Legislature(2009 - 2010)Anch LIO Rm 220

12/11/2009 10:00 AM House ENERGY


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10:09:04 AM Start
10:09:36 AM House Draft Energy Policy Bill|| House Draft Omnibus Energy Bill
01:18:41 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Teleconference --
House Draft Energy Policy Bill
House Draft Omnibus Energy Bill
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                       December 11, 2009                                                                                        
                           10:09 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bryce Edgmon, Co-Chair                                                                                           
Representative Charisse Millett, Co-Chair                                                                                       
Representative Kyle Johansen (via teleconference)                                                                               
Representative Pete Petersen                                                                                                    
Representative Chris Tuck (via teleconference)                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Nancy Dahlstrom                                                                                                  
Representative Jay Ramras                                                                                                       
                                                                                                                                
OTHER MEMBERS PRESENT                                                                                                         
                                                                                                                              
Representative Peggy Wilson                                                                                                     
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
     House Draft Energy Policy Bill                                                                                             
     House Draft Omnibus Energy Bill                                                                                            
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                              
No previous action to report                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
BILL POPP, President & CEO                                                                                                      
Anchorage Economic Development Corporation (AEDC)                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Representing the House Energy Stakeholders                                                               
Group, presented an overview of the formation of the energy                                                                     
policy.                                                                                                                         
                                                                                                                                
CAITLIN HIGGINS, Executive Director                                                                                             
Alaska Conservation Alliance (ACA)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Assisted in the presentation of an overview                                                              
of the formation of the energy policy.                                                                                          
                                                                                                                                
RON MILLER, Consultant                                                                                                          
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Introduced provisions  of the  House Draft                                                             
Omnibus  Energy Bill  in  his  capacity as  a  consultant to  the                                                               
Alaska State Legislature.                                                                                                       
                                                                                                                                
ADAM BERG, staff                                                                                                                
Representative Bryce Edgmon                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:     As  staff  for   Representative  Edgmon,                                                             
sponsor, assisted in the introduction  of the House Draft Omnibus                                                               
Energy Bill.                                                                                                                    
                                                                                                                                
STEVEN   HAAGENSON,  Statewide   Energy  Coordinator;   Executive                                                               
Director                                                                                                                        
Alaska Energy Authority (AEA)                                                                                                   
Department  of   Commerce,  Community,  &   Economic  Development                                                               
(DCCED)                                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Testified during  the hearing on  the House                                                             
Draft  Omnibus Energy  Bill  and the  House  Draft Energy  Policy                                                               
Bill.                                                                                                                           
                                                                                                                                
SARA FISHER-GOAD, Deputy Director-Operations                                                                                    
Alaska Energy Authority (AEA)                                                                                                   
Department  of   Commerce,  Community,  &   Economic  Development                                                               
(DCCED)                                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Reviewed  sections  of  the  House  Draft                                                             
Omnibus Energy Bill.                                                                                                            
                                                                                                                                
GENE THERRIAULT, Senior Policy Advisor/In-state Energy                                                                          
Office of the Governor                                                                                                          
Fairbanks, Alaska                                                                                                               
POSITION  STATEMENT:   Responded to  questions on  behalf of  the                                                             
governor.                                                                                                                       
                                                                                                                                
MARILYN LELAND, Executive Director                                                                                              
Alaska Power Association                                                                                                        
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Discussed  the House  Draft Energy  Policy                                                             
Bill as a member of  the Energy Stakeholders Group that developed                                                               
the proposed legislation.                                                                                                       
                                                                                                                                
MEERA KOHLER, President & CEO                                                                                                   
Alaska Village Electric Cooperative, Inc. (AVEC)                                                                                
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Discussed  the House  Draft Energy  Policy                                                             
Bill as a member of  the Energy Stakeholders Group that developed                                                               
the proposed legislation.                                                                                                       
                                                                                                                                
