Legislature(2013 - 2014)BARNES 124

02/27/2013 08:00 AM ENERGY


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08:05:22 AM Start
08:06:29 AM Presentation(s): the All Alaska Energy Solution
09:04:20 AM Presentation(s): Alaska's Energy and Air Quality Crisis
09:59:46 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentations: TELECONFERENCED
- "The All Alaska Energy Solution" by Meera
Kohler, CEO, Alaska Village Electric Cooperative
- "Alaska's Energy and Air Quality Crisis" by
Ward Sattler, President, Alaska Resource Agency
& Dr. James Houck
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                       February 27, 2013                                                                                        
                           8:05 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Doug Isaacson, Co-Chair                                                                                          
Representative Charisse Millett, Co-Chair                                                                                       
Representative Neal Foster                                                                                                      
Representative Pete Higgins                                                                                                     
Representative Shelley Hughes                                                                                                   
Representative Benjamin Nageak                                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Andy Josephson                                                                                                   
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Lance Pruitt                                                                                                     
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION(S):  THE ALL ALASKA ENERGY SOLUTION                                                                                
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PRESENTATION(S):  ALASKA'S ENERGY AND AIR QUALITY CRISIS                                                                        
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MEERA KOHLER, President and CEO                                                                                                 
Alaska Village Electric Cooperative Inc. (AVEC)                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided a PowerPoint presentation on the                                                                
All Alaska Energy Solution.                                                                                                     
                                                                                                                                
ROBERT JACOBSEN, Ph.D                                                                                                           
Vice President Science & Technology                                                                                             
Marsh Creek LLC                                                                                                                 
McLean, Virginia                                                                                                                
POSITION STATEMENT:  Answered a  question during the presentation                                                             
on the All Alaska Energy Solution.                                                                                              
                                                                                                                                
REPRESENTATIVE TAMMIE WILSON                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Provided introductory remarks  prior to the                                                             
presentation by the Alaska Resource Agency.                                                                                     
                                                                                                                                
WARD SATTLER, President                                                                                                         
Alaska Resource Agency (ARA)                                                                                                    
Fairbanks, Alaska                                                                                                               
POSITION   STATEMENT:     Provided   a  PowerPoint   presentation                                                             
entitled, "Sustainable Renewable  Resource Solutions for Interior                                                               
Alaska's Energy & Air Quality Crisis."                                                                                          
                                                                                                                                
JAMES HOUCK, Ph.D                                                                                                               
Independent Consultant; Professor Air Quality                                                                                   
University of Portland                                                                                                          
Portland, Oregon                                                                                                                
POSITION   STATEMENT:     Provided   a  PowerPoint   presentation                                                           
entitled, "Wood Heater Change Outs - A Reality Check."                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
8:05:22 AM                                                                                                                    
                                                                                                                                
CO-CHAIR CHARISSE  MILLETT called the House  Special Committee on                                                             
Energy meeting  to order  at 8:05  a.m.   Representatives Foster,                                                               
Higgins, Hughes,  Isaacson, Nageak,  and Millett were  present at                                                               
the call to order.                                                                                                              
                                                                                                                                
^PRESENTATION(s):  THE ALL ALASKA ENERGY SOLUTION                                                                               
        PRESENTATION(s):  THE ALL ALASKA ENERGY SOLUTION                                                                    
                                                                                                                              
8:06:29 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  MILLETT  announced that  the  first  order of  business                                                               
would  be a  presentation on  the All  Alaska Energy  Solution by                                                               
Meera Kohler.                                                                                                                   
                                                                                                                                
