Legislature(2023 - 2024)DAVIS 106

03/14/2024 10:15 AM House ENERGY

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10:17:24 AM Start
10:18:28 AM HB368
01:59:29 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 15 Minutes Following Session --
-- Please Note Location Change --
+= HB 368 ELECTRICAL ENERGY & ENERGY PORTFOLIO STDS TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                         March 14, 2024                                                                                         
                           10:17 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative George Rauscher, Chair                                                                                           
Representative Tom McKay                                                                                                        
Representative Thomas Baker                                                                                                     
Representative Stanley Wright                                                                                                   
Representative Mike Prax                                                                                                        
Representative Calvin Schrage                                                                                                   
Representative Jennie Armstrong                                                                                                 
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 368                                                                                                              
"An Act relating to clean energy standards and a clean energy                                                                   
transferable tax credit; and providing for an effective date."                                                                  
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 368                                                                                                                  
SHORT TITLE: ELECTRICAL ENERGY & ENERGY PORTFOLIO STDS                                                                          
SPONSOR(s): ENERGY                                                                                                              
                                                                                                                                
02/20/24       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/20/24       (H)       ENE, FIN                                                                                               
02/22/24       (H)       ENE AT 11:00 AM BARNES 124                                                                             
02/22/24       (H)       -- MEETING CANCELED --                                                                                 
02/27/24       (H)       ENE AT 11:00 AM BARNES 124                                                                             
02/27/24       (H)       Heard & Held                                                                                           
02/27/24       (H)       MINUTE(ENE)                                                                                            
02/29/24       (H)       ENE AT 10:15 AM BARNES 124                                                                             
02/29/24       (H)       Heard & Held                                                                                           
02/29/24       (H)       MINUTE(ENE)                                                                                            
03/05/24       (H)       ENE AT 10:15 AM BARNES 124                                                                             
03/05/24       (H)       Scheduled but Not Heard                                                                                
03/07/24       (H)       ENE AT 10:15 AM BARNES 124                                                                             
03/07/24       (H)       Heard & Held                                                                                           
03/07/24       (H)       MINUTE(ENE)                                                                                            
03/14/24       (H)       ENE AT 10:15 AM DAVIS 106                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
STEVE COLT, Research Professor                                                                                                  
Alaska Center for Energy and Power (ACEP)                                                                                       
University of Alaska Fairbanks (UAF)                                                                                            
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  On behalf  of the House Special Committee on                                                             
Energy, sponsor, provided a PowerPoint presentation on HB 368.                                                                  
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:17:24 AM                                                                                                                   
                                                                                                                                
CHAIR  RAUSCHER  called the  House  Special  Committee on  Energy                                                               
meeting  to  order  at 10:17  a.m.    Representatives  Armstrong,                                                               
Schrage, McKay,  Prax, Wright, Baker,  and Rauscher  were present                                                               
at the call to order.                                                                                                           
                                                                                                                                
        HB 368-ELECTRICAL ENERGY & ENERGY PORTFOLIO STDS                                                                    
                                                                                                                                
10:18:28 AM                                                                                                                   
                                                                                                                                
CHAIR RAUSCHER  announced that the  only order of  business would                                                               
be  HOUSE  BILL  NO.  368,  "An  Act  relating  to  clean  energy                                                               
standards  and  a  clean  energy  transferable  tax  credit;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
10:20:04 AM                                                                                                                   
                                                                                                                                
STEVE  COLT, Research  Professor,  Alaska Center  for Energy  and                                                               
Power (ACEP), University of Alaska  Fairbanks (UAF), on behalf of                                                               
the  House  Special  Committee on  Energy,  sponsor,  provided  a                                                               
PowerPoint  presentation on  HB  368, [hardcopy  included in  the                                                               
committee packet],  titled "Analysis of Clean  Energy electricity                                                               
generation and  Clean Energy  Tax Credit  amounts under  HB 368."                                                               
He displayed  slide 2,  which provided  answers to  questions and                                                               
read as follows [original punctuation provided]:                                                                                
                                                                                                                                
     Q1. How  much new Clean  Energy (as defined by  HB 368)                                                                    
     would be  generated if the Clean  Energy Standard [CES]                                                                    
     of 35 [percent]  after 10 years and  60 [percent] after                                                                    
     25 years is met?                                                                                                           
         ("after"   means   after    2026   or   after                                                                          
         transmission    upgrades    are    completed,                                                                          
          whichever is later)                                                                                                   
                                                                                                                                