JOHN DAVIES, Senior Researcher/Public Policy                                                                                    
Cold Climate Housing Research Center (CCHRC)                                                                                    
Fairbanks, Alaska                                                                                                               
POSITION  STATEMENT:   Discussed  the House  Draft Energy  Policy                                                             
Bill as a member of  the Energy Stakeholders Group that developed                                                               
the proposed legislation.                                                                                                       
                                                                                                                                
ALBERT LUKE, Asa'carsarmuit Tribal Council                                                                                      
Mountain Village, Alaska                                                                                                        
POSITION STATEMENT:  Described the  energy efficiency training he                                                             
was receiving in Anchorage.                                                                                                     
                                                                                                                                
PAUL D. KENDALL                                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Testified during  the hearing on  the House                                                             
Draft  Energy Policy  Bill  and the  House  Draft Omnibus  Energy                                                               
Bill.                                                                                                                           
                                                                                                                                
CLIFFORD FITKA                                                                                                                  
Marshall, Alaska                                                                                                                
POSITION STATEMENT:  Speaking as  a member of the Marshall Tribe,                                                             
and on behalf of the Ohogamiut  Tribe, discussed the need for net                                                               
metering in rural communities.                                                                                                  
                                                                                                                                
DEWAYNE COOPER                                                                                                                  
Construction Project Manager                                                                                                    
Native Tribe of Marshall                                                                                                        
Marshall, Alaska                                                                                                                
POSITION  STATEMENT:   Addressed  the need  for  net metering  in                                                             
rural Alaska and  stated his support for the  House Draft Omnibus                                                               
Energy Bill.                                                                                                                    
                                                                                                                                
TOM LAKOSH                                                                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Testified during  the hearing on  the House                                                             
Draft  Energy Policy  Bill  and the  House  Draft Omnibus  Energy                                                               
Bill.                                                                                                                           
                                                                                                                                
WILLIAM WARREN                                                                                                                  
Nikiski, Alaska                                                                                                                 
POSITION STATEMENT:   Testified during  the hearing on  the House                                                             
Draft  Energy Policy  Bill  and the  House  Draft Omnibus  Energy                                                               
Bill.                                                                                                                           
                                                                                                                                
FREYA CHAY                                                                                                                      
Kenai, Alaska                                                                                                                   
POSITION STATEMENT:   Testified on the House  Draft Energy Policy                                                             
Bill.                                                                                                                           
                                                                                                                                
JERRY MEHLBERG                                                                                                                  
Valdez, Alaska                                                                                                                  
POSITION  STATEMENT:   Testified in  support of  the House  Draft                                                             
Omnibus Energy Bill.                                                                                                            
                                                                                                                                
RICH WILSON, Member                                                                                                             
Alaska Ratepayers                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Testified on  behalf of  Alaska Ratepayers                                                             
during the hearing on the House  Draft Energy Policy Bill and the                                                               
House Draft Omnibus Energy Bill.                                                                                                
                                                                                                                                
DAVID KARABELNIKOFF                                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Testified during  the hearing on  the House                                                             
Draft  Energy Policy  Bill  and the  House  Draft Omnibus  Energy                                                               
Bill.                                                                                                                           
                                                                                                                                
MARVIN YODER                                                                                                                    
Palmer, Alaska                                                                                                                  
POSITION  STATEMENT:  Testified in  support  of  the House  Draft                                                             
Omnibus Energy Bill.                                                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:09:04 AM                                                                                                                   
                                                                                                                                
CO-CHAIR CHARISSE  MILLETT called the House  Special Committee on                                                             
Energy meeting  to order at  10:09 a.m.   Present at the  call to                                                               
order   were  Representatives   Petersen,   Edgmon,  Tuck,   (via                                                               
teleconference),   and  Millett.      Also   in  attendance   was                                                               
Representative Peggy Wilson (via teleconference).                                                                               
                                                                                                                                
10:09:36 AM                                                                                                                   
                                                                                                                                
^HOUSE DRAFT ENERGY POLICY BILL                                                                                               
^HOUSE DRAFT OMNIBUS ENERGY BILL                                                                                              
                                                                                                                                