8:06:36 AM                                                                                                                    
                                                                                                                                
MEERA  KOHLER,   President  and  CEO,  Alaska   Village  Electric                                                               
Cooperative  Inc.  (AVEC),  informed  the  committee  AVEC  is  a                                                               
nonprofit electric  utility that serves 55  villages primarily in                                                               
Western  Alaska.   Since its  inception  in 1968,  AVEC has  been                                                               
searching for  solutions for rural  Alaska, and  the presentation                                                               
is about a solution that  addresses all of Alaska's energy needs.                                                               
Ms.  Kohler recalled  the genesis  for this  project came  from a                                                               
study  group formed  by [Commonwealth  North, Anchorage,  Alaska]                                                               
that looked  at the  challenges to  a sustainable  energy future,                                                               
specifically for  rural Alaska.   She  pointed out  that Alaska's                                                               
rural communities and the Interior  pay the highest energy prices                                                               
in the  nation even though  Alaska is an  energy-producing state.                                                               
The  average cost  of AVEC's  delivered fuel  cost has  increased                                                               
from $1.29 in 2002 to $4.03 in  2012, which is an increase of 311                                                               
percent [slide 3].  The real  challenge for Alaska is the cost of                                                               
heating a home.   The study group's first finding  is that Alaska                                                               
needs a statewide energy vision,  plan, and pathway to completion                                                               
[slide 4].   The second finding  is that Alaska needs  to develop                                                               
grids because that would enable  economies of scale, efficiencies                                                               
of  generation,   reduce  redundancies  in   infrastructure,  and                                                               
integrate  alternative  energy projects  [slide  5].   The  third                                                               
finding is  that the  dependency on diesel  fuel must  be reduced                                                               
[slide 6].  The fourth finding  is that a single statewide entity                                                               
could coordinate  energy generation  and transmission  issues for                                                               
the  entire state  [slide 7].   The  fifth finding  is to  ensure                                                               
high-value  investments and  to  provide a  "one  stop shop"  for                                                               
permitting and  regulators [slide  8].  The  final finding  is to                                                               
eliminate the need for Power Cost Equalization (PCE) [slide 9].                                                                 
                                                                                                                                
8:10:58 AM                                                                                                                    
                                                                                                                                
MS.  KOHLER  estimated that  $3  billion  per  year is  spent  on                                                               
energy.   Over 20 years,  the total  is $60 billion,  which would                                                               
pay  for very  significant  improvements in  the  cost of  energy                                                               
[slide 10].   Alaska's energy problem is:   rural communities use                                                               
diesel  for almost  all  of their  energy  needs; Fairbanks  uses                                                               
diesel,  wood,  and   coal  for  a  portion   of  its  electrical                                                               
generation and heating, contributing  to its air quality problem;                                                               
Southcentral is running out of  gas and faces an imminent crisis;                                                               
and  industry  is  languishing  without  affordable  energy;  and                                                               
energy is  scarce and expensive [slide  11].  On the  other hand,                                                               
Alaska has 235 trillion cubic  feet (tcf) of stranded natural gas                                                               
on the  North Slope,  and with  the market  price of  natural gas                                                               
decreased throughout the world it makes  sense to use that gas to                                                               
benefit  Alaskans  [slide  12].   The  proposed  solution  is  as                                                               
follows:   very  large scale  generation  of natural  gas on  the                                                               
North Slope and high voltage  direct current (HVDC) lines forming                                                               
a  backbone  transmission  grid  around the  state.    With  this                                                               
concept   there  would   be  abundant   power  for   North  Slope                                                               
operations,  Fairbanks  and  other Railbelt  communities,  remote                                                               
mines,   processors,  and   heat   and   electricity  for   rural                                                               
communities  [slide 13].   Ms.  Kohler explained  that HVDC  is a                                                               
technology not used  in Alaska, but that is  used everywhere else                                                               
in the world.  It has been  used since the 1950s and has advanced                                                               
today  to cost-effectively  transmit  very large  loads of  power                                                               
long and short distances [slide 14].   For example, for the Three                                                               
Gorges  project  in  China  it   would  take  five  high  voltage                                                               
alternating current (HVAC)  towers with three wires  each to move                                                               
6.0 gigawatts  (GW) of power, but  only two HVDC towers  with two                                                               
wires each.   Other advantages of  HVDC are that the  power moves                                                               
independently on each  line, a smaller right of  way is required,                                                               
and there a  big difference in capacity [slide 15].   The Pacific                                                               
Intertie has  been in operation since  1985 and is a  3.0 GW HVDC                                                               
line connecting  California to Washington State  that moves power                                                               
south in  summer and  north in  winter.   Furthermore, in  2010 a                                                               
1,300 mile HVDC line was installed  in China that moves 6.4 GW of                                                               
power [slide 16].                                                                                                               
                                                                                                                                
8:17:56 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  MILLETT  asked  how  much   power  is  lost  over  long                                                               
distances.                                                                                                                      
                                                                                                                                
MS. KOHLER  responded that power  losses are equivalent  to those                                                               
of  a gas  pipeline,  and there  are no  reactive  problems.   In                                                               
further response  to Co-Chair Millett, she  said any transmission                                                               
grid, whether  alternating current  (AC) or direct  current (DC),                                                               
allows for the admission of renewables.                                                                                         
                                                                                                                                
REPRESENTATIVE   FOSTER  asked   whether   renewables  would   be                                                               
competitive against natural gas.                                                                                                
                                                                                                                                
