Legislature(2021 - 2022)BARNES 124

03/08/2022 10:15 AM House ENERGY

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10:18:34 AM Start
10:19:15 AM HB301
11:29:34 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
                HOUSE SPECIAL COMMITTEE ON ENERGY                                                                             
                          March 8, 2022                                                                                         
                           10:18 a.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Calvin Schrage, Chair                                                                                            
Representative Matt Claman                                                                                                      
Representative Tiffany Zulkosky                                                                                                 
Representative Zack Fields                                                                                                      
Representative George Rauscher                                                                                                  
Representative James Kaufman                                                                                                    
MEMBERS ABSENT                                                                                                                
Representative Chris Tuck                                                                                                       
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 301                                                                                                              
"An Act relating to the establishment of a renewable portfolio                                                                  
standard for regulated electric utilities; and providing for an                                                                 
effective date."                                                                                                                
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 301                                                                                                                  
SHORT TITLE: UTILITIES: RENEWABLE PORTFOLIO STANDARD                                                                            
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
02/04/22       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/04/22       (H)       ENE, L&C, FIN                                                                                          
03/08/22       (H)       ENE AT 10:15 AM BARNES 124                                                                             
WITNESS REGISTER                                                                                                              
T.W. PATCH, Director of Planning                                                                                                
Alaska Energy Authority                                                                                                         
Department of Commerce, Community, & Economic Development                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Introduced HB 301 via a PowerPoint                                                                       
presentation, on behalf of the sponsor, House Rules by request                                                                  
of the governor.                                                                                                                
BOB PICKETT, Commissioner                                                                                                       
Regulatory Commission of Alaska                                                                                                 
Department of Commerce, Community, & Economic Development                                                                       
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:   Answered questions during the  hearing on HB
ACTION NARRATIVE                                                                                                              
10:18:34 AM                                                                                                                   
CHAIR  CALVIN  SCHRAGE  called  the  House  Special  Committee  on                                                            
Energy meeting  to order  at 10:18  a.m.  Representatives  Claman,                                                              
Rauscher,  and  Schrage  were  present   at  the  call  to  order.                                                              
Representatives  Kaufman,  Fields,  and Zulkosky  arrived  as  the                                                              
meeting was in progress.                                                                                                        
         HB 301-UTILITIES: RENEWABLE PORTFOLIO STANDARD                                                                     
[Contains discussion of HB 371, HB 247, HB 358, and SB 179.]                                                                    
10:19:15 AM                                                                                                                   
CHAIR SCHRAGE announced  that the only order of  business would be                                                              
HOUSE BILL  NO. 301, "An  Act relating to  the establishment  of a                                                              
renewable  portfolio standard  for  regulated electric  utilities;                                                              
and providing for an effective date."                                                                                           
10:20:07 AM                                                                                                                   
T.W. PATCH, Director  of Planning, Alaska Energy  Authority (AEA),                                                              
Department  of   Commerce,  Community,  &  Economic   Development,                                                              
presented a  PowerPoint, titled  "HB 301  Overview," on  behalf of                                                              
the  sponsor,  House  Rules  by  request  of  the  governor.    He                                                              
referenced  slide 2,  which listed  AEA's  programs and  services.                                                              
He noted that the  agency deals with many types  of energy issues,                                                              
including the ownership of  the Bradley Lake Hydroelectric Project                                                              
and some other  energy transmission assets.  He stated  that if HB
371 becomes law, AEA would become  involved with certain broadband                                                              
issues.  Per rural Alaska, AEA  constructs and maintains bulk fuel                                                              
tank  farms,  diesel  powerhouses,   and  electrical  distribution                                                              
grids.   It also administers  the Power Cost  Equalization Program                                                              
(PCEP).  He  said if HB 247  becomes law, power  cost equalization                                                              
(PCE) could  be used to address  the deferred maintenance  for the                                                              
bulk  fuel  tank  farms.    He   continued  that  AEA  engages  in                                                              
alternative   energy  and   efficiency   planning,  funding,   and                                                              
technical   assistance.     He  pointed   out   that  the   agency                                                              
administers  grants  and loans  through  the Power  Project  Fund,                                                              
which is  the primary  source of funding  for the construction  of                                                              
rural power  projects.  He added  that it also  administers grants                                                              
through  the Energy  Builds Program.    He explained  if [HB  358]                                                              
