate with  the landowners appropriate  rights to  develop the                                                              
project,  but  will   not  necessarily  create  barriers   to  the                                                              
project; in  fact, AEA  will begin  direct negotiations  of rights                                                              
in earnest in the next week or so.                                                                                              
                                                                                                                                
3:38:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PETERSEN asked  whether Mr.  Bjorkquist was  aware                                                              
of  other pending  Native  allotment  cases  that may  affect  the                                                              
planning of the project.                                                                                                        
                                                                                                                                
MR. BJORKQUIST understood  there are Native allotments  located in                                                              
the vicinity  of the road and  transmission corridors, but  not in                                                              
the project;  however, efforts will  be made to avoid  these areas                                                              
if possible.                                                                                                                    
                                                                                                                                
3:39:00 PM                                                                                                                    
                                                                                                                                
MR.  DYOK  returned  to  slide 9  and  noted  the  next  important                                                              
deadline is 6/11/12  when AEA will file detailed  study plans with                                                              
FERC.  Beginning  early in 2012, the agency will  conduct a number                                                              
of  field  studies  to  glean  basic   information  from  resource                                                              
agencies  and  others  relevant  to the  FERC  application.    The                                                              
engineering  studies will  start with  56 years  of data from  the                                                              
U.S. Department of  the Interior, U. S. Geological  Survey Susitna                                                              
River  at Gold  Creek gauging  station.   This data  will help  to                                                              
understand the  hydrology of  the area and  the effect  of climate                                                              
change on  the flow of  the river, and  to estimate the  number of                                                              
megawatt  hours that  will be generated  from  the project.   Data                                                              
from  AEA's  Railbelt  Integrated  Resource Plan  (RIRP)  will  be                                                              
updated  for  further  planning.     Also,  AEA  will  design  for                                                              
different elevations  and for  the sizing of  the units,  and will                                                              
explore transmission  system reliability, stability  modeling, and                                                              
upgrades to  the existing intertie.    He noted that  "great data"                                                              
already exists on  the geotechnical investigations.   Important to                                                              
AEA and FERC  is the early  formation of the board  of engineering                                                              
consultants  so   it  can  assist  with  decisions.     Presently,                                                              
construction  cost  estimate  updates  are  Level 4  of  the  Cost                                                              
Estimate  Classification System,  thus  estimates are  still in  a                                                              
wide range  rather  than in specific  numbers.   Lastly, AEA  will                                                              
work hard to complete the feasibility report in 2012.                                                                           
                                                                                                                                
3:43:29 PM                                                                                                                    
                                                                                                                                
MR. DYOK  then presented  slide 11  entitled, "2012  Environmental                                                              
Studies,"   which  are:     studies   on  understanding   sediment                                                              
transport;   ice  and changes  in  the temperature  of the  river;                                                              
project  operations  and engineering  affected  by  ice and  water                                                              
quality;  fisheries;  wildlife;  botanical  and  the  location  of                                                              
wetlands; cultural resources; and recreation.                                                                                   
                                                                                                                                
REPRESENTATIVE  SADDLER  referred  to geotechnical  drilling  work                                                              
done in the '80s  that is still valuable.  He  asked whether there                                                              
is residual value in previous environmental work.                                                                               
                                                                                                                                