      Q2. What amount of Clean Energy Tax Credits would be                                                                      
       issued if the Clean Energy Standard is met, under                                                                        
     various credit rates?                                                                                                      
                                                                                                                                
     Q3. How much electricity is used by schools?                                                                               
                                                                                                                                
10:23:21 AM                                                                                                                   
                                                                                                                                
MR. COLT continued to slide 3,  "Quick answer to Q1: How much new                                                               
Clean Energy  to meet CES?"   The slide depicted a  graph and the                                                               
statement,  "Answer: By  2050, about  4.5 million  megawatt-hours                                                               
(MWh)  statewide would  come from  Clean Energy  sources deployed                                                               
after 2026 to meet the CES.   That's about equal to current total                                                               
Railbelt consumption."   He noted that under the  bill version he                                                               
is working from,  the clock for meeting the  standard starts when                                                               
a sufficient  transmission network  is in  place.   Regardless of                                                               
the actual start date, he  continued, the graph works for showing                                                               
the  general pattern  of what  might be  expected.   Even if  the                                                               
transmission network  was declared adequate tomorrow,  he pointed                                                               
out, there  would be plenty  of lead time because  Alaska already                                                               
has a significant  amount of existing clean energy  as defined by                                                               
HB 368 [shown in blue], so  there would be no immediate crisis to                                                               
comply with the  35 percent of sales  by 10 years as  laid out in                                                               
the  bill.   He explained  that [the  dashed line  on the  graph]                                                               
depicts  the  total amount  of  electricity  needed to  meet  the                                                               
growth in demand  as projected by ACEP and the  gold area depicts                                                               
the CES  targets in HB  368 of 35 percent  and 60 percent  of the                                                               
total  electricity  generated.    The CES  process  would  get  4                                                               
million megawatt-hours (MWH) of new  clean electricity as well as                                                               
0.5  MWh  from   what  he  classifies  as   Alaska's  power  cost                                                               
equalization (PCE) communities.                                                                                                 
                                                                                                                                
10:28:05 AM                                                                                                                   
                                                                                                                                
MR. COLT moved to  slide 4, "Quick answer to Q2:  How many CE Tax                                                               
Credit $$ would be created?"  He  stated that "at a tax credit of                                                               
0.2  cents  per kilowatt  hour,  which  is  the  same as  $2  per                                                               
megawatt  hour, ...  the state  would be  issuing tax  credits of                                                               
about $5-$6 million  per year by ... 2050."   He advised that the                                                               
credits would not start for  several years because there would be                                                               
no  immediate crisis.   While  people might  deploy clean  energy                                                               
right away, he added, they wouldn't have to.                                                                                    
                                                                                                                                
10:30:03 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE PRAX observed  on slide 4 that  the cumulative tax                                                               
credits would  be $65  million over about  20 years,  which seems                                                               
like  a small  amount  compared to  the  capital investment  that                                                               
would be required to achieve the  $2 per megawatt hour.  He asked                                                               
whether this would create a significant incentive.                                                                              
                                                                                                                                
MR.  COLT offered  his  understanding that  an  amendment may  be                                                               
offered  to  change  the  [proposed] incentive  to  5  cents  per                                                               
kilowatt  hour, which  is $50  per megawatt  hour, for  a limited                                                               
time.  He advised that 5  cents per kilowatt hour is almost equal                                                               
to  what Chugach  Electric Association  is  paying for  gas-fired                                                               
power.  Chugach  Electric could purchase wind power  at 11 cents,                                                               
get 5 cents of  tax credit, and be able to  sell it to ratepayers                                                               
for  less than  what they  are  paying for  gas now,  and if  gas                                                               
prices  go up  that will  become even  more attractive.   So,  he                                                               
said, 0.2 cents  per kilowatt hour is probably not  going to have                                                               
a dramatic incentive  effect, but 5 cents would have  to sway the                                                               
calculations that Chugach Electric would be making.                                                                             
                                                                                                                                
10:34:26 AM                                                                                                                   
                                                                                                                                
MR.  COLT displayed  slide  5, which  read  as follows  [original                                                               
punctuation provided with some formatting changes]:                                                                             
                                                                                                                                
