Legislature(2009 - 2010)Anch LIO Rm 220
11/17/2009 03:00 PM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| Presentation on the House Energy Stakeholders Group, Statewide Energy Policy Bill | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
Anchorage, Alaska
November 17, 2009
3:05 p.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative Charisse Millett, Co-Chair
Representative Kyle Johansen (via teleconference)
Representative Pete Petersen
Representative Chris Tuck
MEMBERS ABSENT
Representative Nancy Dahlstrom
Representative Jay Ramras
OTHER LEGISLATORS PRESENT
Representative Anna Fairclough
Representative Reggie Joule
COMMITTEE CALENDAR
PRESENTATION ON THE HOUSE ENERGY STAKEHOLDERS GROUP, STATEWIDE
ENERGY POLICY BILL
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
BILL POPP, President & CEO
Anchorage Economic Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Provided a presentation entitled "Energy
Policy for Alaska."
CHRIS ROSE, Executive Director
Renewable Energy Alaska Project (REAP)
Anchorage, Alaska
POSITION STATEMENT: Provided a presentation entitled "Energy
Policy for Alaska."
LUKE HOPKINS, Mayor
Fairbanks North Star Borough
Fairbanks, Alaska
POSITION STATEMENT: Reviewed summary on the State Energy Policy
and Program Recommendations and provided an update regarding
what is going on in the Interior.
STACY SCHUBERT, Director
Inter-Governmental Affairs
Office of the Mayor
Municipality of Anchorage
Anchorage, Alaska
POSITION STATEMENT: Discussed energy solutions for the Cook
Inlet.
DICK KOOS, Member
Ketchikan City Council
City of Ketchikan
Ketchikan, Alaska
POSITION STATEMENT: Spoke on behalf of the mayor of Ketchikan.
ERIC MIDDLEBROOK, Member
Bethel City Council
City of Bethel
Bethel, Alaska
POSITION STATEMENT: Encouraged the committee to review the
possibility of a pilot study for the liquefied natural
compressed gas system that wouldn't be dependent upon
construction of the pipeline and the short shipping season.
FRANK AGUCHAK, Mayor
Scammon Bay
Scammon Bay, Alaska
POSITION STATEMENT: Expressed the need to pursue small hydro
projects.
DON MCCONACHIE, Mayor
City & Borough of Wrangell
Wrangell, Alaska
POSITION STATEMENT: Encouraged the committee to consider hydro
power and interties in Southeast Alaska.
AL DWYER, Mayor
City of Petersburg
Petersburg, Alaska
POSITION STATEMENT: Expressed support for the electric grid
extension to Kake and opined that hydro assets owned by the
state should remain as such.
ROGER PURCELL, Mayor
City of Houston
Houston, Alaska
POSITION STATEMENT: Discussed energy costs and alternatives in
Houston.
WILLARD DUNHAM, Mayor
City of Seward
Seward, Alaska
POSITION STATEMENT: Discussed the City of Seward's energy
difficulties and offered suggestions.
DAVE STONE, Mayor
City & Borough of Yakutat
Yakutat, Alaska
POSITION STATEMENT: Discussed energy solutions that Yakutat is
considering or in the process of implementing.
DAN O'HARA, Mayor
Bristol Bay Borough
Naknek, Alaska
POSITION STATEMENT: Related the energy situation in the Bristol
Bay Borough.
STANLEY MACK, Mayor
Aleutians East Borough
Anchorage, Alaska
POSITION STATEMENT: Discussed energy concerns for the Aleutians
East Borough.
VERNE RUPRIGHT, Mayor
City of Wasilla
Wasilla, Alaska
POSITION STATEMENT: Discussed energy concerns in Southcentral
Alaska, specifically the City of Wasilla.
DOUG ISAACSON, Mayor
City of North Pole
North Pole, Alaska
POSITION STATEMENT: Discussed concerns and offered suggestions
regarding energy issues in North Pole and the state.
PATRICIA PHILLIPS, Mayor
City of Pelican
Pelican, Alaska
POSITION STATEMENT: Discussed concerns with energy and proposed
an intertie between Pelican and Hoonah.
HARLEN NEWMAN, Member
King Cove City Council
City of King Cove
King Cove, Alaska
POSITION STATEMENT: Discussed hydro power use in King Cove.
ACTION NARRATIVE
3:05:59 PM
CO-CHAIR CHARISSE MILLETT called the House Special Committee on
Energy meeting to order at 3:05 p.m. Representatives Millett,
Edgmon, Johansen (via teleconference), Petersen, and Tuck were
present at the call to order. Representatives Fairclough and
Joule were also in attendance.
^PRESENTATION ON THE HOUSE ENERGY STAKEHOLDERS GROUP, STATEWIDE
ENERGY POLICY BILL
3:06:23 PM
CO-CHAIR MILLETT announced that the only order of business would
be the presentation on the House Energy Stakeholders Group,
Statewide Energy Policy Bill.