MR. DYOK  opined there  is great  value in  that that  information                                                              
will  help AEA  look  at trends,  but  significant  money must  be                                                              
spent to understand  the situation today.  In  further response to                                                              
Representative  Saddler, he anticipated  little savings  except in                                                              
cultural  resources   and  other   static  subjects.     Slide  12                                                              
entitled,  "Susitna-Watana Schedule,"  was  a chart  of tasks  and                                                              
their timelines.   Item 1 was to  file the Notice of  Intent (NO1)                                                              
and Pre-Application  Document (PAD);  Item 2  was to complete  the                                                              
Level 4  cost estimate;  Item 3 was  to conduct informal  studies;                                                              
and Item  4 was the  FERC approval of  2013 and 2014  study plans,                                                              
which is anticipated  on November 30, 2012.    Continuing, he said                                                              
Item 5  was the completed  engineering feasibility study  and Item                                                              
6 was a  "check-in" with the  legislature.  After the  first draft                                                              
of the study plan  in June 2012, AEA will have a  good idea of the                                                              
cost  of  all  of   the  studies.    Item  7   was  a  legislative                                                              
appropriation  for  licensing/final  design,  and  Item  8  was  a                                                              
possible  appropriation  for additional  state  investment in  the                                                              
project.   Mr. Dyok pointed  out the goal  is to file  the license                                                              
application in  September, 2015.   Prior to  filing, AEA  seeks to                                                              
achieve  a  settlement  with stakeholders  such  as  the  resource                                                              
agencies,    Alaska    Native    entities,    and    nongovernment                                                              
organizations  (NGOs).   Item  12  was  to negotiate  power  sales                                                              
agreements  with Railbelt  utilities, and  Item 13  was the  final                                                              
engineering design  which will begin  by the middle of  next year.                                                              
After the  application is  filed, FERC  will begin its  processing                                                              
and  will prepare  its National  Environmental  Policy Act  (NEPA)                                                              
document.   If a license is  issued in January  2017, construction                                                              
will  begin immediately  and  finish  in 2023.    Finally, AEA  is                                                              
beginning  plans for  financing  the project  by discussions  with                                                              
the U.S. Department  of Agriculture (USDA) Rural  Utility Services                                                              
(RUS), because interest rates are very low at the present time.                                                                 
                                                                                                                                
3:51:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PETERSEN  questioned whether the project  will meet                                                              
the state's energy policy goal of 2025.                                                                                         
                                                                                                                                
MR. DYOK  assured the  committee  AEA will proceed  as quickly  as                                                              
possible  while  still  following   the  guidelines  of  the  FERC                                                              
integrated  licensing  process  for  new  projects.   He  said  he                                                              
expected AEA  will meet the  schedule; in  fact, AEA is  taking on                                                              
the burden  of getting all the  information to FERC  to facilitate                                                              
a timely filing.                                                                                                                
                                                                                                                                
REPRESENTATIVE SADDLER  inquired as to  AEA's efforts to  make the                                                              
case to Alaskans on the financial benefits.                                                                                     
                                                                                                                                
MR. DYOK acknowledged  AEA has more work to do on  this element of                                                              
the project.     Studies should show benefits such  as the cost of                                                              
power,  construction   jobs,  and   low-cost  energy   for  future                                                              
generations.                                                                                                                    
                                                                                                                                
3:53:56 PM                                                                                                                    
                                                                                                                                
MS. FISHER-GOAD  added that  part of the  issue in 2012  is making                                                              
sure that  AEA has a  Level 4 cost  estimate.  More  detailed cost                                                              
estimates and  further modeling  on the size  of the  project will                                                              
help "sell the case  with respect that this is ...  a project that                                                              
will provide  a long-term, stable  cost of power for  the Railbelt                                                              
region."                                                                                                                        
                                                                                                                                
REPRESENTATIVE  SADDLER  supported  finding  the benefits  of  the                                                              
project as part of the message to people.                                                                                       
                                                                                                                                
REPRESENTATIVE  TUCK would like  to help  promote the  dam because                                                              
it  is an  exciting  project.   Natural  gas  and  oil prices  are                                                              
volatile  and  he  is  "a  big  fan  of  hydro."    He  asked  for                                                              
clarification on  whether the deadline  on the decision  to either                                                              
build the big dam or the expandable one is December, 2012.                                                                      
                                                                                                                                
3:56:45 PM                                                                                                                    
                                                                                                                                
MR. DYOK  said AEA would  like to make  the decision for  the FERC                                                              
application  by  the end  of  2012 to  avoid  the  challenge of  a                                                              
change "down the  road."  He opined the following  year there will                                                              
be   more   environmental   information    but   the   engineering                                                              
information  will be sufficient  in 2012,  except for  information                                                              
on load-growth.   The  goal is to  make the  decision next  year -                                                              
although it is possible  to wait one or two years  - however, when                                                              
AEA begins  work on the FERC  application, the decision  should be                                                              
made.     He   displayed   slide  12   entitled,   "Susitna-Watana                                                              
Schedule,"  that  indicated  preparing   and  filing  the  license                                                              
application  is  scheduled  for the  middle  of  2013.   An  early                                                              
decision is preferred,  but is not required until  the application                                                              
is started,  and then  "you really  need to  freeze the  design at                                                              
that point."                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK  asked whether  there  is an  opportunity  to                                                              
expand the  project in the middle  of the FERC filing  process, or                                                              
if "we have to start all over with FERC."                                                                                       
                                                                                                                                