MS. KOHLER advised renewables will  always be needed because they                                                               
are emissions free and are cost effective on a large scale.                                                                     
                                                                                                                                
REPRESENTATIVE NAGEAK  asked if transmission grids  in California                                                               
follow highways or cross remote areas.                                                                                          
                                                                                                                                
MS.  KOHLER assumed  the Lower  48 does  not have  access issues;                                                               
however,  remote construction  of large-scale  HVDC is  common in                                                               
Canada.                                                                                                                         
                                                                                                                                
8:22:18 AM                                                                                                                    
                                                                                                                                
ROBERT  JACOBSEN,  Ph.D,  Vice President  Science  &  Technology,                                                               
Marsh Creek LLC, added that Canada  has multiple lines 500 or 600                                                               
miles across  tundra and  geography similar  to Alaska,  and with                                                               
similar winter conditions.   The remote systems  are reliable and                                                               
are  designed  so  that  any necessary  maintenance  is  done  by                                                               
helicopters.                                                                                                                    
                                                                                                                                
REPRESENTATIVE HIGGINS  heard HVDC has  a 3 percent to  5 percent                                                               
line loss  per 1,000 miles.   He asked how much  gas the proposed                                                               
plant would use and how long it would be viable.                                                                                
                                                                                                                                
MS. KOHLER estimated  the life of a large scale  gas generator is                                                               
about 15-20 years and overhauls  extend that estimate.  There are                                                               
existing  gas plants  in the  Lower 48  that are  several decades                                                               
old.    In  response  to Representative  Hughes,  she  said  HVDC                                                               
transmission was not  used much in the 1950s because  it was more                                                               
expensive  to convert  the  power from  AC to  DC.   Advances  in                                                               
microprocessor technology  have made this process  more economic.                                                               
In further response  to Representative Hughes, she  said the cost                                                               
of a DC  substation is still higher; however, the  key issue with                                                               
HVDC  is the  capability  to  move large  amounts  of power  long                                                               
distances.                                                                                                                      
                                                                                                                                
8:29:12 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  ISAACSON asked  whether an  underutilized HVDC  line is                                                               
efficient.                                                                                                                      
                                                                                                                                
MS.  KOHLER  acknowledged   this  is  a  "chicken   and  the  egg                                                               
[situation]" in  that the demand  load does not exist  because of                                                               
the  lack of  affordable  energy.   She expressed  disappointment                                                               
that  the  [Donlin  Gold  LLC]  project  is  planning  to  import                                                               
liquefied natural gas  (LNG) from British Columbia for  360 MW of                                                               
power over the  next 10 years.  These potential  base loads, such                                                               
as  those in  the NANA  Region, the  Ambler mining  district, and                                                               
others,  will not  develop until  there  is available  affordable                                                               
energy, nor will value-added industry and its accompanying jobs.                                                                
                                                                                                                                
CO-CHAIR ISAACSON  asked whether  the state can  justify spending                                                               
money  to  supply  large  loads   of  power  without  established                                                               
partnerships with - and commitments from - industry.                                                                            
                                                                                                                                
MS. KOHLER  said the state must  build for the future  as did the                                                               
telephone industry.  The advantage  of building HVDC is that cost                                                               
does not  increase dramatically to  build a 2+ GW  capacity line.                                                               
In addition, the generation plants  are modular and can always be                                                               
expanded  when necessary.   An  economic analysis  will show  the                                                               
existing  load statewide  at this  time is  6.5 billion  kilowatt                                                               
hours  (kWh)  per year;  however,  she  characterized this  as  a                                                               
"phantom load"  that is  not an accurate  reflection of  the true                                                               
load, therefore, the  project is attractive to  industry and will                                                               
be built mostly by electric utilities.                                                                                          
                                                                                                                                
CO-CHAIR  ISAACSON asked  whether more  line loss  occurs if  the                                                               
line capacity is beyond what is needed.                                                                                         
                                                                                                                                
8:35:22 AM                                                                                                                    
                                                                                                                                
DR. JACOBSEN responded  that line loss drops to  about 10 percent                                                               
of   what  the   line  is   rated.     In  further   response  to                                                               
Representative  Isaacson,   he  said  a  smaller   load  is  used                                                               
efficiently and effectively.                                                                                                    
                                                                                                                                
CO-CHAIR  MILLETT   clarified  that   this  project  is   not  in                                                               
competition with a gas pipeline.                                                                                                
                                                                                                                                