CO-CHAIR MILLETT announced  the first order of  business would be                                                               
the  public  unveiling of  the  House  Draft Energy  Policy  Bill                                                               
followed by  the House  Draft Omnibus Energy  Bill.   She relayed                                                               
that  the  committee has  traveled  throughout  Alaska to  gather                                                               
information  for both  pieces of  legislation.   Co-Chair Millett                                                               
urged the  public to understand  that these are the  first drafts                                                               
of  legislation  that  will  be  refined  by  expert  and  public                                                               
testimony during the committee process.                                                                                         
                                                                                                                                
10:10:56 AM                                                                                                                   
                                                                                                                                
BILL  POPP,  President  &  CEO,  Anchorage  Economic  Development                                                               
Corporation (AEDC), informed the  committee that the House Energy                                                               
Stakeholder  Group  established  a  framework  for  the  proposed                                                               
statewide energy  policy.   In addition to  Mr. Popp  and Caitlin                                                               
Higgins  from the  Alaska Conservation  Alliance, members  of the                                                               
stakeholder group are:   Representative Edgmon and Representative                                                               
Millett, House Special Committee  on Energy Co-Chairs; Adam Berg,                                                               
Jeff  Turner,   and  Larry   Persily,  legislative   staff;  Gwen                                                               
Holdmann, Alaska  Center for Energy  and Power;  Robert Venables,                                                               
Southeast  Conference;  Scott  Goldsmith,  University  of  Alaska                                                               
Anchorage  Institute  of  Social  and  Economic  Research;  Jason                                                               
Brune,  Resource  Development  Council  for  Alaska,  Inc.;  John                                                               
Davies,  Alaska  Cold  Climate  Housing  Research  Center;  Ralph                                                               
Anderson,  Bristol  Bay  Native Association;  Bob  Pawlowski  and                                                               
Denali Daniels,  Denali Commission; Stacy  Schubert, Municipality                                                               
of  Anchorage; Marilyn  Leland, Alaska  Power Association;  Meera                                                               
Kohler, Alaska  Village Electric  Cooperative, Inc.;  Ron Miller,                                                               
consultant;  Chris Rose,  Renewable  Energy  Alaska Project;  and                                                               
Kathie Wasserman,  Alaska Municipal League.   Mr. Popp  said that                                                               
the members of  the stakeholders group met over  the last several                                                               
months for  intense discussions of the  issues surrounding energy                                                               
in Alaska.                                                                                                                      
                                                                                                                                
10:12:52 AM                                                                                                                   
                                                                                                                                
CAITLIN   HIGGINS,   Executive  Director,   Alaska   Conservation                                                               
Alliance, informed  the committee  that part  of the  purpose for                                                               
developing an  energy policy was to  provide a basis for  a long-                                                               
term energy vision, and a  comprehensive and coordinated approach                                                               
to   energy  development   that  takes   advantage  of   Alaska's                                                               
opportunities and challenges.   By taking this  step, Alaska will                                                               
be  joining other  states that  are  developing statewide  energy                                                               
policies.    Furthermore, a  statewide  policy  will align  state                                                               
government  around a  set of  unified strategic  goals that  will                                                               
ultimately  guide the  state  to the  achievement  of its  energy                                                               
goals.                                                                                                                          
                                                                                                                                
10:13:35 AM                                                                                                                   
                                                                                                                                
MR. POPP added  that the key steps of this  process were toward a                                                               
foundation to  establish an overarching  energy policy  that will                                                               
bring  unity   to  all  of  the   divisions,  sub-divisions,  and                                                               
political divisions of  state government.  He  encouraged the use                                                               
of the  policy as  a base to  develop a set  of short-,  mid-, or                                                               
long-term strategic  goals.  Finally,  the policy can be  used to                                                               
develop  a  plan  for  the implementation  of  the  programs  and                                                               
projects  to achieve  the  aforementioned goals.    He said,  "In                                                               
other words, the  foundation is the policy, the  direction is the                                                               
goals, and the plan is how to achieve those goals."                                                                             
                                                                                                                                