     The following slides provide:                                                                                              
        1. More detail on the assumptions and methods used                                                                      
          to derive these "base case" results                                                                                   
        2. Sensitivity cases:                                                                                                   
          S1: 2 cents per kWh instead of 0.2 cents                                                                              
        S2: 2 cents per kWh plus 1 cent/kWh rural bonus                                                                         
          S3: 5 cents per kWh in years 1-5, then decline to                                                                     
          zero by end of yr 10.                                                                                                 
        3. Schools: how much electricity do they use?                                                                           
        4. Regional detail and data tables                                                                                      
                                                                                                                                
MR.  COLT spoke  to  slide  6, which  read  as follows  [original                                                               
punctuation provided with some formatting changes]:                                                                             
                                                                                                                                
     Assumptions about future electric sales:                                                                                   
   • Sales equal the demand or "load" at the customer                                                                           
      meter, including the load served by a customer's own                                                                      
     solar.                                                                                                                     
   • Statewide electric sales in 2022 were about 6 million                                                                      
     megawatt-hours (MWh). 1 MWh = 1,000 kWh.                                                                                   
     Railbelt:      4.4 million (75 [percent])                                                                                  
     PCE places:    460,000 (8 [percent])                                                                                       
     Rest of State: 1.0 million (17 [percent])                                                                                  
   • ACEP projects that Railbelt sales will double to 8.8                                                                       
     million   MWh  in   2050.   This  projection   includes                                                                    
     significant  adoption of  electric vehicles  and modest                                                                    
     adoption of heat pumps by  2050. {see the ACEP Railbelt                                                                    
     2050 Scenarios study, Section 3.2 for more details.)                                                                       
     https://www.uaf.edu/acep/files/media/ACEP_Railbelt_                                                                      
     Decarbonization_Study_Final_Report.pdf                                                                                   
   • For this analysis, non-Railbelt sales are projected to                                                                     
     increase by about 77 percent between 2022 and 2050.                                                                        
                                                                                                                                
MR. COLT showed slide 7,  "Projected Electricity Load at customer                                                               
meter,"  and  explained  that  the  graph is  a  picture  of  the                                                               
assumptions  and  shows  the  electric  sales  projections.    He                                                               
pointed  out  that  the  driver  of the  increased  load  in  the                                                               
Railbelt  would  come  from electric  vehicles  and  heat  pumps.                                                               
However, he qualified, if electric  vehicles and heat pumps don't                                                               
materialize, then the load in  the Railbelt and probably in other                                                               
places would remain almost flat.                                                                                                
                                                                                                                                
10:37:14 AM                                                                                                                   
                                                                                                                                
MR. COLT explained that slide 8  is a tally of the energy already                                                               
had in Alaska  that would meet the definition of  clean energy as                                                               
defined  by  HB   368.    Slide  8  read   as  follows  [original                                                               
punctuation provided with some formatting changes]:                                                                             
                                                                                                                                
        Assumptions about Railbelt current and projected                                                                        
     electricity generation:                                                                                                    
     • Current Railbelt Clean Energy, as defined by HB368,                                                                      
        based on year 2022 data:                                                                                                
    square4 543,557 MWh from coal (Healy 1, Healy 2, Aurora)                                                                    
        square4 567,393 MWh from hydro (Bradley, Eklutna, Cooper                                                                
          Lake)                                                                                                                 
        square4 102, 061 MWh from wind (Fire island, Eva Creek,                                                                 
          Delta Wind)                                                                                                           
        square4 1,577 MWh from utility solar (Willow, GVEA Solar                                                                
          farm)                                                                                                                 
        square4 About 10,850 MWh from customer-sited Solar (also                                                                
          known as BTM solar or rooftop solar)                                                                                  
     • Customer solar increases to 223,000 MWh by 2050.                                                                         
       • Coal generation equal to current Healy 2 output                                                                        
      (about 2120,0900 MWh) is retired at the end of 2040.                                                                      
                                                                                                                                
MR. COLT explained that slide 9  is a tally of the energy already                                                               
had in power  cost equalization (PCE) places that  would meet the                                                               
definition of  clean energy as defined  by HB 368.   Slide 9 read                                                               
as follows  [original punctuation  provided with  some formatting                                                               
changes]:                                                                                                                       
                                                                                                                                
     Assumptions  about  PCE  places current  and  projected                                                                    
     electricity generation:                                                                                                    
     •  Current PCE  places  Clean  Energy,  as  defined  by                                                                    
        HB368, based on year FY2022 data:                                                                                       
        square4 32,609 MWh from hydro                                                                                           
        square4 22,572 MWh from utility wind & utility solar                                                                    
        square4 55,024 MWh purchased hydro & wind                                                                               
        square4 Perhaps About 500 MWh from customer-sited Solar                                                                 
     • Customer solar increases to 11,138 MWh by 2050.                                                                          
                                                                                                                                