8:37:07 AM                                                                                                                    
                                                                                                                                
MS. KOHLER provided examples of the  use of HVDC technology.  The                                                               
Norway Offshore HVDC  Light Project transmits 78 MW  of power 182                                                               
miles  via a  submersible cable  [slide  17].   An undersea  HVDC                                                               
cable  between   Estonia  and   Finland  provides   a  successful                                                               
connection [slide  18].  She advised  that large scale 300  MW to                                                               
450  MW   generators  are  high   efficiency  and   would  handle                                                               
aggregated  loads for  Alaska.   Also, the  cost of  installation                                                               
decreases  as the  size of  the generator  increases [slide  19].                                                               
The  first part  of the  project proposes  a line  from a  1.0 GW                                                               
generation station  at the North  Slope through the  Railbelt and                                                               
to Anchorage  via a  2.0 GW  transmission line  [slide 20].   The                                                               
cost of the  power plant is estimated at $1.25  billion, the cost                                                               
of the power line is estimated  at $1.86 billion, and the cost of                                                               
the  converter stations  is estimated  at  $600 million.   It  is                                                               
assumed the system  will operate at [85] percent  capacity for 30                                                               
years at 7  percent.  This results in a  wholesale delivered cost                                                               
of power of about $0.09 per kWh.   She pointed out that more than                                                               
half of  the cost  is the  capital cost of  the line  [slide 21].                                                               
When comparing the cost of using  electricity for heat, at $5 per                                                               
gallon, diesel used in an  80 percent efficient furnace costs the                                                               
equivalent of $0.163 per kWh.   A 2.5 GW gas-fired power plant on                                                               
the  North Slope  could deliver  an  equal amount  of energy  for                                                               
$0.065 per kWh  [slide 22].  Another proposal was  for a 500-mile                                                               
transmission  line   to  Fairbanks  that  with   a  capital  cost                                                               
investment of $4  billion, results in an estimated  cost of $0.65                                                               
per kWh  [slides 23 and 24].   Extending the line  west 600 miles                                                               
to the  NANA and  Norton Sound  regions is  estimated to  cost an                                                               
additional $1  billion for a  200 MW  line.  The  delivered power                                                               
would  cost about  $0.15  per kWh,  and a  reduction  in cost  is                                                               
expected with increased demand on the line [slides 25-27].                                                                      
                                                                                                                                
8:42:05 AM                                                                                                                    
                                                                                                                                
MS.   KOHLER concluded that HVDC  is as reliable as  AC, although                                                               
the  proposal does  not exclude  gas generation  stations located                                                               
around the state where practical  [slide 28].  The proposal would                                                               
make  a   significant  step  to   reduce  greenhouse   gases  and                                                               
emissions, thereby reducing emissions  by high percentages [slide                                                               
29].   On the critical  question of whether the  project competes                                                               
with a gas pipeline, she indicated  that the 2.5 GW project would                                                               
use 113 billion cubic feet of natural  gas per year thus in a 30-                                                               
year life  cycle would use 3.4  tcf of gas, which  is 1.5 percent                                                               
of the  total known  reserves of  gas on  the North  Slope [slide                                                               
30].  In  summary, HVDC transmission can be  used to interconnect                                                               
the state  to deliver low-cost  power to industry,  the military,                                                               
processors, residents,  and community buildings.   It can further                                                               
eliminate PCE,  reduce greenhouse gas emissions,  and provide for                                                               
value-added products made in Alaska [slide 31].                                                                                 
                                                                                                                                
8:44:22 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   HUGHES   asked   Ms.  Kohler   for   her   first                                                               
recommendation for action by the committee.                                                                                     
                                                                                                                                
MS.  KOHLER  suggested  that  the   committee  focus  on  how  to                                                               
actualize the state's  energy policy in a way  that is achievable                                                               
in the foreseeable  future.  The proposed project  could be built                                                               
in five years; the generation is  "out of the box" technology and                                                               
the  expertise  to  build the  transmission  lines  is  available                                                               
locally.   Although construction of the  converter stations would                                                               
take outside  means, there are international  firms familiar with                                                               
this specific project.                                                                                                          
                                                                                                                                
REPRESENTATIVE HUGHES asked whether  a single statewide entity is                                                               
necessary to develop a solution.                                                                                                
                                                                                                                                