10:14:43 AM                                                                                                                   
                                                                                                                                
MS. HIGGINS noted the principle  guiding the stakeholders group's                                                               
process  was the  importance of  affordable, reliable,  safe, and                                                               
available energy  to Alaska's economy.   There  are uncertainties                                                               
in the market  on energy pricing, and concerns  about fuel fossil                                                               
prices and  how heavy energy  costs are affecting Alaskans.   The                                                               
issue  of energy  needs to  be addressed  by the  state, and  she                                                               
advised  that the  first step  is developing  a statewide  energy                                                               
policy  and  uniting around  goals  to  help meet  future  energy                                                               
needs.                                                                                                                          
                                                                                                                                
10:15:14 AM                                                                                                                   
                                                                                                                                
MR. POPP continued to explain  that this policy is fundamental to                                                               
the economic  and social health  of residential,  commercial, and                                                               
industrial   users  of   energy.     After  some   research,  the                                                               
stakeholders  group  agreed  to use  the  Tri-Borough  Commission                                                               
Proposed Southcentral  Energy Policy as  a starting point.   This                                                               
document  addressed many  issues that  are in  common across  the                                                               
state; however, the  document was broadened to  a statewide focus                                                               
that would  take into account  the regional differences  that are                                                               
important to the success of any energy policy initiative.                                                                       
                                                                                                                                
10:16:28 AM                                                                                                                   
                                                                                                                                
MS. HIGGINS highlighted the fact  that in the policy, "everything                                                               
is on the table."  The  stakeholders group attempted to provide a                                                               
complete review  of the  state's energy needs  and to  offer many                                                               
economic   development  options,   as  well   as  the   necessary                                                               
resources.  The  policy covers issues from  energy efficiency and                                                               
conservation to renewable  and nonrenewable resource development,                                                               
research,  education, work-force  development,  the promotion  of                                                               
long-term  energy  development,  the coordination  of  government                                                               
functions, and the streamlining of the regulatory process.                                                                      
                                                                                                                                
10:17:14 AM                                                                                                                   
                                                                                                                                
MR. POPP  reiterated that  establishing the  policy is  the first                                                               
step.   Afterward, the  stakeholders group  will be  developing a                                                               
set of strategic goals that can  serve as an advisory document to                                                               
the legislature.   Mr. Popp  concluded by saying that  plans must                                                               
be  adopted in  order  to  achieve the  goals  and implement  the                                                               
programs and projects.                                                                                                          
                                                                                                                                
10:17:59 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  EDGMON  described   the  stakeholders  group's  meeting                                                               
schedule and the process that resulted  in the proposed bill.  He                                                               
characterized  the   bill  as  a  comprehensive   and  reasonable                                                               
statement of  an energy policy  that recognizes that Alaska  is a                                                               
resource development  state, yet  is cognizant of  global climate                                                               
change,    energy    conservation,   and    energy    efficiency.                                                               
Furthermore,  public testimony  around the  state cited  the need                                                               
for  an  overarching vision  in  state  statute  and also  for  a                                                               
centralized  clearinghouse   that  would   allow  energy   to  be                                                               
represented prominently along with  other state issues.  Co-Chair                                                               
Edgmon  thanked all  of the  stakeholders group  members for  the                                                               
"good work that was done."                                                                                                      
                                                                                                                                
10:19:42 AM                                                                                                                   
                                                                                                                                
CO-CHAIR MILLETT agreed  with Co-Chair Edgmon and  added that the                                                               
policy came from  the work of the stakeholders.   She related the                                                               
eye-opening   experience  of   working   with  the   conservation                                                               
community  and the  resource development  community to  reach the                                                               
compromise  and  consensus that  resulted  in  "a fantastic  work                                                               
product."                                                                                                                       
                                                                                                                                