3:07:45 PM
BILL POPP, President & CEO, Anchorage Economic Development
Corporation, thanked the members of the Stakeholder Advisory
Panel, which are listed on slide 1 of the presentation entitled
"Energy Policy for Alaska." Mr. Popp, referring to slide 2,
explained that the panel was designed for the following:
To develop a statewide energy policy as the basis for
a long-term vision to address Alaska's energy
challenges and opportunities
Through adopted policy, align state government in a
unified set of strategic goals for the State of Alaska
Lead to the development of a comprehensive energy plan
to achieve the strategic goals of the State of Alaska
3:10:41 PM
CHRIS ROSE, Executive Director, Renewable Energy Alaska Project
(REAP), interjected that there are a lot of energy plans out
there. However, what's lacking in Alaska is an overall state
policy for the next several decades. An overall state policy is
necessary to provide the guidelines and goals for energy plans
and projects. He expressed hope that statewide energy plan
legislation will pass this session so that work can begin to
establish which goals are important and what plans and projects
will implement those goals.
3:12:10 PM
MR. POPP, referring to the slide entitled "Principles Guiding
the Process," related that the principles guiding this process
were agreed upon early in the process, including the following:
The future success of Alaska's statewide economy is
tied to available, reliable, and affordable energy
for:
ƒResidential users
ƒCommercial users
ƒIndustrial users
Worldwide supply and demand for fossil fuels and
concerns about global climate change will affect the
price of fossil fuels in the future
MR. POPP opined that the state needs to think strategically
regarding how to address the aforementioned issues in the
future.
3:12:54 PM
MR. ROSE informed the committee that he and Mr. Popp were both
involved in the Tri-Borough Commission Energy Policy, which was
already in existence when the [House Energy Policy Stakeholders
Advisory Panel] began meeting in July. The House Energy Policy
Stakeholders Advisory Panel has had five meetings thus far. At
one of the early meetings, the Tri-Borough Commission Energy
Policy and Report was reviewed and determined to be a good
starting point in the development of a statewide policy. The
advisory panel recognized that the Tri-Borough Commission Energy
Policy was focused on Southcentral Alaska, and therefore only
some of the ideas could be applied to a statewide policy.
3:14:29 PM
MR. POPP related that the policy the panel drafted is currently
undergoing legal review covers the following basic key points:
Promotes energy efficiency and conservation
Promotes development of renewable and nonrenewable
energy resources
Promotes economic development through cost effective,
long-term sources of energy for communities statewide
Supports energy research, education, and workforce
development
Supports coordination of governmental functions and
promotes streamlining of regulatory processes,
avoiding duplication of effort, and overall
coordination of effort by all levels of government
3:16:20 PM
MR. ROSE, referring to the slide entitled "The Key Steps Going
Forward," opined that it helps describe the process the panel
went through over the last five months. The panel, he relayed,
agreed upon the need for a policy that was distinct from the
goals, planning, projects, and implementation that have been
discussed. The resulting legislation is very general and allows
the legislature, regions, and communities to develop tailored
plans while being aligned with the goals the legislature may set
and the [statewide] policy. He reiterated the need for a
statewide energy policy that's a map for the future. However,
that doesn't mean that the legislature can't change the policy
at some point. Still, there needs to be a statewide goal while
having regional planning and projects to implement those goals,
he opined.
3:18:25 PM
MR. POPP highlighted that although it was a consensus-driven
process, there was very spirited debate over various points of
the policy and the direction it was taken. He characterized the
proposed legislation as a document that has aspects that all
members of the advisory panel felt were important to establish,
such as a policy that can be codified through the state
statutory process and withstand various administrations. The
most important first step is to set the foundational policies
because from that goals can flow from which can flow a plan to
achieve those goals.
MR. ROSE and POPP thanked everyone who has been involved in this
process.
3:20:07 PM
CO-CHAIRS MILLETT and EDGMON both thanked everyone, including
the committee members, who have worked on this proposed
legislation.
3:22:09 PM
CO-CHAIR MILLETT moved on to testimony from the Alaska Municipal
League (AML).
3:22:42 PM
LUKE HOPKINS, Mayor, Fairbanks North Star Borough, said he would
review the draft summary on the State Energy Policy and Program
Recommendations and provide an update regarding what is going on
in the Interior. Interior Alaska, particularly Fairbanks, has
issues with the cost of energy as does the rest of the state.
He related that the Fairbanks North Star Borough has concern
with wood burning activities that have resulted in a
nonattainment area in the borough. He indicated that having an
attainment plan that works within the next three years is a
difficult proposition because three years is a short window for
the borough as well as the state, as it relates to funding
issues. Mayor Hopkins informed the committee that he is a
member of the Alaska Gasline Port Authority Board, which is
reviewing the possibility of bringing natural gas by truck from
the North Slope to Fairbanks and other Interior areas. Although
natural gas is available to the Interior from the Tri-Borough
area, it's more expensive than fuel oil in the community. He
emphasized the need for Fairbanks to have reliable, affordable,
and clean energy in the community soon. Although Mayor Hopkins
said that he is pleased to see that the proposed legislation
addresses many renewable and alternative energy programs, the
Interior faces a short-term issue that he hopes will be
addressed in the upcoming legislative sessions. He expressed
concern for Fairbanks' ratepayers since Golden Valley Electric
Association (GVEA) may not have "jumped onto" HB 183 to ensure
that its generating equipment is reliable. If the anchor tenant
for bringing natural gas into the community by truck is GVEA, it
would lower the rates to the members of that cooperative. Mayor
Hopkins encouraged the committee to consider how HB 183 will
impact those in the Interior. He noted concern with renewable
and alternative energy [sources/plans]. The current resource
available for consumers [in the Interior] is coal, which he
assumed means that the Healy clean coal plant will move forward.
