Legislature(2023 - 2024)BARNES 124

03/21/2023 10:15 AM House ENERGY

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Audio Topic
10:16:52 AM Start
10:18:25 AM Presentation(s): Alaska Energy Authority
11:33:30 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation: Alaska Energy Authority by TELECONFERENCED
Curtis Thayer, Executive Director
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                         March 21, 2023                                                                                         
                           10:16 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative George Rauscher, Chair                                                                                           
Representative Tom McKay                                                                                                        
Representative Stanley Wright                                                                                                   
Representative Mike Prax                                                                                                        
Representative Calvin Schrage                                                                                                   
Representative Ashley Carrick                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Josiah Patkotak                                                                                                  
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION(S): ALASKA ENERGY AUTHORITY                                                                                        
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
CURTIS THAYER, Executive Director                                                                                               
Alaska Energy Authority                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Gave a PowerPoint presentation, titled "AEA                                                              
Overview Presentation."                                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:16:52 AM                                                                                                                   
                                                                                                                                
CHAIR  GEORGE  RAUSCHER called  the  House  Special Committee  on                                                             
Energy  meeting  to  order  at   [10:16  a.m.]    Representatives                                                               
Carrick, Wright,  Prax, McKay, and  Rauscher were present  at the                                                               
call to  order.   Representative Schrage  arrived as  the meeting                                                               
was in progress.                                                                                                                
                                                                                                                                
^PRESENTATION(S): ALASKA ENERGY AUTHORITY                                                                                       
            PRESENTATION(S): ALASKA ENERGY AUTHORITY                                                                        
                                                                                                                              
10:18:25 AM                                                                                                                   
                                                                                                                                
CHAIR RAUSCHER  announced that the  only order of  business would                                                               
be a presentation by the Alaska Energy Authority.                                                                               
                                                                                                                                
10:18:44 AM                                                                                                                   
                                                                                                                                
CURTIS  THAYER,  Executive   Director,  Alaska  Energy  Authority                                                               
(AEA), offered  a PowerPoint, titled "AEA  Overview Presentation"                                                               
[hard copy included in the committee  packet].  He began on slide                                                               
2 and slide 3, stating  that the Alaska State Legislature created                                                               
AEA  in  1976, with  the  mission  of  reducing energy  costs  in                                                               
Alaska.   He  said AEA  administers the  power cost  equalization                                                               
(PCE)  program,  provides  grants  and  loans,  works  on  energy                                                               
planning,  and works  with the  Railbelt and  rural utilities  on                                                               
their  energy generation  facilities.   He moved  to slide  4 and                                                               
showed  a map  of active  projects overseen  by AEA,  which spans                                                               
across all different forms of energy generation.                                                                                
                                                                                                                                
10:20:41 AM                                                                                                                   
                                                                                                                                
The committee took an at-ease from 10:20 a.m. to 10:22 a.m.                                                                     
                                                                                                                                
10:22:42 AM                                                                                                                   
                                                                                                                                
MR. THAYER,  in response to  a committee question,  answered that                                                               
the  map covers  over  500 projects,  including renewable  energy                                                               
generation projects and projects in PCE communities.                                                                            
                                                                                                                                
MR. THAYER moved to slide 5  through slide 7 and gave an overview                                                               
of  the  Bradley Lake  Hydroelectric  Project.   He  stated  that                                                               
Bradley  Lake provides  approximately  10 percent  of the  energy                                                               
used  by the  Railbelt utilities  and  is the  largest source  of                                                               
renewable energy in the state.   Energy generated by Bradley Lake                                                               
costs 4  cents per kilowatt hour  (kWh).  He showed  a chart with                                                               
the  percentage  of  power  received  by  each  of  the  Railbelt                                                               
utilities from Bradley Lake.                                                                                                    
                                                                                                                                
MR. THAYER,  in response to  a committee question,  answered that                                                               
the percentages  were determined  during the  original discussion                                                               
of the project  and reflect the percentages of the  bonds paid by                                                               
each utility.  In response  to a follow-up question, he expressed                                                               
the agreement  that the  percentages of  power received  could be                                                               
perceived as a "purchase."                                                                                                      
                                                                                                                                