becomes law, the  sunset date for the Renewable  Energy Fund (REF)                                                              
would be  extended, and AEA  would be submitting  renewable energy                                                              
projects for the legislature's approval.                                                                                        
10:24:08 AM                                                                                                                   
MR. PATCH moved  to slide 3, which introduced  renewable portfolio                                                              
standards (RPS) to  the committee.  He stated that  RPS are backed                                                              
with incentives,  both punitive  and fund  inducements.   He added                                                              
that each  state's RPS are different,  with many accompanied  by a                                                              
tradable renewable  energy credit certificate.  He  clarified that                                                              
credit   certificates   would  not   be   part  of   the   current                                                              
10:25:30 AM                                                                                                                   
MR. PATCH informed  the committee that SB 179 is  a companion bill                                                              
for  HB  301.    He  stated  that  the  purpose  of  the  proposed                                                              
legislation  would be  to promote  energy independence,  long-term                                                              
cost reductions,  and the  development of  competitive markets  in                                                              
the Railbelt [as  seen on slide 4].  Rather than  having renewable                                                              
energy goals,  he said, the  proposed legislation would  create an                                                              
energy  standard.  He  added that  having RPS  would align  Alaska                                                              
with 30 other  states and create  a commitment to transition  to a                                                              
percentage  of renewable  power.   He  expressed  the belief  that                                                              
enacting  the  proposed  legislation  would  be the  best  way  to                                                              
diversify Alaska's  supply of energy  sources and  increase energy                                                              
10:26:38 AM                                                                                                                   
MR.  PATCH,  in response  to  Representative  Rauscher,  explained                                                              
that if  the proposed legislation  is adopted, Alaska  would align                                                              
with  other states  by having  RPS.   He added  that each  state's                                                              
renewable  energy standards  differ by  percentages [of  renewable                                                              
energy] and projected timelines.                                                                                                
REPRESENTATIVE   RAUSCHER,  with   a  follow-up  question,   asked                                                              
whether  the  standards  in  the  proposed  legislation  would  be                                                              
considered high compared to the standards in other states.                                                                      
MR. PATCH  responded that opinions  vary.   He stated that  he has                                                              
heard it expressed  that [the proposed legislation's  requirement]                                                              
of   achieving  an   80  percent   standard  by   2024  would   be                                                              
unrealistic,  while   other  opinions  have  expressed   that  the                                                              
standard  is   too  low.    He   deferred  the  question   to  the                                                              
representatives  of utility  companies scheduled  in a  subsequent                                                              
meeting  on  HB  301.    In  response   to  a  follow-up  question                                                              
concerning  Alaska's  standards   relative  to  other  states,  he                                                              
offered to supply the information at a later time.                                                                              
10:29:59 AM                                                                                                                   
REPRESENTATIVE  KAUFMAN   asked  about  "compliance   risk."    He                                                              
referenced   the  proposed   legislation's   requirement  that   a                                                              
percentage of  power be  obtained from a  [renewable] source.   He                                                              
questioned  the  management  of  this  requirement  in  regard  to                                                              
permitting and other risks.                                                                                                     
CHAIR   SCHRAGE   interjected  that   representatives   from   the                                                              
utilities would be  available to answer questions  during a future                                                              
meeting.  He  suggested that would be the opportunity  to question                                                              
10:30:47 AM                                                                                                                   
MR. PATCH, in  agreement, stated that research  or utility company                                                              
representatives  would  do better  to  answer  the question.    He                                                              
noted  that the  Regulatory Commission  of Alaska  (RCA) would  be                                                              
monitoring  the  accomplishments   of  the  utilities  within  the                                                              
Railbelt, which is the targeted area of the legislation.                                                                        
10:32:07 AM                                                                                                                   
CHAIR SCHRAGE  pointed out that  the legislation's  main objective                                                              
is listed  on slide 4 as long-term  cost reduction.   He expressed                                                              
the  understanding   that  other   than  providing  adequate   and                                                              
consistent power,  the second priority of utility  companies is to                                                              
provide low  rates to  customers.  He  expressed the  opinion that                                                              
companies  would   seek  cost  reductions  with   or  without  the                                                              
legislation.   He requested  an explanation  of the  legislation's                                                              
capability to encourage  long-term cost reductions  outside of the                                                              
motivations that the utility companies already have.                                                                            
MR. PATCH  explained one of  the attractive elements  of renewable                                                              
energy  is  that  there  would be  no  cost  associated  with  the                                                              