CO-CHAIR MILLETT  announced the committee would  hear a sectional                                                               
analysis of both  bills by staff and then would  hear invited and                                                               
public testimony.   The public  is also encouraged to  comment on                                                               
the committee's website.                                                                                                        
                                                                                                                                
10:21:53 AM                                                                                                                   
                                                                                                                                
RON  MILLER advised  the committee  that  the work  draft of  the                                                               
proposed  omnibus energy  bill was  created to  aggregate in  one                                                               
bill   provisions   from   the  following   pending   pieces   of                                                               
legislation;  HB  148,  Energy Efficiency  Standards  for  Public                                                               
Buildings and  the companion bill  SB 121; HB 191,  Nuclear Power                                                               
Production; HB  196, Alternative  Energy Revolving Loan  Fund; HB
218, State Department  of Energy; HB 219,  Renewable Energy Grant                                                               
Requirements;  SB  31,  Renewable  Energy  Tax  Credits;  SB  71,                                                               
Alternative  Energy  Systems  for   Public  Works;  and  SB  150,                                                               
Emerging  Energy  Technology Fund  at  the  University of  Alaska                                                               
Fairbanks (UAF).   There are  other pending bills "that  touch on                                                               
energy", however,  the pending legislation included  in this work                                                               
draft  is  intended  to promulgate  the  proposed  energy  policy                                                               
statement in the draft house bill amending AS 44.99.                                                                            
                                                                                                                                
                                                                                                                                
10:25:03 AM                                                                                                                   
                                                                                                                                
MR. MILLER  explained that  Section 1 is  the only  new provision                                                               
that  is not  currently included  in pending  legislation.   This                                                               
section amends  AS 14.07 and  would require the  consideration of                                                               
energy  use standards  for proposed  school construction  that is                                                               
supported  with state  funds.   Section 2  adds a  new subsection                                                               
that  proposes  that  the  Department   of  Education  and  Early                                                               
Development  (EED) would  consider  siting plans  for new  school                                                               
construction to determine the potential  use of the co-generation                                                               
capabilities of local  power plants to provide heat  to the newly                                                               
constructed school.  Section 3  begins the section of the omnibus                                                               
bill that relates  to nuclear facilities in the state.   In fact,                                                               
Sections 3,4,5,6, and  7, relate to nuclear  power production and                                                               
were  extracted from  HB 191,  sponsored by  Representative Craig                                                               
Johnson, Alaska State  Legislature.  Mr. Miller  pointed out that                                                               
the proposed deletion on page 5,  line 10, "however, a permit may                                                               
not be issued  until the municipality with  jurisdiction over the                                                               
proposed facility  site has approved  the permit" will  remain in                                                               
the language  of the  bill, and only  "the governor  has approved                                                               
the permit" is deleted.                                                                                                         
                                                                                                                                
10:26:52 AM                                                                                                                   
                                                                                                                                
CO-CHAIR MILLETT  asked whether  this change  was to  allow local                                                               
control over issues located "in their backyard."                                                                                
                                                                                                                                
10:27:04 AM                                                                                                                   
                                                                                                                                
MR. MILLER agreed.                                                                                                              
                                                                                                                                
10:27:17 AM                                                                                                                   
                                                                                                                                
ADAM  BERG,  staff,  Representative Bryce  Edgmon,  Alaska  State                                                               
Legislature, clarified that Sections 5 and  6 are part of HB 218,                                                               
and Section 7 is part of HB 148 and SB 119.                                                                                     
                                                                                                                                