In conclusion, Mayor Hopkins related his appreciation for the
work that occurred to address renewable and alternative energy
sources in Alaska.
3:29:04 PM
STACY SCHUBERT, Director, Inter-Governmental Affairs, Office of
the Mayor, Municipality of Anchorage, reminded the committee
that Mayor Sullivan established a task force to address energy
issues in the Southcentral region. There is a group of
concerned individuals who have been working diligently with
regard to energy issues, specifically in relation to
deliverability in Anchorage. The mayor has also had a test
event with Anchorage citizens to focus on conservation efforts.
About 4 percent of the community participated and there was
about a 4 percent reduction in energy the night of that test.
She indicated that there will be more tests of that nature in
the future. However, the intermediate solution for the Cook
Inlet region is storage, on which the mayor would like to focus
over the next couple of years. With regard to the long-term
solution for the Cook Inlet region and throughout Alaska, Mayor
Sullivan is committed to working with the legislature as it
develops solutions.
3:31:06 PM
REPRESENTATIVE TUCK related his understanding that the utilities
were going to run [energy conservation] tests; and then inquired
as to when those would occur.
MS. SCHUBERT clarified that the municipality did work with the
utilities to perform the aforementioned test. The utilities
have indicated that they learned much from that exercise. She
said that she didn't know whether additional exercises with the
individual utilities are planned.
3:31:45 PM
DICK KOOS, Member, Ketchikan City Council, City of Ketchikan,
spoke on behalf of the mayor of Ketchikan. He opined that the
energy policy has to include non-renewable and renewable
resources as well as conservation. In Southeast Alaska, the
primary source of energy is hydro. Through the help of the
mayors of Wrangell and Petersburg, power was sent through the
Swan-Tyee power lines. He noted that there are other sources of
energy available if there is a willingness to tackle them.
Still, it will require help from the legislature and likely some
changes from the federal government. He specified that
hydropower has to be recognized as a renewable resource and
biomass in the Tongass National Forest has to be available. He
then related that nuclear has to be a source of energy as well,
particularly since it seems to be more portable. Mr. Koos
opined that federal regulations empower the federal regulators
and the environmental groups to stop or significantly delay
projects. Therefore, the state needs to assert its rights and
sovereignty to keep the federal government away.
3:35:18 PM
CO-CHAIR EDGMON inquired as to the kilowatt per hour rate in
Ketchikan.
MR. KOOS answered that it's $.10 plus $.01 for diesel that will
have to be run. He related that Ketchikan purchases power from
the Two-damn pool for about $.06 cents and the other $.10 is the
cost to run the power lines, etcetera in town. In further
response to Co-Chair Edgmon, Mr. Koos confirmed that there is a
trend of more people heating their homes with electricity than
diesel. In fact, a number of public buildings are considering
using electricity. Mr. Koos told the committee that if the data
from the consultants to the manager of Ketchikan is correct, in
five years Ketchikan will be pushing existing power limits.
Therefore, Southeast Alaska needs to continue to implement hydro
projects or other projects to generate electricity and connect
them together in order to reduce costs.
3:37:07 PM
ERIC MIDDLEBROOK, Member, Bethel City Council, City of Bethel,
thanked the committee for all its hard work traveling throughout
the state to take testimony on energy, which he opined is the
most important issue for the state. He pointed out that one of
the duties of local government is to create an environment in
which business and people can thrive. The high cost of energy
has made the aforementioned difficult. Although he has had
people approach him with various ideas for value-added fish,
craft sales, etcetera, it has been difficult for those
businesses to take hold and develop with such a high cost of
energy. Mr. Middlebrook highlighted that there is another
energy source for rural communities, which is to purchase
liquefied natural gas (LNG) on the world market, ship it into
rural Alaska, and store it as compressed natural gas. The PDC
Harris Group, through a local tribe, has applied for a grant
from the Alaska Energy Authority (AEA) for the aforementioned
energy source. However, it was denied because it wasn't deemed
to be a renewable energy project. Still, Mr. Middlebrook opined
that such a scenario should be reviewed. The cost of a pilot
study was $75,000. Furthermore, the cost of LNG on the world
market is a fraction of the price of petroleum. He informed the
committee that LNG costs about $4-5 per million British thermal
unit (MmBtu) versus over $30 for petroleum. The LNG market
seems to indicate that the price for LNG will remain low for
quite some time and the supply will be available. Mr.