resource.   For example, there is  no cost to the wind,  but there                                                              
would  be infrastructure  cost to  harness  the wind.   He  stated                                                              
that  if  the technology  is  efficient,  such  as a  wind  tower,                                                              
energy  generation could  be maximized.   He  said that  presently                                                              
energy  is gas generated,  and the  ratepayers  would have  to pay                                                              
the cost to retire  the built assets of fuel-fire  generation.  He                                                              
surmised that,  if careful over the  long run, cost  savings could                                                              
be  achieved  with  free-power-source  energy,  but  the  existing                                                              
infrastructure  would  need  to   be  paid  off  over  time.    He                                                              
expressed the  opinion that there  would be an opportunity  in the                                                              
long term for cost reduction and fuel-cost savings.                                                                             
REPRESENTATIVE   RAUSCHER   questioned   whether   expanding   the                                                              
renewable  energy portfolio  would be  the best  way to  diversify                                                              
Alaska's energy  supply and increase  energy security.   He voiced                                                              
concern about  the loss of economic  activity if Alaska  is forced                                                              
to move from  reliable sources of energy to  intermittent sources.                                                              
He  questioned  whether it  would  be  feasible to  attain  energy                                                              
levels  with  percentages of  intermittent  solar  and  wind.   He                                                              
suggested that blackouts  and brownouts may result  and questioned                                                              
the methods  utility companies  would use  to provide  electricity                                                              
in these situations.                                                                                                            
MR.  PATCH  voiced  the  opinion  that not  all  of  the  Railbelt                                                              
utilities would completely abandon thermal generation capacity.                                                                 
REPRESENTATIVE  RAUSCHER,  with a  follow-up  question,  clarified                                                              
that  [in alignment  with the  legislation] 80  percent of  energy                                                              
would  be  reliant  on  solar and  wind.    Considering  this,  he                                                              
questioned  whether unforeseen  blackouts  would  result from  the                                                              
inability to maintain the [energy] supply.                                                                                      
10:38:27 AM                                                                                                                   
MR.  PATCH  expressed  the belief  that  [maintaining  the  energy                                                              
supply]  would be  possible.   He stated  that, to  deal with  the                                                              
brownouts, plans  are being made  for improved battery  storage in                                                              
the  Railbelt; once  this  concern  has been  addressed,  reserves                                                              
could  be used  with  a quick-ramp  thermal  source  to address  a                                                              
catastrophic event  and shorten a blackout.   He noted that  he is                                                              
not  an  expert  in power  management,  but  there  are  qualified                                                              
managers who  carefully monitor  the rate  of power available  for                                                              
distribution to customers.                                                                                                      
MR.  PATCH, responding  to  Chair  Schrage, explained  a  brownout                                                              
happens when  there is insufficient  power to reach all  the homes                                                              
within  a  distribution  area  of   the  utility.    If  there  is                                                              
"frequency degradation," electricity will be intermittent.                                                                      
REPRESENTATIVE  FIELDS,   with  a  follow  up   on  Representative                                                              
Rauscher's  question, voiced  the opinion  that due diligence  has                                                              
not  been   done  on   HB  301  to   justify  the   [percentages].                                                              
Nevertheless, he  suggested that by using wind,  solar, batteries,                                                              
hydro, and  some gas  capacity, a  higher percentage of  renewable                                                              
energy could be  attained.  He conjectured that if  wind and solar                                                              
ramp down,  batteries and  gas could  be used  over the  course of                                                              
the year,  and the levels  may average out  to be 80 percent.   He                                                              
questioned whether  this is a correct perspective  of the proposed                                                              
MR. PATCH responded in the affirmative.                                                                                         
REPRESENTATIVE FIELDS,  for the record, emphasized that  it is not                                                              
certain  that a  higher  [percentage  of renewable  energy]  would                                                              
result  in   blackouts  and  brownouts.     He  stated   that  the                                                              
"technology is  there," but the right  [percentage] has yet  to be                                                              
10:40:37 AM                                                                                                                   
MR. PATCH  indicated that  Alaska has  been considering  renewable                                                              
energy  options in  the  Railbelt's portfolio  mix  for 12  years,                                                              
since the  enactment of  a state  energy policy.   He stated  that                                                              
the   policy   has  been   criticized   as   being   aspirational,                                                              
nevertheless there has  been an impact.  Slide  5 highlighted some                                                              
achievements  and  goals  made since  the  state's  energy  policy                                                              
began.  He pointed  out that on a national level  some states have                                                              
had  renewable standards  as  early as  2012,  while other  states                                                              
have had renewable  goals.  He reminded the committee  that Alaska                                                              
adopted  renewable   energy  goals  in  2010,  and   the  proposed                                                              
legislation would  create a renewable standard.   He offered slide                                                              