8:46:18 AM                                                                                                                    
                                                                                                                                
MS. KOHLER suggested there should be  a study of the concept used                                                               
in the  Lower 48, which  is that  the utilities typically  do not                                                               
generate power, but  purchase power from the grid  as members and                                                               
owners  of  a  generation and  transmission  (G&T)  organization.                                                               
Thus, individual utilities  do not develop their  own local grids                                                               
in  isolation, but  as  members  of a  large  organization.   For                                                               
example, in  Alaska the Alaska Industrial  Development and Export                                                               
Authority (AIDEA),  Department of Commerce, Community  & Economic                                                               
Development, could serve this purpose.                                                                                          
                                                                                                                                
8:47:41 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FOSTER  asked Ms.  Kohler  to  address access  to                                                               
land.                                                                                                                           
                                                                                                                                
MS. KOHLER  said this is an  issue that needs to  be addressed in                                                               
partnership  with the  state.   The  proposed  project should  be                                                               
appealing to the federal government;  however, the routes will be                                                               
studied  with the  possibility of  burying  cable underground  if                                                               
necessary.                                                                                                                      
                                                                                                                                
REPRESENTATIVE FOSTER said  as a rural legislator,  he would like                                                               
to  not rely  on PCE  because that  would be  good for  the state                                                               
overall, and because PCE is susceptible to economics.                                                                           
                                                                                                                                
MS. KOHLER agreed that cuts to  the PCE program have been painful                                                               
for rural  residents.   As an  aside, she  noted that  the Alaska                                                               
Housing  Finance  Corporation   (AHFC),  Department  of  Revenue,                                                               
reported that  the state  spends $640 million  per year  to power                                                               
state buildings.                                                                                                                
                                                                                                                                
8:52:30 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NAGEAK asked whether  this project would eliminate                                                               
some other energy projects.                                                                                                     
                                                                                                                                
MS. KOHLER assumed the construction  of the [Susitna-Watana Hydro                                                               
project]  which   would  be  an  alternative   generation  source                                                               
distanced from  the North Slope.   She pointed out that  the HVDC                                                               
transmission  lines  proposed by  this  project  can be  used  to                                                               
transmit hydropower  to market,  and for  other sources  as well.                                                               
Furthermore,  as  resources  are  identified  across  the  state,                                                               
markets will be spread further apart.                                                                                           
                                                                                                                                
REPRESENTATIVE   HUGHES  asked   whether  private   industry  has                                                               
expressed interest in this project.                                                                                             
                                                                                                                                
MS. KOHLER said yes.                                                                                                            
                                                                                                                                
REPRESENTATIVE  HIGGINS  recalled   past  conversions  from  all-                                                               
electric  homes  because of  fluctuating  prices.   He  expressed                                                               
concern about  gas as the  state's main source of  energy because                                                               
the oil and gas industry control the price.                                                                                     
                                                                                                                                
MS. KOHLER stated  the intent at the outset is  to have long-term                                                               
contracts for  gas.   Gas is  a commodity  subject to  supply and                                                               
demand and because of the plentiful  supply of gas the price will                                                               
be low for a long time.                                                                                                         
                                                                                                                                
8:57:52 AM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 8:57 a.m. to 9:04 a.m.                                                                       
                                                                                                                                
9:04:09 AM                                                                                                                    
                                                                                                                                
^PRESENTATION(s): ALASKA'S ENERGY AND AIR QUALITY CRISIS                                                                        
    PRESENTATION(s): ALASKA'S ENERGY AND AIR QUALITY CRISIS                                                                 
                                                                                                                              
9:04:20 AM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT announced that the  next order of business would                                                               
be a  presentation on Alaska's  Energy and Air Quality  Crisis by                                                               
the Alaska Resource Agency.                                                                                                     
                                                                                                                                
9:04:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TAMMIE WILSON,  Alaska State Legislature, informed                                                               
the committee  that Fairbanks is  currently a  U.S. Environmental                                                               
Protection  Agency (EPA)  fine  particle  (PM 2.5)  nonattainment                                                               
area   for  particulate   matter  from   wood  smoke   and  other                                                               
pollutants.   This status creates  barriers to the growth  of the                                                               
area and, in  response, the community has  established wood stove                                                               
change  out  programs  and installed  pollution-control  devices.                                                               
The  presentation  will  discuss   other  efforts  to  reach  the                                                               
community's goal  for cleaner air;  however, without  natural gas                                                               
the EPA  limits cannot  be reached -  even though  replacing wood                                                               
and coal heating systems with cleaner units is beneficial.                                                                      
                                                                                                                                