Middlebrook then informed the committee of a propane project
with the North Slope gas supply. The North Slope gas has a
large amount of propane in it that needs to be removed before
the gas is shipped. The [propane] would be shipped by barge to
Western Alaska. He emphasized that Bethel is desperate for any
source of energy that's cheaper than oil. However, he expressed
concern with the aforementioned project because of the
difficulty with shipping things from the North Slope due to
weather. Furthermore, there are limited shipping companies in
the area. The aforementioned means that the aforementioned
project would have some of the same problems with shipping to
Bethel that the petroleum distribution does. Moreover, the
project is dependent upon the gas pipeline being built. With
that said, Mr. Middlebrook encouraged the committee to review
the possibility of doing a pilot study for the liquefied natural
compressed gas system that wouldn't be dependent upon
construction of the pipeline and the short shipping season of
the North Slope as it could be a possible low cost energy source
for most of Western Alaska and rural Alaska.
3:41:18 PM
FRANK AGUCHAK, Mayor, Scammon Bay, related the following story
to the committee. Back in 1972, the U.S. Army Corps of
Engineers came to Scammon Bay to perform a feasibility study of
alternative energy, which included small hydro projects. The
aforementioned study concluded that small hydro projects were
very doable. However, the community elders rejected the project
based on concern for the environment. The community of Scammon
Bay has struggled over the last two years due to nearly $8 per
gallon for heating fuel. Mayor Aguchak said that he is
encouraged to hear that the State of Alaska is in support of the
aforementioned alternative energy endeavor. To that end, he
encouraged the committee to continue its work. In response to
Co-Chair Edgmon, Mayor Aguchak said that he didn't know the cost
of power per kilowatt hour. He then opined that hydro power
would be [appropriate and doable] for six months and perhaps
wind turbines could address the other six months.
3:45:40 PM
DON MCCONACHIE, Mayor, City & Borough of Wrangell, informed the
committee that one of the goals of the Alaska Conference of
Mayors is to have 50 percent renewable energy by the year 2025.
He encouraged the committee to review Southeast Alaska because
Wrangell, Petersburg, and Ketchikan are where a lot of the state
would like to be [energy wise]. Wrangell residents enjoy $.11
per kilowatt hour and those who do a certain amount of
infrastructure, such as installing electric heating units,
receive $.08 per kilowatt hour for that section. He encouraged
the committee to review the rainfall and high elevation lakes
located in Southeast Alaska, which are potential energy for
Southeast Alaska along with interties to small communities.
3:47:42 PM
AL DWYER, Mayor, City of Petersburg, also thanked the committee
for its work and travel throughout the state. In Petersburg,
the wholesale cost of hydro is 6.8 cents, while the average
homeowner's cost is $.11 per kilowatt hour. However,
communities such as Kake have faced difficult times due to
energy costs. He expressed hope that the electric grid
extension, along with the road, to Kake will revive the
community. Mayor Dwyer opined that it's important that hydro
assets that belong to the state remain with the state because
private ownership of hydro assets isn't a good idea since
corporations are driven by profit. The Swann Lake Tyee Lake
Project is a municipally owned power and light company, the goal
of which is to drive the wholesale cost of power down. He
explained that a reserve fund has been developed to pay for the
things that break. Once enough reserves are accumulated, the
cost of power is lowered. He related his belief that in the
near future the cost of power in the area will be less than 6.8
cents per kilowatt hour. Mayor Dwyer added that it's important
for the Native communities located in Southeast Alaska to
benefit from the public monies that Petersburg, Ketchikan, and
Wrangell have received. The only way to accomplish the
aforementioned is to include them in the grid and eliminate the
use of diesel.
3:50:54 PM
ROGER PURCELL, Mayor, City of Houston, informed the committee
that although Houston is near Anchorage, 80 percent of the city
heats with diesel fuel. Currently, diesel heating fuel costs
about $3.15 per gallon, which has driven up heating costs. He
noted that last year he converted his furnace to a coal furnace,
which reduced his [energy] costs by about 60 percent.
Furthermore, Usibelli delivers coal to the house, at quite a
significant savings. He expressed the need to review hydro in
the Mat-Su Valley, particularly the Susitna area. He informed
the committee that Houston is trying to implement plans that
were discussed in 1972 when a comprehensive plan was discussed.
He said that it seems projects are studied to death and millions
of dollars are spent reviewing and analyzing projects that are
put on a shelf to collect dust. It's time, he opined, to follow
through because infrastructure and low cost energy bring
business and economic growth. He pointed out that although the
Mat-Su Borough has a lot of methane gas, there are ordinances
prohibiting drilling for methane gas. He recalled a
conversation with a legislator who said that if drilling for
methane in the Mat-Su Valley jeopardized a bullet line, he/she
would ensure it didn't go through. Mayor Purcell opined that
the aforementioned is an example of a poor view of the future
for Alaska, especially in this area. He expressed the desire
not to penalize areas that have other growth areas because it
may jeopardize something that may happen in the future. Biomass
is another area of opportunity, especially in some of the
outlying Bush areas that can be utilized instead of diesel fuel.
Furthermore, converting from diesel doesn't cost very much.
Mayor Purcell acknowledged that everything needs to come
together at once, but emphasized the need to move forward.
3:55:24 PM
CO-CHAIR EDGMON noted that a lot is going on regarding energy in
Alaska, in terms of the local, state, and federal government.
He opined that one matter to be considered next session will be
whether state government should be involved in helping with the
energy situation. He further opined that there should be a
centralization of the various arms of state government
concerning energy. He inquired as to Mayor Purcell's experience
with those trying to move the energy issue forward.