6 as a snapshot of the changes in the nation.                                                                                   
10:43:49 AM                                                                                                                   
REPRESENTATIVE  RAUSCHER questioned  whether there  is data  which                                                              
shows electricity  rates changing in states with  renewable energy                                                              
MR.  PATCH  expressed  the opinion  that  the  National  Renewable                                                              
Energy Laboratory  (NREL) has data, and several  universities have                                                              
studied  the  issue.    He  said   there  is  probably  some  data                                                              
addressing  rate variation  and the percentages  in these  states,                                                              
but he  has not  researched the issue.   He  offered to  follow up                                                              
with a supplement on the data after the meeting.                                                                                
10:45:43 AM                                                                                                                   
CHAIR SCHRAGE  commented that slide  6 shows states  shifting from                                                              
having no renewable  energy policies to either  [renewable energy]                                                              
goals or  standards.  He provided  the interpretation  that states                                                              
do  not  seem  to  be  abandoning   [renewable  energy]  goals  or                                                              
MR.  PATCH  pointed   out  on  slide  8  a  snapshot   of  [energy                                                              
production by  source] for the nation  and Alaska.  He  listed the                                                              
common  sources used  for energy  production: oil  and gas,  coal,                                                              
renewable  energy, hydroelectric,  and nuclear  power.  He  stated                                                              
that 70 percent of  the nation's power source is oil  and gas.  He                                                              
provided  the following breakdown  of Alaska's  power sources:  65                                                              
percent  from   oil  and  gas,   27  percent  from   hydroelectric                                                              
generation,  and 2  percent  from renewable  energy  sources.   He                                                              
explained if  the Susitna-Watana  Hydroelectric Project  is built,                                                              
it would  produce as much as  58 percent of the  energy production                                                              
within  the  Railbelt.    He  added   that  with  2  percent  from                                                              
renewable  energy,  this would  achieve  60 percent,  which  would                                                              
still  be  short  of  the  80  percent  target  [proposed  in  the                                                              
legislation].  He  explained that the 80 percent  target would not                                                              
be  realized  until  after the  Susitna-Watana  project  is  fully                                                              
operational.   He  offered that  this  may address  Representative                                                              
Rauscher's  question   on  the   reasonability  of  the   targeted                                                              
percentage.   He emphasized  that this is  just a comment,  and he                                                              
is not answering Representative Rauscher's question.                                                                            
10:49:17 AM                                                                                                                   
MR.  PATCH  stated  that  AEA takes  pride  in  the  Bradley  Lake                                                              
Hydroelectric Project.   The Bradley Lake project  supplies energy                                                              
to  the Railbelt,  which  contains  the largest  concentration  of                                                              
population in the  state.  He pointed out the  project's specifics                                                              
listed  on  slide  9,  commenting  that  hydroelectric  energy  is                                                              
renewable with  clean benefits.   He said  that in recent  history                                                              
the  energy   value  of   the  Bradley   Lake  Project   has  been                                                              
supplemented by the  Battle Creek Project.  As shown  on slide 10,                                                              
the  Dixon  Diversion  Project  is  a  supplement  that  is  being                                                              
considered  by AEA.    He explained  that,  if  this project  were                                                              
advanced, more water  would be made available behind  the dam face                                                              
to  move through  the turbine  generators,  increasing the  energy                                                              
supply.   There are  two options  being considered  for the  Dixon                                                              
Diversion  Project: a tunnel  constructed  from the Dixon  Glacier                                                              
to Bradley  Lake, and a powerhouse  built on Martin River.   Slide                                                              
11 shows  the timeline  for the  Dixon Diversion  Project and  the                                                              
yearly approximate cost.                                                                                                        
10:52:41 AM                                                                                                                   
REPRESENTATIVE  ZULKOSKY questioned  AEA's plans  to move  forward                                                              
with  the  funding  for  [the  Dixon  Diversion  Project]  in  the                                                              
upcoming   fiscal   years.      She   questioned   whether   state                                                              
unrestricted general funds would be used.                                                                                       
CHAIR SCHRAGE  requested  that Mr. Patch  prepare the  information                                                              
for Mr. Thayer  to present when  he comes before the  committee in                                                              
a future meeting.                                                                                                               
MR. PATCH  responded in the affirmative.   He stated  that between                                                              
January  25 and  January  26  of this  year  AEA achieved  a  peak                                                              
demand  of 820  megawatts.    Slide 12  and  slide  13 depict  the                                                              
energy resources used  to meet this peak demand.   He offered that                                                              
the peak demand  had been met with no brownouts  or blackouts, and                                                              
all customers were  served.  He opined that there  is a difference                                                              
in  meeting the  demand with  hydro  and meeting  the demand  with                                                              