MR. COLT  continued to slide  10 and  explained that most  of the                                                               
energy  in the  "rest of  the state"  is hydropower  in Southeast                                                               
Alaska, so this region has  already met the clean energy standard                                                               
and wouldn't have to do anything  to meet the standard.  Slide 10                                                               
read  as   follows  [original  punctuation  provided   with  some                                                               
formatting changes]:                                                                                                            
                                                                                                                                
     Assumptions about  Rest of State current  and projected                                                                    
     electricity generation:                                                                                                    
     •  Current Rest-of-State  Clean Energy,  as defined  by                                                                    
        HB368, based on year FY2022 data:                                                                                       
        square4 1,083,000 MWh from mostly hydro                                                                                 
   square4 Perhaps About 1,300 MWh from customer-sited Solar                                                                    
     •  Customer solar  increases  to  about 26,200  MWh  by                                                                    
        2050.                                                                                                                   
     •  Current rest-of-state  Clean Energy  greatly exceeds                                                                    
        60 [percent] of sales until about 2050.                                                                                 
                                                                                                                                
10:38:55 AM                                                                                                                   
                                                                                                                                
MR.  COLT  paraphrased  from  slide 11,  which  read  as  follows                                                               
[original punctuation provided with some formatting changes]:                                                                   
                                                                                                                                
     Assumptions about timing of the Clean Energy Standard:                                                                     
     •  The CES "clock" starts  on 1/1/2027 and  the targets                                                                    
        are therefore 35 [percent] CE by 2036 and 60                                                                            
        [percent] CE by 2051. (This is optimistic, a                                                                            
        reference case).                                                                                                        
     •  New  CE   generation   is   deployed  along   smooth                                                                    
        (exponential) growth pathways to hit the 35                                                                             
        [percent] and 60 [percent] targets. This is the "CES                                                                    
        Target Pathway".                                                                                                        
         • In this analysis, the pathway is calculated                                                                          
        separately for each region.                                                                                             
                                                                                                                                
MR. COLT addressed slide 12,  "The Statewide CES Target Pathway."                                                               
The graph, he  explained, shows the task  that Alaska's utilities                                                               
would  face if  they were  to set  out to  meet the  clean energy                                                               
standard and to hit  35 percent by 2036 and to  hit 60 percent by                                                               
2051.  He said  the black line depicts what needs  to be done and                                                               
the blue  area shows that  Alaska already  has a head  start with                                                               
existing renewables.  He noted  ACEP is projecting that free help                                                               
will be received  from customer-sited solar.   The white triangle                                                               
on the  graph, he  summarized, shows what  the utilities  will be                                                               
faced with to meet the targets depicted by the black line.                                                                      
                                                                                                                                
10:41:20 AM                                                                                                                   
                                                                                                                                
MR. COLT discussed  the graph on slide 13, "New  CE generation is                                                               
deployed to  stay on the pathway,  and it is eligible  for CE Tax                                                               
Credits during  the first 10  years of  service."  The  gold area                                                               
depicts the new  projects that are eligible for  clean energy tax                                                               
credits,  he  explained,  and  the green  area  depicts  the  new                                                               
projects that  have aged out  of tax credit eligibility  after 10                                                               
years, which  helps to limit the  expense of the money  going out                                                               
the door  for tax credits.   The gold area extends  above the CES                                                               
target pathway depicted by the  black line, he further explained,                                                               
because each load  serving entity must meet the CES  and when all                                                               
those entities and  Southeast Alaska are added  together, the CES                                                               
is exceeded statewide.                                                                                                          
                                                                                                                                
10:43:31 AM                                                                                                                   
                                                                                                                                
CHAIR  RAUSCHER  noted that,  under  HB  368, the  accountability                                                               
starts after  the transmission line  is built.  He  asked whether                                                               
Mr. Colt  is saying that [the  utilities] will try to  attain the                                                               
targets early because of the credits.                                                                                           
                                                                                                                                
MR. COLT replied that he will  be getting to that question at the                                                               
end of the presentation.   He explained that the orange extending                                                               
above the  black line  reflects that the  Railbelt would  have to                                                               
put  in "a  lot of  new stuff,"  whereas Southeast  Alaska is  in                                                               
surplus relative to  hitting 35 percent because  it [already] has                                                               
so much hydro.                                                                                                                  
                                                                                                                                