MAYOR PURCELL related that the City of Houston just applied for
an environmental impact study from AEA for a small generation
system for methane along with a bladder system. The
aforementioned would provide low cost steam heat for the school
and all the municipal buildings in Houston as well as provide
electricity to the industrial areas. Furthermore, the notion is
to sell electricity back to Matanuska Electric Association (MEA)
in order to pay for the plant itself. However, natural gas and
methane is not considered a renewable resource of energy, and
therefore may not qualify for the grant funds. Mayor Purcell
recalled his time on the Mat-Su Resource Conservation
Development [organization] that worked with the Small Business
Administration to help people obtain loans for alternate energy
[systems]. Those people weren't able to proceed past a certain
step and there was no real help to move people past the next
phase.
3:57:49 PM
CO-CHAIR EDGMON surmised then that it would be helpful to have a
one-stop shopping area [for local governments to access].
MR. PURCELL said that there really isn't an [agency] that
provides information for an individual area, and therefore an
[agency] that streamlines the available information would be
desirable.
3:58:43 PM
WILLARD DUNHAM, Mayor, City of Seward, opined that the state's
energy policy is probably the most important thing facing the
legislature today. He noted that although community needs are
different, they're actually the same. Mayor Dunham informed the
committee that Seward owns its own [electric] plant and owns 38
miles of line. Currently, the City of Seward is performing a $5
million upgrade of its diesel backup system. Presently, the
City of Seward purchases power from Chugach Electric at a cost
of about $.12 per kilowatt hour. However, he emphasized that
the fuel surcharge almost doubles the cost of electricity. The
fuel surcharge is a direct cost added on to the bill and [the
city] has no control over it whatsoever. Furthermore, the lack
of assistance from the state has resulted in a weakening of the
delivery systems. The Railbelt Intertie funds have slowly been
siphoned back with the accumulated interest and not all the
funds were expended. In fact, the city wasn't able to upgrade
its system. For example, Seward's system has three different
carrying capacities, which can cause problems. Mayor Dunham
recalled the [reports] past administrations created. Although
he characterized the current report before the committee as
simplistic, he said he was glad to have it before the committee.
He noted that now there is "GRETZKY". Although some headway has
been made, the six utilities [in Alaska] are about split [on the
administration's plan]. It's up to legislators, he said, to
build a system to help [local communities]. Mayor Dunham
acknowledged that the Railbelt doesn't encompass all the power
problems in the state, as has been evidenced by the testimony
the committee has heard. He reiterated that communities
throughout the state are the same, yet different. Given the
right opportunity, he opined that "GRETZKY" could work,
especially if the legislature was involved as it was in the
Bradley Lake hydro project. In the Bradley Lake project, all
the utilities participated by percentage of population and the
state backed the bonds that the utilities paid back. He
expressed hope that the legislature will review such a process
when it implements an energy policy. Mayor Dunham emphasized
that it's important for the legislature to address energy needs
[of local communities] for which new power delivery systems,
generation, weatherization, and alternate energy are key
components. However, [an energy policy] can't be accomplished
if the state doesn't provide the backing or opportunity to do
so. A stable gas supply is also necessary because there is no
way to get a gas line to Seward without getting gas reserves.
In closing, Mayor Dunham said that although the availability of
cash is problematic, the legislature can provide backing for a
program. He expressed hope that the legislature will review a
financing schedule to accomplish the state's energy goals.
4:06:40 PM
REPRESENTATIVE TUCK related his understanding that the City of
Seward owns the local utility and did have the ability to power
its own generation plant by diesel.
MAYOR DUNHAM confirmed that the City of Seward bought diesel for
$.7 a gallon and the power was delivered by hydro, which was
$.11 [per kilowatt hour]. Therefore, the community elected to
dismantle its hydro system and use diesel. However, once the
cost of diesel rose, Seward worked out a contract with Chugach
[Electric] to [purchase] energy from it. The City of Seward
decided to hold the diesel plants as backups in order to avoid
power outages. Mayor Dunham pointed out that if there's a power
shortage in Anchorage, the City of Seward will end up going on
diesel at which point energy costs will increase by $.30 or
more.
4:09:44 PM
REPRESENTATIVE TUCK inquired as to any of the problems Mayor
Dunham foresaw with the GRETZKY program as well as some of the
solutions for the City of Seward.
MAYOR DUNHAM opined that the "GRETZKY" program is the answer, as
it's a centralized power corporation much like that of the
Bradley lake project in which [the energy] is prorated out to
[the various utilities] that maintain their own systems. The
situation would be much like the arrangement the City of Seward
has with Chugach Electric. He commented that he didn't believe
that the utilities would ever turn over their ownership to the
state, and furthermore he didn't believe that would be the best
approach either.
4:12:08 PM
DAVE STONE, Mayor, City & Borough of Yakutat, informed the
committee that residents in Yakutat pay $.55 per kilowatt hour.