other  resources.    He stated  that  in  this  case there  was  a                                                              
predominant  deployment of wind  and battery.   He apologized  for                                                              
the lack  of promised information  from NREL on fuel-cost  savings                                                              
pertaining to  these two  slides.  Nevertheless,  it can  be taken                                                              
away   that  using   a  combination   of   resources  could   meet                                                              
significant  Railbelt demand.   He  offered  to follow  up with  a                                                              
supplement when he receives the data [from NREL].                                                                               
CHAIR  SCHRAGE requested  that Mr.  Patch define  "BESS" and  "PV"                                                              
which appear on the slide.                                                                                                      
MR.  PATCH explained  that  "BESS"  signifies a  battery  [energy]                                                              
storage  system.   He reiterated  that batteries  are being  built                                                              
within the  Railbelt, as they can  act quickly to  meet inadequate                                                              
generation   and  brownout   concerns.     He  stated  that   "PV"                                                              
[photovoltaic] refers to solar energy.                                                                                          
10:56:44 AM                                                                                                                   
REPRESENTATIVE RAUSCHER,  referring to the list of  energy sources                                                              
on slide  12, expressed concern that  biomass would not  be easily                                                              
attained in  the Interior  and Western Alaska.   He expressed  the                                                              
opinion  that  neither geothermal  nor  hydro  would work  in  the                                                              
winter.   Concerning wind  energy, he said,  "I've seen  very calm                                                              
days  up north  ... for  weeks and  weeks  at a  time without  any                                                              
sunlight."    He  requested  an explanation  on  the  prospect  of                                                              
meeting  the percentage  demands  in these  areas "utilizing  even                                                              
half of the list."                                                                                                              
MR. PATCH  explained that HB  301 would impact regulated  electric                                                              
utilities  and probably  would  not affect  areas  outside of  the                                                              
Railbelt.   He said areas like  Utqiagvik would not be  covered by                                                              
HB 301.   In response to a  follow-up question, he  clarified that                                                              
the  proposed   legislation  would   address  regulated   electric                                                              
utilities in the Railbelt.                                                                                                      
10:59:46 AM                                                                                                                   
BOB  PICKETT,  Commissioner,  Regulatory   Commission  of  Alaska,                                                              
Department  of   Commerce,  Community,  &  Economic   Development,                                                              
clarified  that  there  are  regulated  utilities  throughout  the                                                              
state, but  the structure of the  legislation deals with  the bulk                                                              
interconnected  Railbelt  system;  areas  not  part  of  the  bulk                                                              
electric  system   would  not  be   affected.    In   response  to                                                              
Representative  Rauscher, he  explained that  Copper Valley  would                                                              
not   be  affected   by  the   legislation  because   it  is   not                                                              
interconnected  to  the  bulk  electric  system.   He  added  that                                                              
Copper Valley  would be included  if, at  some point, there  is an                                                              
interconnection  between  Glennallen  and the  Matanuska  electric                                                              
service  areas.   In response  to  a follow-up  question, he  said                                                              
[the proposed  legislation] would  cover five cooperatives  up and                                                              
down the Railbelt.                                                                                                              
11:01:32 AM                                                                                                                   
REPRESENTATIVE KAUFMAN,  in reference to the energy  mix presented                                                              
on  slide 12,  questioned  the uniformity  of  the wind  bandwidth                                                              
depicted on the  graph.  He questioned the representation  of wind                                                              
reacting in a uniform matter as plotted on the graph.                                                                           
MR. PATCH  voiced the  understanding  that, as  the sun heats  the                                                              
earth, wind follows  a predictable pattern, and  wind is generated                                                              
in a belt-like distribution.                                                                                                    
REPRESENTATIVE KAUFMAN,  with a follow-up comment,  clarified that                                                              
his  question had  not been  about  the amplitude,  but about  the                                                              
mix.  He stated  that wind power depicted in the  graph seems like                                                              
a uniform band.   He expressed the expectation that  [the level of                                                              
power generated by the wind would fluctuate].                                                                                   
CHAIR SCHRAGE  requested clarification  on the consistency  of the                                                              
wind power.                                                                                                                     
MR.  PATCH voiced  his  understanding that  the  slide intends  to                                                              
depict the  demand for  wind power,  not wind power  [generation].                                                              
He explained that  he did not create the graph,  and he reiterated                                                              
the  unavailable numbers  for these  slides would  have shown  the                                                              
fuel-cost savings per demand.                                                                                                   
CHAIR SCHRAGE, with  follow-up comment, stated that  each of these                                                              
energy sources may  have surplus capacity that could  be tapped to                                                              
meet  demand.    He related  the  understanding  that  [the  graph                                                              