9:06:12 AM                                                                                                                    
                                                                                                                                
WARD  SATTLER, President,  Alaska Resource  Agency (ARA),  gave a                                                               
short history of his experiences in  Alaska.  He said air quality                                                               
is a serious problem in Fairbanks  and North Pole although it was                                                               
worse  in the  '60s and  '70s.   At that  time air  pollution was                                                               
caused by  automobile exhaust, and  the problem was  moderated by                                                               
EPA mandates  requiring catalytic  converters on  cars.   Now the                                                               
cause of  poor air quality  is that the  price of energy  is high                                                               
and residents have  returned to wood stove use  for home heating.                                                               
Mr. Sattler  explained how carbon particles  and highly injurious                                                               
chemical  compounds  bond  with  water vapor  when  there  is  an                                                               
inversion layer in  cold weather.  Nothing can be  done about the                                                               
inversion layer, but  new technology has led to  wood stoves that                                                               
do  not  produce  troublesome particulates  and  today's  outdoor                                                               
wood-fired boilers burn  cleaner.  The goal of ARA  is to advance                                                               
sustainable and renewable resource  solutions for Interior Alaska                                                               
[slide 2].   Large-scale  energy projects to  reduce the  cost of                                                               
energy have been  proposed, but completion remains  over a decade                                                               
away,  and innovative,  cost-effective solutions  are needed  now                                                               
for  clean heat  and power  to improve  the quality  of life  and                                                               
emphasize the  use of Alaska's vast  renewable biomass resources.                                                               
He  provided   an  inventory   of  residential   heating  devices                                                               
indicating that  inefficient and  antiquated appliances  have led                                                               
to serious air quality problems [slide 3].                                                                                      
                                                                                                                                
9:14:24 AM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT  asked whether  EPA shut  down two  outdoor wood                                                               
boilers recently.                                                                                                               
                                                                                                                                
MR. SATTLER  said that is a  legal question.  He  returned to the                                                               
presentation and  pointed out that  wood-burning stoves  give the                                                               
Fairbanks  area some  of  the worst  pollution in  the  U.S.   He                                                               
restated  that   large  energy  projects  are   years  away  from                                                               
completion, including  the expansion of the  Fairbanks North Star                                                               
Borough Gas Distribution System.                                                                                                
                                                                                                                                
CO-CHAIR  ISAACSON surmised  building a  gas pipeline  would take                                                               
until 2021, but not the gas trucking project.                                                                                   
                                                                                                                                
MR.  SATTLER  was unsure  how  fast  the trucking  project  would                                                               
develop.    While  the  Interior  waits for  gas  the  future  is                                                               
jeopardized  for   Eielson  Air   Force  Base,  Army   Post  Fort                                                               
Wainwright,   federal  transportation   funds,  businesses,   the                                                               
housing  market,  and public  health.    He suggested  the  cost-                                                               
effective   solution  is   a  new   infrastructure  for   biomass                                                               
utilization [slide 7].  Alaska  Resource Agency has addressed the                                                               
interim  energy and  air quality  problem by  administering field                                                               
and research  and development  projects such  as the  Air Quality                                                               
Attainment  (AQA)  project,  which seeks  to  identify  pollution                                                               
sources  in  sensitive  areas,   inform  homeowners  of  possible                                                               
upgrades to  appliances, perform upgrades, teach  homeowners best                                                               
burn  practices,  and  replace   uncertified  or  defective  wood                                                               
stoves.  Since  September 2012, ARA has  inspected and maintained                                                               
appliances,   installed   appliances,  inspected   outdoor   wood                                                               
boilers, installed  pollution control devices, and  replaced five                                                               
large outdoor wood boilers [slide 8].                                                                                           
                                                                                                                                
9:19:11 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NAGEAK  asked how the recent  accomplishments were                                                               
financed.                                                                                                                       
                                                                                                                                
MR. SATTLER  answered the  AQA program  was paid  for by  a state                                                               
grant.                                                                                                                          
                                                                                                                                
9:20:02 AM                                                                                                                    
                                                                                                                                
JAMES HOUCK,  Ph.D, informed the  committee he is  an independent                                                               
consultant  on energy  and environmental  issues  and an  adjunct                                                               
professor  at the  University of  Portland  in air  quality.   He                                                               
provided a PowerPoint presentation  entitled, "Wood Heater Change                                                               
Outs  - A  Reality Check."   Dr.  Houck said  the most  important                                                               
benefit of  a "change  out" to  a new wood  heating system  is to                                                               
improve health.   Secondly,  change outs  will contribute  to the                                                               
goal of attainment of federal  fine particulate standards.  Also,                                                               
modern  appliances produce  less  creosote,  which is  associated                                                               
with  chimney  fires, and  are  safer  and more  efficient  units                                                               
[slide 1].   In fact, EPA has certified many  cordwood stoves and                                                               
inserts.   In  response  to Representative  Nageak, he  confirmed                                                               
that cordwood is the fuel under discussion.                                                                                     
                                                                                                                                