He then expressed concern that power cost equalization (PCE)
isn't available for public buildings or businesses. Due to
cheaper energy costs for freezing black cod, boats go to Seward
or Sitka to sell their black cod that has to be frozen before
sending it to Japan. Mayor Stone opined that the City & Borough
of Yakutat is ahead of other communities in terms of energy
[solutions] because it's on the second stage of biomass
electrical generation. The hope is to bring electricity costs
down to $.11 per kilowatt hour. He explained that Yakutat will
plant 6,000 acres of alders as fuel stock. When the alders are
grown, a thinning process will begin and that wood will be used
to fire the generator. Yakutat is also pursuing wave energy,
and is in step three of that process. In fact, Yakutat is the
only community that has applied for the funds. He described the
wave energy system as a clam shell that pumps fluid to shore to
turn the turbines. Mayor Stone acknowledged that the wave
energy system is an expensive project, but he expressed hope
that the legislature will view it as a good pilot project.
Returning to PCE, Mayor Stone pointed out that the state will
have to put more funds into PCE if businesses and public
buildings are funded. He further pointed out that economic
development in the Bush is dependent on energy. In fact,
grocery stores are closing because they can't afford to run
freezers at $.55 per kilowatt hour. He highlighted that Yakutat
is the only community in Southeast Alaska without hydro
capability, which resulted in AEA saying that Yakutat is going
to biomass electrical generation. In response to Representative
Petersen, Mayor Stone informed the committee that Yakutat
invested $45,000 to study wave power. The study concluded that
wave power in Yakutat is feasible, and therefore the project is
moving on to the next step. The hope is that there would be a
pilot project for wave power in Yakutat. He noted that the
community would need additional funds to support a pilot
project.
4:18:04 PM
DAN O'HARA, Mayor, Bristol Bay Borough, thanked the committee
for the opportunity to speak. He informed the committee that
it's an exciting time in the Bristol Bay Borough because the
local electric company has a thermal drill rig that would result
in the capability of directional drilling at 8,000 and 11,000
[feet]. Furthermore, [the local electric company] is ready to
drill a second hole. With regard to energy, eight years ago
Kvichak Bay had 25 million fish after being closed. The stock
size has risen steadily to reach 31 million fish harvested in
2009. In 2010, it's projected that 33.5 million fish are
expected to return. However, there's no processing capability
in the area. The aforementioned is related to energy because
the area residents pay $.57 per kilowatt hour. He explained
that when [this energy source is available] energy costs in the
area will decrease to $.13 per kilowatt hour and include 15
communities and the Bristol Bay Borough. In fact, the rights-
of-way for the electric lines are already being planned. Mayor
O'Hara opined that it's time for the state to help Naknek
Electric and the Bristol Bay Borough with regard to energy. He
further opined that [with the availability of lower cost
electric power] the processors or the borough would likely [fund
a processing plant to] freeze the projected large amounts of
fish.
4:24:12 PM
CO-CHAIR EDGMON inquired as to the impact of the high cost of
living in the Bristol Bay Borough.
MAYOR O'HARA informed the committee that for the last five years
the population has been moving to Anchorage due to the cost of
energy and the lack of a full athletic and music program. The
school population decreased from 315 to 145 students and rose
slightly this year to 155 students. Furthermore, the cost of
energy is so high that retirees have to move to Anchorage in
order to survive. Moreover, young people find it difficult to
return to the area. He informed the committee that two years
ago, Crowley didn't give Perryville fuel, and therefore it had
to be flown in. The cost to fly in the fuel was $750 for five
55 gallons of fuel and $1,150 for 55 gallons of stove oil. He
opined that Crowley not delivering the fuel was unconscionable.
Mayor O'Hara suggested that although everyone will have to work
together, legislators are integral in the equation of making a
difference.
4:26:45 PM
STANLEY MACK, Mayor, Aleutians East Borough, informed the
committee that in the Aleutians there is every type of energy
available, but there's no way to harness it. Fortunately, up to
this point King Cove has been able to harness the hydro power,
which has been a tremendous asset. Although there is
geothermal, wave action, tidal action, natural gas, and wind in
the area, it's all cost prohibitive to develop. Furthermore,
development of any of the aforementioned resources is often
heavily regulated and faces environmental opposition. Mayor
Mack opined that if some of these alternative energy projects
could be identified and running, much of the Aleutians energy
problems could be addressed. He then echoed earlier testimony
that the fuel surcharge is an additional cost to the already
high cost of energy. The Aleutians East Borough, he related,
has tried to identify the resources in the area, and is willing
to work with the legislature on that.
MAYOR MACK told the committee about the environmental obstacle
construction of the King Cove School faced and overcame. During
construction of the aforementioned school, a waste heat recovery
unit was incorporated for use in the school. Funds had to be
borrowed for the aforementioned. Mayor Mack emphasized the need
to receive assistance in the form of a grant for projects such
as the aforementioned. He related that about $40,000-$50,000
has been saved in the operation of the school. He then noted
that another source of energy has been identified as a possible
supplement to existing energy. He opined that there is energy
to supply power to the neighboring community of Cold Bay. The
aforementioned eliminates the use of fossil fuel in generators,
which are going to have to be upgraded in order to meet upcoming
emission standards. The cost to upgrade will cause the cost of
electricity to increase. However, an increase in electricity
could be avoided if the hydro or geothermal power could be
harnessed. Furthermore, such action could lead to an extension
of electrical lines to neighboring communities. He reiterated
the need to review funding such projects and getting the
investment back in a grant form to keep communities alive and
well. He then predicted that fish processing plants are going
to face more demand on their power grid, which means more diesel
power. However, emissions will be at the maximum level and thus
won't be able to be expanded. The use of hydro power could
allow the use of alternate energy sources, which could result in
the expansion and development of the resource. Mayor Mack said
that the borough is looking to partner with the legislature in
any way it can to identify the available alternative resources
and if possible even receive financing for the long term.