depicts] the  utilization of  an energy  resource, not  the amount                                                              
of energy produced by the resource to meet demand.                                                                              
MR. PATCH confirmed Chair Schrage's statement.                                                                                  
REPRESENTATIVE   KAUFMAN,  with   a   follow-up  comment,   voiced                                                              
curiosity  between the  uniformity  of the  wind bandwidth  versus                                                              
the variation in hydro bandwidth.                                                                                               
CHAIR SCHRAGE  interjected that this  question may be  deferred to                                                              
energy experts [in a subsequent hearing].                                                                                       
11:06:30 AM                                                                                                                   
REPRESENTATIVE  FIELDS, in  relation  to Representative  Kaufman's                                                              
question, referenced  page 16 of  NREL's report and the  output of                                                              
wind [energy]  over time.   He stated that  every scenario  in the                                                              
report, except the  Susitna-Watana Project, has a  high percentage                                                              
of energy  provided by wind.   He expressed  the opinion  that the                                                              
Susitna-Watana   Project    would   be   a    multi-billion-dollar                                                              
investment  with zero  political  energy for  the capital  outlay,                                                              
and,  because  of this,  the  project  would  not  be built.    He                                                              
expressed the opinion  that the federal government  would not fund                                                              
the project either.   He said, "I think it is silly  that we would                                                              
consider an 80  percent target predicated on Susitna-Watana."   He                                                              
stated that  without the Susitna-Watana  project there  would need                                                              
to be  a very high  percentage of energy  provided by  wind during                                                              
the course  of the year.   He questioned  the number of  states in                                                              
the Lower  48 which presently have  wind supplying this  amount of                                                              
energy.    To  create a  steadier  energy  supply,  he  questioned                                                              
whether the  high output of energy  from the wind would  require a                                                              
corresponding investment in pump storage.                                                                                       
MR. PATCH  voiced the belief  that there  are states in  the Lower                                                              
48 which engage,  produce, and sell extremely high  percentages of                                                              
wind energy.  He  stated that he does not have a  copy of the NREL                                                              
document for reference,  so he does not have a  specific response,                                                              
and he does not  know the availability of pump  storage to support                                                              
wind in the Lower 48.                                                                                                           
REPRESENTATIVE FIELDS,  with a follow-up question,  clarified that                                                              
to achieve any of  the scenarios [listed in the  NREL study] which                                                              
utilize  high  percentages  of wind  utilization,  investments  in                                                              
pump storage  would have to be made.   He stated that  in the rest                                                              
of the  country wind  can be  dispatched across  state lines.   He                                                              
argued  that,  in  respect  to wind  percentages  in  Alaska,  the                                                              
context should be "an island grid."                                                                                             
MR. PATCH responded  that [using an island grid  for Alaska] would                                                              
be "wise."   He pointed  out that  Representative Fields  raised a                                                              
different  question   concerning  the  necessary   investment  for                                                              
transmission    expenditures.       He   stated   that    enhanced                                                              
transportation  capabilities  to move  energy  [would  need to  be                                                              
funded], and this applies to all energy sources.                                                                                
11:09:58 AM                                                                                                                   
REPRESENTATIVE  RAUSCHER   expressed  the  opinion   that  without                                                              
building  the  Susitna-Watana Project,  as  Representative  Fields                                                              
suggested,  RPS levels  would  not be  obtained,  as this  project                                                              
would be a key part of obtaining levels in the Railbelt.                                                                        
11:10:30 AM                                                                                                                   
REPRESENTATIVE  FIELDS,   with  a  follow  up   on  Representative                                                              
Rauscher's  point, questioned  whether  pump  storage capacity  up                                                              
and down the  Railbelt would provide enough hydro  capacity if the                                                              
Susitna-Watana Project did not go through.                                                                                      
CHAIR  SCHRAGE  requested  that  Mr. Patch  follow  up  with  this                                                              
information after the meeting.                                                                                                  
11:11:09 AM                                                                                                                   
MR.  PATCH, moving  to slide  14,  stated that  upgrades would  be                                                              
necessary  for not  just  the production  of  power,  but for  the                                                              
movement  of generated power  and the  delivery to  the load.   He                                                              
noted  that  Railbelt  utilities   have  worked  to  optimize  the                                                              
availability and  delivery of  renewable and conventional  energy.                                                              
He  stated  that  AEA  is  working   with  the  Railbelt  electric                                                              
utilities, studying  [energy transmission].   He pointed  out that                                                              
the  projects listed  on  Slide 15  have  schedules and  projected                                                              
budgets  for achieving  transmission.   He stated  that the  total                                                              