MR.  DYOK said  no because  the  preliminary application  document                                                              
includes alternatives,  but the timing of the filing  will slow if                                                              
there are  changes.  In further  response to Representative  Tuck,                                                              
he  said  FERC will  issue  a  license  to  build the  project  as                                                              
applied  for  and modified  by  any  constraints placed  by  FERC.                                                              
During the construction  - if a decision is made  to expand to the                                                              
larger dam  - a  license amendment  will be  filed that  would not                                                              
stop construction,  even though  approval of  the change can  be a                                                              
time-consuming process.                                                                                                         
                                                                                                                                
4:01:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK  recalled in  2009  AEA determined  that  the                                                              
higher  dam would  cost 22  percent  more and  would generate  200                                                              
percent more  power.  Furthermore,  hydroelectric power  has long-                                                              
term  benefits,  including rate  stabilization,  and  the cost  of                                                              
hydroelectric  decreases with  time, once  the initial  investment                                                              
is  repaid.    He  questioned  whether the  fear  of funding  $8.4                                                              
billion will stop the full dam.                                                                                                 
                                                                                                                                
MS. FISHER-GOAD  reminded the committee  that AEA seeks  a project                                                              
that  will help  the state  meet  its goal  for renewable  energy.                                                              
The right  size of  the dam  is also determined  by the  projected                                                              
debt  payments   through   a  power  sales   agreement  with   the                                                              
utilities, and by  the amount of power the Railbelt  utilities can                                                              
purchase  from the  project.  The  power sales  agreement  and the                                                              
Railbelt utilities' interaction are important considerations.                                                                   
                                                                                                                                
4:04:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK  urged AEA to  continue to look at  the larger                                                              
project.                                                                                                                        
                                                                                                                                
CO-CHAIR  FOSTER  heard last  year  there  was concern  about  the                                                              
public not being  able to comment at the public  scoping meetings,                                                              
and he asked about the format.                                                                                                  
                                                                                                                                
4:05:25 PM                                                                                                                    
                                                                                                                                
MS.  FISHER-GOAD reminded  committee  members that  last year  AEA                                                              
issued  the  preliminary  decision document  indicating  that  the                                                              
Susitna  project should  proceed.   In February  2011, AEA  held a                                                              
series  of  public  meetings  throughout   the  Railbelt  using  a                                                              
presentation  format   that  did  not  encourage   "open  dialog."                                                              
Written questions  were taken, but  the public was not  happy with                                                              
the format.   At the  end of  August 2011, AEA  held a  site visit                                                              
with  resource   agencies  that  included  a  public   meeting  in                                                              
Talkeetna.   During  the  meeting, about  two  and one-half  hours                                                              
were  spent by  the team  fielding questions  and working  through                                                              
issues that  were raised by residents  of the area.  She  said the                                                              
upcoming  FERC public  scoping  meetings  are another  opportunity                                                              
for the public to provide comments.                                                                                             
                                                                                                                                
4:07:17 PM                                                                                                                    
                                                                                                                                
MR.  DYOK  explained  that  typically   the  FERC  public  scoping                                                              
meetings  will  have a  presentation  from  the applicant  on  the                                                              
project, and  then FERC will  discuss its licensing  and decision-                                                              
making process.   Afterward, public  comments of 3-5  minutes each                                                              
will be  heard, although  he will  encourage  the FERC manager  to                                                              
ensure that  everyone has  a chance  to speak.   There is  also an                                                              
opportunity to submit  written comments to FERC for  30 days after                                                              
the meeting.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER   referred  back  to   the  Susitna-Watana                                                              
Schedule on  slide 12  and asked for  a more detailed  description                                                              
of the items.                                                                                                                   
                                                                                                                                