4:38:00 PM
VERNE RUPRIGHT, Mayor, City of Wasilla, opined that the
legislature is a diverse group of people from across the state
who certainly understand the problems in their districts. He
remarked that the Mat-Su Valley shares the same problems as the
Anchorage area. Mayor Rupright related that he fully supports
the [proposed] amendment to Title 44, although he noted that it
will take political will [to be adopted]. He then expressed the
need for one-stop shopping and moving past the borough codes,
which seem to be an impediment. He noted his agreement with
Mayor Purcell that the aforementioned can be achieved if there
is state will behind it. Although there have been many good
ideas put forth during the Mayors Conference and today's
meeting, the state isn't on one grid and is sectionalized. The
aforementioned, he said, results in each area dealing with its
own immediate problems. Of critical importance in Southcentral
Alaska is storage. Mayor Rupright urged the legislature to take
the amended Title 44 and put political power and will behind it
with the federal government and lending agencies. He reiterated
that on the short-term [Southcentral Alaska] needs to address
its storage problem, while on the long-term hydro power, gas
development, and methane development is necessary. For example,
Sutton to the Beluga fields has enough coal for 1,000 years.
The coal has to be used efficiently and the negativity toward
coal has to be overcome. Mayor Rupright urged the legislature
and the state to support private corporations, Native
corporations, and smaller communities to help them overcome the
rules and regulations and find funding to have cheap power for
economic development, especially in light of the increase in
population in the Mat-Su Valley. In conclusion, Mayor Rupright
again urged the committee to pass the proposed amendment with
some teeth so that it's a one-stop shop "because we're certainly
going to go cold and dark in a relatively short period of time
in this part of the state if we don't act."
4:42:54 PM
CO-CHAIR EDGMON noted his agreement with Mayor Rupright in terms
of the need for political will to advance the issue of energy.
He then inquired as to what the Alaska Municipal League (AML) is
doing in terms of discussion and resolutions tied to energy.
MAYOR RUPRIGHT responded that energy has been discussed and AML
has put forth a resolution on the topic. He opined that the
mayors are supportive of addressing energy issues.
4:44:52 PM
CO-CHAIR EDGMON returned to the earlier mention of the need for
a centralized agency to deal with the various elements of energy
without growing government.
MAYOR RUPRIGHT noted his agreement with the aforementioned
philosophy in order to help the small and large towns address
energy needs. However, he questioned where the funding
necessary to pass regulations can be found. He related that the
[Mat-Su Borough] code only permits the construction of a 50
megawatt [plant]. The aforementioned is why a gentleman crossed
the bridge into Anchorage with a check for $2.4 million to
acquire property that would power an area as large as Wyoming.
He suggested that perhaps a used aircraft carrier or boomer
could be parked and plugged into to provide nuclear power. The
aforementioned is done in rescue missions all over the world.
4:48:03 PM
DOUG ISAACSON, Mayor, City of North Pole, began by informing the
committee that the Alaska Conference of Mayors supports
consideration of all routes and the immediate construction of an
in-state gas line to provide reliable energy price relief for
Alaskan communities as well as an inducement for business and
employment enterprises. However, the aforementioned means
different things to each mayor. To Mayor Cottle it may mean a
line down to Valdez while to those in North Pole, it means
obtaining a bullet line that will help power 180 megawatts of
Golden Valley Electric Association electricity generation. The
goal in the City of North Pole is to obtain something so that
the cost of a refined product is lessened. Mayor Isaacson
emphasized that the priority for this year would be constructing
the gas line. With regard to whether the gas line should be
constructed by inducement or by anchor tenants that attract
other tenants, Mayor Isaacson highlighted that the [state] has
been waiting since the 1950s to have a gas line built by
inducement. He opined that a gas line will never be constructed
by inducement until the state steps in and anchors businesses so
that more business can grow. The aforementioned has to be
addressed otherwise the businesses that are present and the
employment from them will disappear in the next few years. He
then encouraged the legislature to get coal to liquids going and
exporting that for military use, which will allow Alaska
residents to have residual pricing rather than premium pricing.
Mayor Isaacson then referred to a report from Steve Haagenson,
which [proposes] "a trickle up from the Cook Inlet." He
explained that there are 70 megawatt transmission lines to move
the cheaper produced electricity with natural gas to the
Interior. He emphasized the need to solve the natural gas
problems in the area, but pointed out that if the Healy Clean
Coal plant gets going it will produce 50 megawatts of energy and
there's a 60 megawatt power generator in North Pole that could
be converted to natural gas or propane for only $2 million
versus $150 million more to get the Healy Clean Coal plant on-
line. He stressed that it's vital for the Interior to get
support for North Pole as it has two refineries that have a
statewide impact. At this point, North Pole doesn't foresee a
bright future without protecting the existing tenant industries.