10:45:32 AM                                                                                                                   
                                                                                                                                
The committee took an at-ease from 10:45 a.m. to 10:46 a.m.                                                                     
                                                                                                                                
10:46:27 AM                                                                                                                   
                                                                                                                                
CHAIR RAUSCHER  requested that Mr.  Colt finish  his presentation                                                               
later in the day due to the upcoming House floor session.                                                                       
                                                                                                                                
MR. COLT agreed to do so.                                                                                                       
                                                                                                                                
10:47:25 AM                                                                                                                   
                                                                                                                                
The committee took an at-ease from 10:47 a.m. to 10:48 a.m.                                                                     
                                                                                                                                
[HB  368 was  held over  and  brought back  before the  committee                                                               
following a recess.]                                                                                                            
                                                                                                                                
10:48:55 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was recessed at 10:48 a.m. to a call of the chair.                                                                  
                                                                                                                                
1:31:03 PM                                                                                                                    
                                                                                                                                
CHAIR  RAUSCHER called  the meeting  back to  order at  1:31 p.m.                                                               
Representatives Schrage, McKay, and  Rauscher were present at the                                                               
call back  to order.   Representatives Armstrong,  Wright, Baker,                                                               
and Prax arrived as the meeting was in progress.                                                                                
                                                                                                                                
1:31:37 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 1:31 p.m. to 1:34 p.m.                                                                       
                                                                                                                                
        HB 368-ELECTRICAL ENERGY & ENERGY PORTFOLIO STDS                                                                    
                                                                                                                                
1:34:51 PM                                                                                                                    
                                                                                                                                
CHAIR RAUSCHER  announced that the  only order of  business would                                                               
be a  return to  HOUSE BILL  NO. 368, "An  Act relating  to clean                                                               
energy standards and a clean  energy transferable tax credit; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
CHAIR RAUSCHER requested  Mr. Colt to resume his  analysis of the                                                               
clean energy standard  (CES) and the tax credits   proposed by HB
368.                                                                                                                            
                                                                                                                                
1:36:08 PM                                                                                                                    
                                                                                                                                
MR. COLT  continued his presentation  with slide 14,  "Base case:                                                               
CE tax credit  equals 0.2 cents per  kWh, or $2.00 per  MWh:"  He                                                               
explained that the graph depicts  the clock starting in 2027 with                                                               
a tax credit of 0.2 cents  per kWh and the utilities meeting, but                                                               
not exceeding,  the [proposed] CES,  which generates  $65 million                                                               
in cumulative tax credits [by 2051].                                                                                            
                                                                                                                                
MR. COLT turned  to the graph depicted on  slide 15, "Sensitivity                                                               
Case S1:  CE credit equals 2.0  cents per kWh =  $20/MWh."  Under                                                               
this  case,  he related,  the  cumulative  tax credits  would  be                                                               
[$655] million.   The 2-3  cents per kWh,  he advised, is  at the                                                               
level  that  the federal  government  would  reimburse, or  would                                                               
subsidize,  or would  offer tax  credits for  those clean  energy                                                               
developers who chose to take  advantage of the federal production                                                               
tax  credit  under the  [2022  federal]  Inflation Reduction  Act                                                               
(IRA).                                                                                                                          
                                                                                                                                
1:39:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SCHRAGE  requested clarification on  whether slide                                                               
15  is  meant  to  outline the  federal  incentive  available  to                                                               
utilities  or  to  outline  the  cost of  Amendment  8,  if  that                                                               
amendment were to be passed.                                                                                                    
                                                                                                                                
MR. COLT  answered that he  was asked to  provide the math  for 2                                                               
cents  and  was unaware  of  which  amendment might  invoke  this                                                               
specific number.   It was  only while presenting this  slide that                                                               
he recalled that  2 cents is in the ballpark  of what the federal                                                               
government is offering through the IRA.                                                                                         
                                                                                                                                
REPRESENTATIVE  SCHRAGE requested  confirmation that  2 cents  is                                                               
what  the  federal incentive  is.    He  further inquired  as  to                                                               
whether that federal incentive program will end in 2032.                                                                        
                                                                                                                                