4:09:09 PM                                                                                                                    
                                                                                                                                
MR.  DYOK  responded  that the  pre-application  document  -  also                                                              
called  the   pre-filing  consultation  -  begins   the  licensing                                                              
process.   The Federal Energy  Regulatory Commission has  a formal                                                              
process  to meet  with  participants and  will  develop the  study                                                              
plans  that have been  filed 11  months previous.   The  following                                                              
year the studies  will be completed, and the  initial study report                                                              
will  be submitted  after meeting  with all  of the  participants,                                                            
and  FERC arbitrated  any disputes.    Thus in  the two-year  time                                                              
period,  there will  be one  year  of study  and detailed  reports                                                              
will   be  submitted   to  resource   agencies   -  comments   and                                                              
modifications  will be  addressed in  the second  year.  Mr.  Dyok                                                              
opined AEA  will begin  the application during  the second  year -                                                              
along with  the confirmatory  studies of 2012  and 2013  - because                                                              
after  the first  year of  formal studies,  negotiations with  the                                                              
stakeholders to  come to a  settlement agreement will  take place.                                                              
Item  14,  the  FERC  National  Environmental  Policy  Act  (NEPA)                                                              
process, is  scheduled for September  2015, and he  estimated FERC                                                              
will take  to the end of 2016  to complete its  process, including                                                              
the  draft and  final environmental  impact  statement (EIS),  and                                                              
issuance  of   the  license.     In  response  to   Representative                                                              
Saddler's  question about  potential  litigation,  he deferred  to                                                              
Mr. Swiger.                                                                                                                     
                                                                                                                                
4:13:36 PM                                                                                                                    
                                                                                                                                
MICHAEL  SWIGER,  Attorney  at  Law, Van  Ness  Feldman  P.C.,  as                                                              
outside  counsel to  AEA on  the  project, advised  that there  is                                                              
always  a possibility  of litigation  at  the end  of the  process                                                              
after FERC has made  its decision.  There could be  a challenge to                                                              
the issuance  of the license,  but a challenge  to a  FERC license                                                              
does  not   necessarily  result   in  a   stay  of  the   license.                                                              
Hopefully, a challenge  to the license will be  avoided by meeting                                                              
all of  the concerns that  arise.  The  process for  challenging a                                                              
FERC  license is  to  petition for  review  in the  U.S. Court  of                                                              
Appeals  for  the Federal  Circuit,  and  typically it  takes  two                                                              
years, so  "at worst if someone  challenged the FERC  license, and                                                              
was  able to  get  a stay  of  the license  order,  it might  hold                                                              
things up for a couple of years."                                                                                               
                                                                                                                                
4:16:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  confirmed that this would come  at the end                                                              
of the process.                                                                                                                 
                                                                                                                                
MR. SWIGER said yes, after the FERC process is concluded.                                                                       
                                                                                                                                
REPRESENTATIVE  PETERSEN  questioned   whether  land  acquired  by                                                              
eminent domain would slow down construction of the dam.                                                                         
                                                                                                                                
4:17:15 PM                                                                                                                    
                                                                                                                                
MR. SWIGER was  unsure whether AEA has quick-take  authority under                                                              
state  law. If  so,  the quick-take  provision  of eminent  domain                                                              
allows  the land  to  be acquired  immediately,  and  the cost  is                                                              
litigated  later.   He pointed out  that the  conveyances  to CIRI                                                              
were made  subject to a power-site  reservation which  ensures the                                                              
right of  reentry into  formerly federal land  to develop  a hydro                                                              
project; therefore, eminent domain action will not be necessary.                                                                
                                                                                                                                
REPRESENTATIVE  PETERSEN,  in  response  to  Representative  Tuck,                                                              
surmised  the utilities  might  not  want to  buy  100 percent  of                                                              
their  power  from the  dam  project  because they  are  presently                                                              
investing in  natural gas facilities  that will be online  for 35-                                                              
40 years  with a 30-year  payoff.  He  opined after  those sources                                                              
of energy are gone, it makes sense to expand the dam.                                                                           
                                                                                                                                
4:19:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK referred  to page 20  of the  "Susitna-Watana                                                              
Hydroelectric Project  Report to the Legislature"  provided in the                                                              
committee  packet, and  said one  condition is  that "one  hundred                                                              
percent financing  would be through  bonds: no state  investment."                                                              
The other  condition is that  "all energy will  be sold and  ... I                                                              
see that  that could  be a problem  because ...  we know  that not                                                              
all energy will  be sold."  Further, he pointed out  that the bond                                                              
rates are reported  at 5 percent over  a term of 50  years with no                                                              
contribution  by  the  state; however,  investment  by  the  state                                                              
would garner better  terms, and the state could defer  to a 30- to                                                              
50-year  payback.  Representative  Tuck  said  he  understood  the                                                              
financing issue presented by Ms. Fisher-Goad.                                                                                   
                                                                                                                                