4:54:40 PM
PATRICIA PHILLIPS, Mayor, City of Pelican, informed the
committee that Pelican has a hydro reservoir and dam. Although
the reservoir is fed by a salmon stream, the topography is such
that the dam is located where the fish cannot reach. As
everyone may know, Pelican's flume collapsed this past August
due to torrential rains. The city is in the middle of an AEA
upgrade. The city has been working with AEA for about five
years and new power plant modules have been put in place to
replace old diesels that were from Nevada silver mines of the
early 1970s. Because the City of Pelican is using diesel right
now, its residents are paying $.38 cents per kilowatt. However,
prior to the collapse of the flume, the residential rate was
$.17 cents per kilowatt. Mayor Phillips reminded the committee
that Pelican Seafoods is located in Pelican where it processes
various species of fish. The energy costs for the freezers of
Pelican Seafoods amounts to about $9,000 a month when using
hydro power, whereas it amounts to about $17,000 a month when
using diesel power. Since schools aren't eligible for PCE,
while the Pelican school uses diesel the gym can't be open at
night because it's too expensive. The cost of energy for the
gym has risen from $400 when using hydro power to $1,000 when
using diesel.
MAYOR PHILLIPS told the committee that the City of Pelican has
identified that the existing hydro resource in Pelican will
support the energy needs of Pelican as well as those of Hoonah.
Hoonah uses 100 percent diesel and it also has a cold storage
facility. Those in Hoonah pay $.58 per kilowatt for
electricity. There has been discussion of constructing a line
from Pelican to Hoonah, a community of about 600 residents.
Supplying electricity to Hoonah will require construction of an
intertie between the two communities. She noted that Elfin Cove
lies between Pelican and Hoonah and could also join the
intertie. Mayor Phillips suggested that it would be appropriate
for this committee to recommend to the legislature to fund a
coordinator through the Southeast Conference. She characterized
such a coordinator as a valuable outreach resource that's
necessary to assist in developing strategies for energy plans
and implementation. The AEA recommended an integrated resource
plan that would identify energy resources and the economic
impact that could be improved through energy efficiencies. The
aforementioned, she opined, would illustrate support for
distressed economies and rural communities, especially those on
diesel power generation. "Clean, efficient, low cost energy is
one of the main attributes of building a viable community," she
highlighted. If the cold storage in Pelican could run again,
value-added fishery resources as well as custom processing for
sport caught fish could occur.
5:00:09 PM
HARLEN NEWMAN, Member, King Cove City Council, City of King
Cove, speaking on behalf of the mayor of the City of King Cove,
began by informing the committee that he is a former power house
hydro operator for the City of King Cove. He opined that
renewable energy is necessary. Currently, the City of King Cove
is doing an upgrade of its existing facility with [the help of]
of AEA. Today, the City of King Cove is using diesel, and thus
700-800 gallons more of diesel than normal is being used due to
the hydro power being down. The aforementioned illustrates that
hydro is key. He related that King Cove [electricity costs] are
about $.26 per kilowatt hour while in the neighboring city of
Sand Point the cost of electricity is about $.50 per kilowatt
hour as it's strictly diesel. The City of King Cove is
exploring wind, tidal, and a second hydro facility.
5:01:25 PM
CO-CHAIR EDGMON recalled a recent visit to King Cove when the
community was powered by hydro. He suggested that King Cove,
with its existing hydro facility and second hydro facility
coming on-line and possibilities of wind and tidal power, will
be a model for other communities.
MR. NEWMAN remarked that it's very exciting to have the existing
hydro facility as well as the second facility coming on-line.
Furthermore, the city is looking into wind power and moving its
existing wind tower to a location that's less turbulent than the
existing location.
5:02:57 PM
REPRESENTATIVE PETERSEN asked if there's an intertie connecting
King Cove and Sand Point.
MR. NEWMAN replied no, pointing out that Sand Point is about 80
miles from King Cove while Cold Bay is a neighboring city. The
hope is that the second hydro facility would help Cold Bay,
which faces a tremendous kilowatt per hour charge.
5:04:04 PM
REPRESENTATIVE JOULE said that as he has listened today he
recalled that in the past the issue of energy was a rural/urban
issue that resulted in a fight. Therefore, he opined that he's
glad that the energy crisis has reached a statewide issue
because it has caused the issue to become a common focus that's
helped everyone to find each other's importance and recognize
each other's challenges. He further opined that this statewide
focus will finally cause the legislature to act.
5:05:08 PM
CO-CHAIR MILLETT encouraged the mayors to take the policy
statement from the stakeholders. She noted that soon a web site
will be in place to receive comments. In conclusion, she
thanked everyone for their testimony.
5:05:38 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 5:05 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Agenda 11-17-09 Meeting.pdf |
HENE 11/17/2009 3:00:00 PM |
|
| Draft Stakeholder Bill 11172009.pdf |
HENE 11/17/2009 3:00:00 PM |
|
| Energy Policy for Alaska Presentation 11.17.09.pdf |
HENE 11/17/2009 3:00:00 PM |