9:23:56 AM                                                                                                                    
                                                                                                                                
DR. HOUCK  further advised that  there are also wood  stoves that                                                               
are designed to fit into  the cavities of existing fireplaces and                                                               
that  are certified  by  EPA.   A  listing  of all  EPA-certified                                                               
appliances is available on its web  site, Burn Wise.  For outdoor                                                               
boilers  - also  known  as  hydronic heaters  -  EPA developed  a                                                               
voluntary program and the results  of tested values are available                                                               
online [slide 2].  All  pellet stoves, inserts, and furnaces, are                                                               
clean  burning  when compared  with  wood  burning devices.    In                                                               
addition, there  are EPA qualified  fireplaces.   Masonry heaters                                                               
are  all  clean  burning  but  are very  expensive.    Dr.  Houck                                                               
estimated  that there  are 28  million existing  fireplaces which                                                               
could be  improved with retrofit  appliances [slide 3].   A chart                                                               
compiled of a  variety of national phone surveys  taken from 1987                                                               
to 2010, indicated that 35  percent of wood heaters are currently                                                               
certified  [slide 4].    Returning  to the  issue  of health,  he                                                               
explained that  pollutants from wood  combustion are  products of                                                               
incomplete  combustion:   carbon monoxide;  respirable particles;                                                               
and  volatile   organic  compounds  (VOC)  that   are  toxic  and                                                               
carcinogenic [slide 5].  Residential  wood combustion also causes                                                               
a higher  exposure to humans than  manufacturing because chimneys                                                               
are not  very high,  and this concentration  is dangerous  to the                                                               
very  young  and  the  very   old,  as  is  exposure  indoors  in                                                               
residential  settings  [slides 6  and  7].   Dr.  Houck  directed                                                               
attention  to  a   diagram  of  the  origin   of  air  emissions,                                                               
explaining that burning  1 kilogram (kg) of wood  requires 7.3 kg                                                               
of air  which is  expelled as  air emissions  and ash  [slide 8].                                                               
Air  emissions  from complete  combustion  consist  of water  and                                                               
carbon  dioxide.    Air   emissions  from  incomplete  combustion                                                               
consist of carbon monoxide, VOCs, and particles [slide 9].                                                                      
                                                                                                                                
9:37:07 AM                                                                                                                    
                                                                                                                                
DR. HOUCK then  provided a list of  Conventional Uncertified Wood                                                               
Heater Title III Hazardous Air  Pollutants [slide 11].  Replacing                                                               
an  uncertified  stove  with   a  non-catalytic  certified  stove                                                               
provides  a  reduction  in  emissions  of  about  68  percent  in                                                               
particles; however, when the savings  in fuel is factored in, the                                                               
reduction   in  emissions   becomes   71   percent  [slide   12].                                                               
Furthermore, certified  wood stoves have continued  to improve in                                                               
efficiency by  19.6 percent,  and outdoor  wood boilers  too have                                                               
improved  dramatically [slides  13  and 14].    Returning to  the                                                               
problems   in  Fairbanks,   he  said   Fairbanks  is   a  federal                                                               
nonattainment area for fine particles under two standards:  24-                                                                 
hour  standard  of  35  micrograms  per  cubic  meter  or  annual                                                               
standard  of  12 micrograms  per  cubic  meter  [slide 15].    He                                                               
provided a map of the  nonattainment area, pointing out that many                                                               
monitors are needed for an accurate reading [slide 16].                                                                         
                                                                                                                                
9:41:45 AM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT asked how many monitors are posted in the area.                                                                
                                                                                                                                
REPRESENTATIVE T.  WILSON gave  the location  of monitors  in the                                                               
Fairbanks  and North  Pole  areas,  and said  there  is a  mobile                                                               
monitor that reports existing conditions to a web site.                                                                         
                                                                                                                                
DR. HOUCK  opined the real health  issue in Fairbanks is  not due                                                               
to the annual standard of  exposure, but of episodic exposure; in                                                               
fact, about 30  episodes occurred during the  winter of 2009-2010                                                               
where  the air  quality  exceeded the  24-hour  standard.   Acute                                                               
exposure causes asthma attacks and other health emergencies.                                                                    
                                                                                                                                
CO-CHAIR ISAACSON surmised that if  fuel costs were low residents                                                               
would not burn wood, and that would improve the air quality.                                                                    
                                                                                                                                