10:26:54 AM                                                                                                                   
                                                                                                                                
MR. THAYER  continued to  slide 8  through slide  10 and  gave an                                                               
overview of  the upgrades  to transmission lines.   He  said that                                                               
AEA  and  the Railbelt  utilities  have  raised $166  million  in                                                               
financing  to  build  transmission  lines from  Bradley  Lake  to                                                               
improve its  efficiency and the  amount of power it  can deliver.                                                               
He added  that there would  be no additional costs  to ratepayers                                                               
or the state.  He showed  a map displaying transmission lines and                                                               
coverage  areas of  the Railbelt  utilities.   He  said that  the                                                               
Alaska intertie  from Willow  to Healy  is owned  by AEA,  and it                                                               
allows Golden  Valley Electric Association to  benefit from lower                                                               
power  costs, saving  its ratepayers  an average  of $37  million                                                               
annually.                                                                                                                       
                                                                                                                                
10:30:07 AM                                                                                                                   
                                                                                                                                
MR. THAYER,  in response to  a committee question,  answered that                                                               
upgrades to  transmission lines would  not have  additional costs                                                               
to the state  or ratepayers because additional  payments made for                                                               
the bonds  are eligible to  go towards the Bradley  Lake project.                                                               
In  response to  a follow-up  question, he  said that  the excess                                                               
bond funds were redirected to the Bradley Lake project.                                                                         
                                                                                                                                
MR. THAYER,  in response to  a committee question,  answered that                                                               
additional  payments  would  be  necessary when  the  bonds  have                                                               
already  been paid  because it  was a  provision in  the original                                                               
conception of the project.                                                                                                      
                                                                                                                                
10:35:44 AM                                                                                                                   
                                                                                                                                
MR.  THAYER continued  to slide  11 and  slide 12  and reiterated                                                               
that  AEA administers  the  PCE  program.   He  said the  program                                                               
covers 193  communities, 91 utilities,  and 82,000 Alaskans.   He                                                               
said that residential  users are eligible to  receive PCE credits                                                               
up to  750 kWhs  per month.   Public  facilities can  receive PCE                                                               
credit  up to  70 kWhs  per month,  multiplied by  the number  of                                                               
residents in the community.                                                                                                     
                                                                                                                                
MR.  THAYER, in  response to  a committee  question, stated  that                                                               
approximately $1 billion is in the  PCE endowment fund.  He added                                                               
that the fund is overseen by the Department of Revenue.                                                                         
                                                                                                                                
MR. THAYER,  in response to  a committee question  concerning how                                                               
the fund is  structured, answered that a court  case the previous                                                               
year  resulted  in  a  ruling   stating  that  the  fund  is  not                                                               
sweepable.   He  added  that  this is  because  of an  accounting                                                               
issue.    In response  to  a  follow-up  question, he  said  that                                                               
depending  on the  amount  of funds  generated  by investment,  a                                                               
certain  amount of  these  funds could  be  allocated to  certain                                                               
other  appropriations.    He  added   that  such  a  scenario  is                                                               
uncommon.                                                                                                                       
                                                                                                                                
10:42:02 AM                                                                                                                   
                                                                                                                                
MR. THAYER  continued with slide 13  and gave an overview  of PCE                                                               
eligibility.  He stated that  residential and community customers                                                               
are  eligible,  while  state  and   federal  facilities  are  not                                                               
eligible  for PCE  funds.   Additionally, communities  with rates                                                               
lower than the urban average are  not eligible.  In response to a                                                               
committee question,  he stated that  state or  federal facilities                                                               
in rural communities would not benefit from PCE.                                                                                
                                                                                                                                
10:45:35 AM                                                                                                                   
                                                                                                                                
The committee took an at-ease from 10:45 a.m. to 10:46 a.m.                                                                     
                                                                                                                                
10:46:31 AM                                                                                                                   
                                                                                                                                
MR. THAYER,  in response to  a committee question,  answered that                                                               
rural  utilities  benefit  from  PCE  regardless  of  whether  an                                                               
individual is a direct customer.                                                                                                
                                                                                                                                