MR.  COLT  replied that  according  to  the IRA's  webpages,  the                                                               
number is  2.75 cents if  [the utility]  meets all the  labor and                                                               
apprenticeship requirements  and chooses  to take the  IRA credit                                                               
as a production tax credit,  which then displaces [the utility's]                                                               
ability to take the investment tax  credit.  He confirmed that it                                                               
ends in 2032.  However, he  continued, an extension clause in the                                                               
IRA says that  if the US has not reduced  its carbon emissions in                                                               
the power  sector by, he  believes, 75 percent, then  the credits                                                               
will  continue.   He said  he and  his ACEP  colleagues think  it                                                               
unlikely the US  will meet that 75 percent reduction  by 2032 and                                                               
have therefore modeled the credit as continuing.                                                                                
                                                                                                                                
1:42:47 PM                                                                                                                    
                                                                                                                                
CHAIR  RAUSCHER  reiterated  his   previous  statement  that  the                                                               
accountability doesn't  start until  after the  transmission line                                                               
is completed.   He further reiterated his question  as to whether                                                               
the  tax  credits  and  incentives   might  cause  businesses  or                                                               
utilities to get a head start.                                                                                                  
                                                                                                                                
MR. COLT responded  yes but said he doesn't have  a slide because                                                               
he didn't consider it until after  the 24-hour cutoff that he was                                                               
given.                                                                                                                          
                                                                                                                                
1:43:59 PM                                                                                                                    
                                                                                                                                
MR. COLT continued  to slide 16, "Sensitivity Case  S2: CE credit                                                               
equals 2  cents/kWh +  1 cent/kWh rural  bonus (Here,  "rural" is                                                               
PCE places   a proxy for  other definitions}."  He explained that                                                               
the blue  areas at the  tops of the gold  bars in the  graph show                                                               
what would happen if a 1 cent/kWh  bonus was added to all the PCE                                                               
utility generation that is clean.                                                                                               
                                                                                                                                
1:45:22 PM                                                                                                                    
                                                                                                                                
MR. COLT skipped slide 17,  "Sensitivity Case S3: credit equals 5                                                               
cents/kWh for 5  years, then decline to zero by  end of year 10."                                                               
He  stated that  he  misinterpreted what  one  of the  amendments                                                               
really says and therefore the slide should be discarded.                                                                        
                                                                                                                                
MR. COLT also  skipped slide 18, which read  as follows [original                                                               
punctuation provided with some formatting changes]:                                                                             
                                                                                                                                
     Possible Role of Schools                                                                                                   
      • According to DEED [Department of Education & Early                                                                      
        Development] School Facilities database, there are                                                                      
        currently about 26 million square feet of school                                                                        
        facility buildings.                                                                                                     
     • According to CCHRC's [Cold Climate Housing Research                                                                      
        Center's] compilation in  2014 of  good-quality data                                                                    
        from   313   schools,   the    average   electricity                                                                    
        consumption of Alaska school buildings  equals 8 kWh                                                                    
        per square foot per year.                                                                                               
     • Multiplying, schools use 208,000 MWh per year, about                                                                     
        3.5 [percent] of statewide total load.                                                                                  
      • Thought experiment: If all schools procured their                                                                       
        own Clean Energy, they might "collect" $562,000 per                                                                     
        year at 0.2 cents/kWh, or $5.6 million at 2                                                                             
        cents/kWh.                                                                                                              
                                                                                                                                
1:46:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCKAY  observed that  according to the  graphs the                                                               
State  of  Alaska  would  be spending  hundreds  of  millions  of                                                               
dollars in  tax credits.   He  asked how  many windmills  the tax                                                               
credits  would  represent and  how  much  would they  reduce  the                                                               
global temperature.                                                                                                             
                                                                                                                                
MR.  COLT displayed  slide 21,  "Regional Detail:  Railbelt," and                                                               
answered  that under  reasonable  assumptions, 4  million MWh  of                                                               
clean energy  would be seen as  defined by HB 368.   He estimated                                                               
that if  all of that  was wind, it  would be about  10-12 Shovel-                                                               
Creek-size (200-250  megawatts) wind  projects.   As to  how much                                                               
that would  reduce the global  temperature, he said he  cannot do                                                               
that math.                                                                                                                      
                                                                                                                                
CHAIR RAUSCHER  pointed out that  in addition to solar  and wind,                                                               
what   is  being   talked  about   is   coal,  gas,   hydropower,                                                               
microreactors, blue hydrogen, green hydrogen, and the like.                                                                     
                                                                                                                                