DR.  HOUCK stressed  the influence  of meteorology,  temperature,                                                               
and growth.                                                                                                                     
                                                                                                                                
CO-CHAIR ISAACSON,  as a resident,  has witnessed an  increase in                                                               
the use of wood heating systems.                                                                                                
                                                                                                                                
9:45:45 AM                                                                                                                    
                                                                                                                                
DR.  HOUCK provided  a summary  of statistics  for the  Fairbanks                                                               
State Office Building that indicated  the annual design value was                                                               
met in 2009 by a small margin  [slide 18].  He opined wood heater                                                               
change  outs  will  reduce  the  frequency  of  24-hour  standard                                                               
noncompliance, will help  the annual standard, and  may help with                                                               
the  carbon  monoxide  maintenance  area  in  downtown  Fairbanks                                                               
[slide 19].  Dr. Houck directed  attention to cost savings due to                                                               
increased efficiency, and  presented an example of  a change from                                                               
five cords  of wood burned  in an uncertified stove,  which saved                                                               
at least $283 per year when  replaced with a certified stove, and                                                               
at least $344  per year when replaced with  a certified catalytic                                                               
stove [slide 21].  Between  2005 and 2008, a successful community                                                               
change out took  place in Libby, Montana, which  has some weather                                                               
and  geographic similarities  to Fairbanks  [slides 22-24].   The                                                               
change out happened during three  heating seasons and about 1,100                                                               
stoves were replaced [slide 25].   A summary showed that in 2004-                                                               
2005 there were six instances  of 24-hour noncompliance in Libby,                                                               
in 2007-2008 there was one, and  after four years there were none                                                               
[slides  26].    In  response   to  Co-Chair  Isaacson,  he  said                                                               
continued  study  for  five   years  leveled  the  meteorological                                                               
effects [slide 27].                                                                                                             
                                                                                                                                
DR. HOUCK,  turning to economics,  said an economic  advantage of                                                               
heating  with wood  is that  many people  cut their  own firewood                                                               
[slide  28].    Finally,  he   compared  three  households  using                                                               
approximately 115 million British  thermal units (Btu) during one                                                               
heating season.   The cost of heating by  electricity was $7,415,                                                               
by fuel oil was $3,316, and  by an outdoor wood boiler system was                                                               
$1,375 [slide 29].                                                                                                              
                                                                                                                                
REPRESENTATIVE  T. WILSON  pointed  out action  is necessary  for                                                               
Fairbanks now because  the area has been given  deadlines by EPA.                                                               
In a plan required by  EPA, Fairbanks has cited pollution control                                                               
devices and  change outs to  reduce air pollution,  but Fairbanks                                                               
and surrounding areas need a  different source of energy, and gas                                                               
is better for air quality and price.                                                                                            
                                                                                                                                
REPRESENTATIVE FOSTER  asked for  the consequence of  not meeting                                                               
federal requirements.                                                                                                           
                                                                                                                                
REPRESENTATIVE  T. WILSON  understood  the  Fairbanks North  Star                                                               
Borough could lose federal highway transportation funding.                                                                      
                                                                                                                                
REPRESENTATIVE HUGHES asked whether health data is indicative.                                                                  
                                                                                                                                
REPRESENTATIVE T. WILSON said health data will be provided.  She                                                                
reminded the committee that residents are not "burning poorly."                                                                 
                                                                                                                                
9:58:01 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HIGGINS asked what the changes were in Montana.                                                                  
                                                                                                                                
DR.  HOUCK  explained  that  wood burning  was  only  allowed  in                                                               
certified devices  or pellet stoves  in the  City of Libby  or in                                                               
Lincoln County, Montana.   Most changes were  from an uncertified                                                               
wood stove to a certified wood stove.                                                                                           
                                                                                                                                
REPRESENTATIVE T. WILSON advised that the City of Libby provided                                                                
and installed the stoves.                                                                                                       
                                                                                                                                
9:59:46 AM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Special Committee on Energy meeting was adjourned at 9:59 a.m.                                                                  

Document Name Date/Time Subjects
Agenda (H) ENE 02272013.docx HENE 2/27/2013 8:00:00 AM
(H) ENE Agenda 02272013
All Alaska Plan Kohler 02272013.pdf HENE 2/27/2013 8:00:00 AM
(H) ENE All AK Energy Solution 02272013
Houck Presentation AK Resource Agency 02272013.pdf HENE 2/27/2013 8:00:00 AM
(H) ENE AK Resource Agency 02272013