MR. THAYER  continued to slide  14 and  stated that AEA  has been                                                               
involved in system upgrades for  rural communities.  He said that                                                               
197 communities are eligible for the  program, and its goal is to                                                               
improve safety, efficiency, and  reliability of energy systems in                                                               
rural  communities.   In  response to  a  committee question,  he                                                               
answered that  AEA is  10 years  behind on  deferred maintenance.                                                               
In response  to a follow-up question,  he said that AEA  tries to                                                               
prevent replacement from becoming necessary.                                                                                    
                                                                                                                                
MR. THAYER,  in response to  a committee question,  answered that                                                               
to extend the  lifespan of systems, AEA sends  out technicians to                                                               
do  as much  maintenance as  possible.   He added  that a  recent                                                               
survey  was  done  for  all  equipment maintained  by  AEA.    In                                                               
response to a  committee question in regard to  whether the state                                                               
capital match  is separate  from the PCE  fund, he  answered that                                                               
because of the  excess of funds generated, the PCE  fund has only                                                               
been used twice for systems upgrades.                                                                                           
                                                                                                                                
10:53:19 AM                                                                                                                   
                                                                                                                                
MR.  THAYER moved  to  slides  15 through  19  and  gave a  brief                                                               
overview of bulk  fuel upgrades and the power  project fund (PFF)                                                               
loan  program, which  provides loans  to  build renewable  energy                                                               
projects.   He  said that  AEA  has done  work on  400 bulk  fuel                                                               
upgrades in rural  areas of Alaska.  The  deferred maintenance of                                                               
these facilities  is $800 million.   He  said that AEA  has $27.2                                                               
million in outstanding  loans and $6.7 million  available for new                                                               
loans.  The current interest rate  is 4.86 percent.  He mentioned                                                               
the Hiilangaay and South Fork  hydroelectric projects as examples                                                               
of successful projects brought about  because of the availability                                                               
of these loans.                                                                                                                 
                                                                                                                                
MR. THAYER,  in response to  a committee question,  answered that                                                               
the South Fork  hydroelectric project can provide  power to other                                                               
homes because  the owners sell  the power generated  to Matanuska                                                               
Electric Association (MEA).                                                                                                     
                                                                                                                                
MR. THAYER,  in response to  a committee question,  answered that                                                               
Hydaburg is a  PCE eligible community.  In response  to a follow-                                                               
up question, he said that King Cove  has not applied for PCE.  He                                                               
added  that  the  state  invested   money  into  the  community's                                                               
hydroelectric project  to help it become  energy self-sufficient,                                                               
which  makes up  for  the PCE  funds that  the  community is  not                                                               
receiving.                                                                                                                      
                                                                                                                                
11:00:20 AM                                                                                                                   
                                                                                                                                
MR. THAYER continued  to slide 20 through slide  24 and presented                                                               
more  examples of  projects  that have  benefited  from the  loan                                                               
program and  the renewable energy  fund (REF) grant program.   He                                                               
said that  the Willow Solar  Farm expansion project  provides 1.2                                                               
megawatt hours of  energy and offsets 2 million  pounds of carbon                                                               
dioxide annually.   He said AEA has awarded  271 grants, totaling                                                               
$300 million for  building renewable energy projects,  and it has                                                               
31  new  applicants  requesting  a  total of  $33  million.    As                                                               
examples  of projects  receiving these  grants, he  mentioned the                                                               
Banner Peak  Wind Farm expansion, the  Whitman Lake Hydroelectric                                                               
Project,  and  the expansion  of  the  Terror Lake  Hydroelectric                                                               
Project.                                                                                                                        
                                                                                                                                
MR. THAYER  continued to slide  25 through  slide 28 and  gave an                                                               
overview  of   some  federal  funding   made  available   by  the                                                               
Infrastructure Investment and Jobs Act  (IIJA).  He said that $60                                                               
million  would be  made available  to Alaska  over five  years to                                                               
increase  grid   resiliency.    The   grants  from   the  federal                                                               
government would require a 15 percent  match from the state and a                                                               
33  percent small  utility  match.   He  stated  that  a plan  to                                                               
increase  electric  vehicle  infrastructure was  approved,  which                                                               
will   unlock  $19   million   for   electric  vehicle   charging                                                               
infrastructure; AEA  expects that Alaska may  receive $52 million                                                               
over the  course of the next  five years.  The  charging stations                                                               
will be  required to be built  no more than 50  miles apart, with                                                               
the exception of Glitter Gulch.                                                                                                 
                                                                                                                                