REPRESENTATIVE   SADDLER  asked   Ms.  Fisher-Goad   if  AEA   has                                                              
sufficient staff and resources for the work it is doing now.                                                                    
                                                                                                                                
MS.  FISHER-GOAD  acknowledged AEA  has  a  small staff  and  that                                                              
authorization  has been  requested for  some additional  positions                                                              
for  2012,  although   with  the  addition  of   contractors,  the                                                              
existing  staff  will be  sufficient.    In further  response,  to                                                              
Representative  Saddler,  she  said  there  will  be  a  need  for                                                              
engineering and environmental assistant managers.                                                                               
                                                                                                                                
4:22:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  PRUITT  observed  the   present  design  calls  for  RCC                                                              
construction  and asked  whether  this type  of construction  will                                                              
have an impact on the initial cost estimates.                                                                                   
                                                                                                                                
MR.  DYOK  answered  that  RCC  will  allow  for  a  smaller  dam,                                                              
however,  the construction  schedule  by MWH  Global, Inc.  (MWH),                                                              
one of AEA's  consultants, remains the  same and he does  not know                                                              
of cost  savings at this  time.  In  further response  to Co-Chair                                                              
Pruitt,  he agreed  that RCC makes  the project  easier to  expand                                                              
because construction can take place while the dam is operating.                                                                 
                                                                                                                                
CO-CHAIR PRUITT  asked whether AEA  has looked for  new industries                                                              
that will utilize power and thus bring the cost down.                                                                           
                                                                                                                                
MR. DYOK  said the RIRP includes  potential large  mining projects                                                              
and  other  future demands  for  energy  -  but future  demand  is                                                              
really unknown -  and the acquisition of turbines  requires a lead                                                              
time of  three to  four years.   He suggested there  is a  lack of                                                              
information from the utilities regarding load-growth.                                                                           
                                                                                                                                
4:26:09 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  PRUITT  questioned whether  the  estimated  construction                                                              
timeline of 2017-2023 can be shortened.                                                                                         
                                                                                                                                
MR. DYOK expressed  his approval of the schedule  prepared by MWH.                                                              
He warned that  weather in Alaska can limit construction  time and                                                              
access  to the  project must  be arranged  first.   He opined  the                                                              
schedule is optimistic  and can be improved if  the state acquires                                                              
stakeholder  agreement  and builds  the  access  road.   Mr.  Dyok                                                              
asked for advice  from counsel regarding building  the access road                                                              
early.                                                                                                                          
                                                                                                                                
4:29:53 PM                                                                                                                    
                                                                                                                                
MR.  SWIGER,   responding  to  several  questions   from  Co-Chair                                                              
Pruitt, advised  that if  the access  road is  part of  a licensed                                                              
project  it  would not  be  built  without  the authority  of  the                                                              
license; however,  if there is an independent  justification for a                                                              
multi-purpose  access   road  the  state  could  go   ahead.    He                                                              
cautioned against  work that could be deemed  project construction                                                              
without a license.                                                                                                              
                                                                                                                                
REPRESENTATIVE  PETERSEN  observed  this  project  will  become  a                                                              
tourist attraction.                                                                                                             
                                                                                                                                
4:32:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  PRUITT  asked  whether   AEA  needs  anything  from  the                                                              
legislature at this time.                                                                                                       
                                                                                                                                
MS.  FISHER-GOAD  suggested  that   legislators  encourage  public                                                              
participation  by   attending  public  scoping  meetings   and  by                                                              
writing  letters to  FERC.   There  is no  legislation or  funding                                                              
needed now.                                                                                                                     
                                                                                                                                
CO-CHAIR PRUITT commended AEA's direction and progress.                                                                         
                                                                                                                                
4:34:18 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being  no further business  before the committee,  the House                                                              
Special Committee on Energy meeting was adjourned at 4:34 p.m.                                                                  

Document Name Date/Time Subjects
AEA Susitna House Energy Presentation [Compatibility Mode].pdf HENE 1/26/2012 3:00:00 PM
Susitna update AEA