cost for all the projects would be an estimated $261 million.                                                                   
11:13:04 AM                                                                                                                   
REPRESENTATIVE FIELDS  acknowledged that AEA has  been mapping out                                                              
[energy  transmission lines]  for  some time.    He said,  "Rather                                                              
than fund  these, we've spent  billions of  dollars on PFDs,  so I                                                              
think  our record  shows  where our  priorities  have  been."   He                                                              
stated that  the administration  has suggested  using some  of the                                                              
oil  windfall this  year  to  fund critical  transmission  capital                                                              
MR.  PATCH   responded  that  he   has  not  been  part   of  this                                                              
REPRESENTATIVE  FIELDS suggested  that  AEA could  respond in  the                                                              
future.    With   a  follow-up  question,  he   asked  the  amount                                                              
ratepayers  would  have  to  pay  for  the  [transmission  capital                                                              
projects]  if they  were  not  funded by  the  oil  windfall.   He                                                              
requested that  AEA model this  and provide  an answer at  a later                                                              
11:14:03 AM                                                                                                                   
REPRESENTATIVE  ZULKOSKY  reflected on  Representative  Rauscher's                                                              
request for follow-up  information from AEA on  the interconnected                                                              
data [used  to set the percentages  in RPS] and the final  cost to                                                              
consumers.     She  requested  that   AEA  also  follow   up  with                                                              
information  on  the  proposed  legislation's  ability  to  reduce                                                              
costs  for  consumers  statewide,  not just  the  Railbelt.    She                                                              
pointed  out that  [the  legislation proposes]  significant  state                                                              
investment  in renewable  projects  in communities  which  already                                                              
benefit from the  lowest cost of energy in the state.   She stated                                                              
that AEA  has not  presented an  assessment of  the [the  proposed                                                              
legislation's   impact]   on  non-Railbelt   communities.      She                                                              
speculated that  AEA's response would  be that these  costs create                                                              
"a  floor" for  PCE  communities.   She  argued  that  there is  a                                                              
continual lack  of [energy]  innovation reaching PCE  communities.                                                              
She  continued  that PCE  has  been  scrutinized in  the  Railbelt                                                              
Project as a  financial instrument and not been  presented as part                                                              
of the infrastructure.   She requested to hear from  AEA about how                                                              
its  proposals  would benefit  all  communities  in Alaska.    She                                                              
voiced  skepticism  that  any  of  the  energy  innovations  being                                                              
pursued in  the state would have  statewide reach.   She expressed                                                              
disappointment in  the lack of compelling arguments  to ensure all                                                              
of Alaska is being considered for energy solutions.                                                                             
MR.PATCH responded  that he understands Representative  Zulkosky's                                                              
concern.    He  pointed  out that  REF  has  delivered  over  $275                                                              
million  in renewable  energy projects,  and the  proposed HB  358                                                              
would extend  its sunset date.   He stated that presently  AEA has                                                              
received  applications from  39  communities  seeking funding  for                                                              
renewable energy  projects.  The  applications are  being reviewed                                                              
by  the  Department  of Natural  Resources,  scored  by  contacted                                                              
economists,  and evaluated  by engineering  experts.   After  this                                                              
process  the applications  would  go before  the Renewable  Energy                                                              
Advisory  Committee.   The  accepted  applications  would then  be                                                              
submitted to  the legislature for  consideration for funding.   He                                                              
pointed out  that this exemplifies  that there is  value, thought,                                                              
consideration,   and  effort   for   renewable  energy   projects,                                                              
specifically for rural Alaska.                                                                                                  
11:19:44 AM                                                                                                                   
REPRESENTATIVE   FIELDS,   in  conjunction   with   his   previous                                                              
information  request  on  capital   funds,  requested  information                                                              
concerning  whether   capital  funding   would  be  used   by  the                                                              
administration   for  the  AEA   prioritized  list  of   renewable                                                              
projects.   In reference  to Representative  Zulkosky's point,  he                                                              
stated that the  list includes multiple rural projects  which have                                                              
been before  the legislature,  but no  capital requests  have been                                                              
made, and "we need to put our money where our mouth is."                                                                        
11:20:36 AM                                                                                                                   
REPRESENTATIVE  KAUFMAN, in  reference  to Representative  Fields'                                                              
point, stated  that he has  heard about "alternative  energy," but                                                              
he  questioned  whether  there  are  "energy  alternatives."    He                                                              
posited that  the available mix of  energy across the  state could                                                              
be  optimized   economically  over   time  without  a   "political                                                              
percentage  mandate."   He  questioned whether  there  has been  a                                                              