MR. THAYER,  in response to  a committee question,  answered that                                                               
"alternative  fuel corridor  (AFC)" is  a term  referring to  the                                                               
possibility  of building  charging stations  in these  corridors.                                                               
In response to  a follow-up question, he stated that  AEA has not                                                               
received any requests other than from Anchorage to Fairbanks.                                                                   
                                                                                                                                
MR. THAYER,  in response to  a committee question,  answered that                                                               
more federal funding could be  received after work along the AFCs                                                               
is completed.  In response to  a follow-up question, he said that                                                               
Glitter Gulch is not operational  during the winter, and the rest                                                               
of  the  plan,  including  this  exception,  was  approved.    In                                                               
response to  a committee question  concerning the  estimated time                                                               
of  completion,  he answered  working  out  logistics is  a  long                                                               
process,  and  in some  respects  AEA  is  still waiting  on  the                                                               
federal government.                                                                                                             
                                                                                                                                
11:10:06 AM                                                                                                                   
                                                                                                                                
MR.  THAYER continued  to  slide  29 and  slide  30  and gave  an                                                               
overview  of  opportunities offered  by  IIJA.   He  stated  that                                                               
energy  infrastructure  projects in  the  state  would receive  a                                                               
total  of $145  million.   He showed  a chart  breaking down  the                                                               
amount  into  purposes.   He  added  that  the only  state  match                                                               
required is $1.8 million for grid resiliency.                                                                                   
                                                                                                                                
MR. THAYER  moved to slide  31 and  gave an overview  of staffing                                                               
needs for AEA.  He said  that two project managers, a contracting                                                               
officer, a senior accountant, and  a grant coordinator are needed                                                               
for  administration  of the  projects  being  built with  federal                                                               
dollars.   An  additional PCE  technician is  also needed,  along                                                               
with some PCE salary adjustments.                                                                                               
                                                                                                                                
MR. THAYER,  in response to  a committee question,  answered that                                                               
AEA has  only three  vacancies, not  including any  new positions                                                               
that may  be added.   He noted that there  are times when  AEA is                                                               
unable to compete with the  much higher salaries from the private                                                               
sector.   In response to a  follow-up question, he said  that AEA                                                               
does  have more  ability  than most  state  agencies to  increase                                                               
salaries.                                                                                                                       
                                                                                                                                
MR.  THAYER,  in  response to  a  committee  question  concerning                                                               
tracking  its   divisions,  answered  that  AEA   is  focused  on                                                               
resiliency, redundancy, and reliability.   He said that there are                                                               
no redundancies  on the Railbelt,  which could  potentially cause                                                               
price issues in the future.   He expressed uncertainty concerning                                                               
whether there is a way to  determine the benefits of investing in                                                               
energy  compared  to  state  investment   in  other  areas.    He                                                               
maintained  that   energy  is  a   statewide  issue   that  needs                                                               
investment and work.                                                                                                            
                                                                                                                                
11:26:55 AM                                                                                                                   
                                                                                                                                
MR.  THAYER, in  response to  a committee  question, stated  that                                                               
AEA's circuit rider program is  a group of technicians who travel                                                               
around  rural  Alaska  providing  training and  assistance.    In                                                               
response  to a  follow-up question,  he stated  that the  program                                                               
mostly  relies  on  federal  funding.   In  response  to  another                                                               
follow-up question, he  stated that there is still  a backlog for                                                               
the program, which  has resulted from the COVID-19  pandemic.  He                                                               
stated  that further  discussion with  his team  would provide  a                                                               
better answer to this.                                                                                                          
                                                                                                                                
11:33:30 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special Committee on Energy meeting was adjourned at 11:33 a.m.                                                                 

Document Name Date/Time Subjects
AEA Overview Presentation to House Energy Committee.pdf HENE 3/21/2023 10:15:00 AM
AEA