REPRESENTATIVE MCKAY  asked how  many windmills are  currently at                                                               
Shovel Creek, Alaska.                                                                                                           
                                                                                                                                
MR.  COLT  replied   that  according  to  the   filing  with  the                                                               
Department  of Natural  Resources (DNR),  the proposed  installed                                                               
capacity of the Shovel Creek Project is 260 MWh of wind.                                                                        
                                                                                                                                
1:50:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRAX  asked whether the calculations  consider any                                                               
elasticity in the demand for or supply of electricity.                                                                          
                                                                                                                                
MR. COLT  responded that  the short  answer is  no.   However, he                                                               
continued, the yellow wedge on  [the graph on slide 7] represents                                                               
new  loads coming  on  to  the system  in  the  form of  electric                                                               
vehicles and  heat pumps.   To get that kind  of new load  on the                                                               
system, he advised, something will need to be done, such as off-                                                                
peak rates, to  have favorable rates for those  uses that benefit                                                               
the  consumer, bring  the  load  on, and  benefit  all the  other                                                               
ratepayers by  helping to  spread the  cost over  more load.   He                                                               
further noted that  [ACEP] is not using  a full-blown econometric                                                               
model that tries to directly measure price elasticity effect.                                                                   
                                                                                                                                
1:52:55 PM                                                                                                                    
                                                                                                                                
MR. COLT  returned to  slide 21  and concluded  his presentation.                                                               
He noted  that the  remaining slides provide  backup to  make the                                                               
record complete.                                                                                                                
                                                                                                                                
MR.  COLT  spoke  to  the potential  effects  of  Amendment  [33-                                                               
LS1170\H.9, Walsh,  3/13/24] [yet-to-be-offered  to HB 368].   He                                                               
stated that  the amendment's proposed  credit of 5 cents  per kWh                                                               
for four or  five calendar years could really move  the needle on                                                               
turning  an  uneconomic  project  into one  that  is  immediately                                                               
economic  for  today's  ratepayers,  which would  be  a  powerful                                                               
incentive.    For  example,  he continued,  Shovel  Creek  is  an                                                               
"aspirational"  project  that  isn't  yet   on  the  books.    He                                                               
calculated that  at a  capacity of  200 megawatts,  about 700,000                                                               
MWh of energy would be generated,  which at a 5-cent credit would                                                               
be $35  million a year of  state tax credit.   Another example of                                                               
an  "aspirational"  project,  he  related,  is  Chugach  Electric                                                               
Association's near-term goal of  acquiring 100,000 megawatt hours                                                               
of energy by  2025.  At 5  cents a kilowatt hour, which  is $50 a                                                               
megawatt hour, Chugach Electric would  get $5 million per year of                                                               
tax credit for however long the  bill leaves the credit in place,                                                               
a substantial  reward that ratepayers  would love to see.   These                                                               
two examples,  he said, give  an idea  of what the  fiscal impact                                                               
would be if there were to be a big uptake.                                                                                      
                                                                                                                                
1:57:39 PM                                                                                                                    
                                                                                                                                
CHAIR RAUSCHER thanked Mr. Colt for his presentation.                                                                           
                                                                                                                                
[HB 368 was held over.]                                                                                                         
                                                                                                                                
1:59:29 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special Committee on Energy meeting was adjourned at 1:59 p.m.                                                                  

Document Name Date/Time Subjects
H.1 H.3 H.5 and H.6 - Rep. Schrage.pdf HENE 3/14/2024 10:15:00 AM
HB 368
H.8.pdf HENE 3/14/2024 10:15:00 AM
HB 368
H.9.pdf HENE 3/14/2024 10:15:00 AM
HB 368
H.10.pdf HENE 3/14/2024 10:15:00 AM
HB 368
H.12.pdf HENE 3/14/2024 10:15:00 AM
HB 368
H.13.pdf HENE 3/14/2024 10:15:00 AM
HB 368
H.14.pdf HENE 3/14/2024 10:15:00 AM
HB 368
H.15.pdf HENE 3/14/2024 10:15:00 AM
HB 368
HB0368 14Mar2024 testimony by S Colt ACEP.pdf HENE 3/14/2024 10:15:00 AM
HB 368
H.11.pdf HENE 3/14/2024 10:15:00 AM
HB 368
HB 368 3.24.14 Amendment Packet.pdf HENE 3/14/2024 10:15:00 AM
HB 368