proposal  or plan addressing  a statewide  scope of  alternatives,                                                              
including  traditional,  renewable,  and  nuclear  energies.    He                                                              
questioned  how  an  optimal  mix  would  look  driven  by  market                                                              
CHAIR  SCHRAGE requested  Mr. Patch  speak to  AEA's analysis  and                                                              
planning efforts which currently exist or have been planned.                                                                    
MR. PATCH  voiced the  expectation that in  the near  future [RCA]                                                              
will have  "a body  that may be  able to do  precisely what  it is                                                              
you  want  ...  in  terms  of  Railbelt  energy."    He  said  the                                                              
organization  is in  the  early stages  of  development and  would                                                              
address electric  reliability.  This organization  would undertake                                                              
the preparation of  an integrated resource plan  for the Railbelt.                                                              
He stated  there are older studies  by AEA regarding  energy mixes                                                              
and deployment  of energy resources  in rural Alaska.   He offered                                                              
the  belief that  the most  recent study  would be  dated, but  he                                                              
would provide the committee with a copy of the study.                                                                           
REPRESENTATIVE  KAUFMAN   responded  that  if  the   committee  is                                                              
choosing options, a broad spectrum of options would be better.                                                                  
11:23:19 AM                                                                                                                   
MR. PATCH,  continuing with the  presentation, clarified  that the                                                              
projects listed on  slide 15 would be funded by  the ratepayers of                                                              
the Railbelt utility,  not by the state.  He stated  that slide 16                                                              
is an  overview of the  Alaska Intertie,  which moves  power north                                                              
from Willow  to Healy.   The Intertie is  operated jointly  by AEA                                                              
and Railbelt  utilities,  and the transmission  line improves  the                                                              
reliability of  energy distribution.   It allows Golden  Valley to                                                              
connect  to  and   receive  the  benefit  of  lower   cost  energy                                                              
purchased  from  the Anchorage  area,  and, for  these  customers,                                                              
there is an annual cost savings of $30 million.                                                                                 
MR. PATCH stated  that slide 17 lists the costs  of projects which                                                              
would maximize  the delivery of energy.   He stated that  slide 18                                                              
shows  a  brief   history  of  the  Susitna-Watana   Hydroelectric                                                              
Project, and  page 22 of the  Appendix shows a rough  timeline for                                                              
this project.   He thanked committee members for  their attention,                                                              
and he  stated that  he has  noted the  questions which  require a                                                              
future response.                                                                                                                
11:26:29 AM                                                                                                                   
REPRESENTATIVE  RAUSCHER questioned  whether  the goal  of HB  301                                                              
would be to reduce carbon.                                                                                                      
MR.  PATCH  responded that  he  does  not  have the  authority  to                                                              
answer the question.   He expressed the belief  that the objective                                                              
of the legislation  would be to incorporate renewable  energy into                                                              
the portfolio  mix of  each of  the Railbelt  utilities, with  the                                                              
view towards  lowering cost.   He said, "I  am not the  person you                                                              
can speak  to whether or  not the greenness  of the energy  is its                                                              
principal objective."                                                                                                           
REPRESENTATIVE   RAUSCHER  requested   that   [AEA  present]   the                                                              
following information  to the committee in the  future: the amount                                                              
of carbon  the proposed legislation  would reduce; the  stages the                                                              
carbon  reduction would  occur; and  the benefit  the state  would                                                              
have with a reduced  carbon footprint.  He offered  the assumption                                                              
that carbon reduction  is the reason for the bill.   He referenced                                                              
an  earlier comment  that wind,  water, and  solar are  free.   He                                                              
argued that, if  this is so, the bill should create  cheaper rates                                                              
for the  ratepayer; but because ratepayers  would have to  pay the                                                              
installation costs  over time, it  would result in an  increase in                                                              
rates.    He  expressed the  opinion  that  Alaskans  are  already                                                              
struggling  with high  utilities.   He  posited  that, instead  of                                                              
focusing on  the requirement  that certain forms  of energy  be on                                                              
the grid, there  should be a reliability and  resiliency standard,                                                              
especially  considering  military  readiness  in the  world  stage                                                              
[HB 301 was held over.]                                                                                                         
11:29:34 AM                                                                                                                   
There being  no further business  before the committee,  the House                                                              
Special Committee on Energy meeting was adjourned at 11:29 a.m.                                                                 

Document Name Date/Time Subjects
HB301. Transmittal Letter.pdf HENE 3/8/2022 10:15:00 AM
HB 301
HB 301 AEA Overview Presentation to House Energy Committee 3.8.2022.pdf HENE 3/8/2022 10:15:00 AM
HB 301
HB301. Sectional Analysis. Version A.pdf HENE 3/8/2022 10:15:00 AM
HB 301
HB301. Version A.PDF HENE 3/8/2022 10:15:00 AM
HENE 4/26/2022 10:15:00 AM
HB 301
HB301. Supporting Document. NREL Feasability Study (2022).pdf HENE 3/8/2022 10:15:00 AM
HENE 3/15/2022 10:15:00 AM
HB 301