10:28:12 AM                                                                                                                   
                                                                                                                                
MR.  MILLER continued  his  analysis of  Section  8, a  provision                                                               
currently in  SB 71,  that allows the  state to  construct public                                                               
facilities  in a  way that  will use  alternative energy  sources                                                               
when available.  Section  9 is a provision in HB  148 and SB 119,                                                               
that requires  an agency to  submit three reports with  a request                                                               
for  an  appropriation   of  $1  million  or   more  for  capital                                                               
improvements.   Sections 10 and  11 relate  to the creation  of a                                                               
new  department of  energy; Section  10, a  provision of  HB 218,                                                               
adds the board of directors  of the Alaska Energy Authority (AEA)                                                               
to the official  list of the boards and  commissions, and Section                                                               
11  moves the  Alaska Natural  Gas Development  Authority (ANGDA)                                                               
from the Department of Revenue  (DOR) to a proposed department of                                                               
energy.  Section  12 relates to the renewable  energy grant fund,                                                               
created  by HB  219,  assuring that  applicants  can verify  that                                                               
matching funds are available for  a project, and that the project                                                               
will have  a financial  benefit exceeding the  grant amount.   It                                                               
also requires projects to file activity reports with AEA.                                                                       
                                                                                                                                
10:30:20 AM                                                                                                                   
                                                                                                                                
MR. MILLER continued  to Section 13, a provision in  HB 219, that                                                               
requires  AEA to  hire  an economist  or  financial analyst  with                                                               
experience in  renewable energy to  prepare a  written evaluation                                                               
for each project recommended for  funding.  Section 14 begins the                                                               
sections  dealing  with  the   emerging  energy  technology  fund                                                               
created by SB 150.   The proposed fund will be  housed at the UAF                                                               
and will be used to provide  loans and grants for energy projects                                                               
such  as research  and  development,  and demonstration  projects                                                               
designed  to  test  new  technologies.   Section  15  also  is  a                                                               
provision in HB 191, and  deletes the exclusion of nuclear energy                                                               
from the definition  of power project, or  projects, currently in                                                               
state statute.   Section 16, a provision in SB  31, is related to                                                               
renewable energy  production tax credits, and  assures that those                                                               
credits are not subject to  Alaska corporate income tax.  Section                                                               
17 is  also a  provision related  to renewable  energy production                                                               
tax  credits  in  SB  31,  and  it  offers  power  producers  and                                                               
utilities tax credits for  producing electricity from geothermal,                                                               
wind, hydroelectric  (hydro), tidal, wave, biomass,  in-river, or                                                               
solar energy.   Section  18 adds  a department  of energy  to the                                                               
state  list of  principal offices  and departments.   Section  19                                                               
also relates  to a  department of energy  and defines  its duties                                                               
and responsibility  for certain  programs.   Section 20  is taken                                                               
from SB 221, regarding energy  efficiency in state buildings, and                                                               
requires  the Department  of Transportation  & Public  Facilities                                                               
(DOT&PF)   to  retrofit,   where  cost   effective,  all   public                                                               
facilities within  15 years  of the completion  of an  energy use                                                               
index database, and that the database must be updated annually.                                                                 
                                                                                                                                
10:34:34 AM                                                                                                                   
                                                                                                                                
MR. MILLER  continued his analysis  of Section 21,  that requires                                                               
DOT&PF to submit  a report to the  legislature summarizing energy                                                               
audits of state  buildings within a year of  completion.  Section                                                               
22, a provision in HB 148 and  SB 119, requires DOT&PF to adopt a                                                               
state  energy use  reduction plan,  and  to consider  the use  of                                                               
energy contracts when cost effective.   Section 23 moves AEA from                                                               
Department  of   Commerce,  Community,  &   Economic  Development                                                               
(DCCED) to  the proposed department of  energy for administrative                                                               
purposes only.   Section 24 increases the membership  of AEA from                                                               
five to seven members, names  its directors, and sets overlapping                                                               
terms  of two  years.   Section  25 further  relates  to the  AEA                                                               
board.   Section  26,  a provision  in SB  221,  requires AEA  to                                                               
develop an  energy use index  database so that  public facilities                                                               
can   measure  baseline   energy   consumption,   and  to   adopt                                                               
regulations  establishing  the  methodology  used.    Section  27                                                               
deletes  the  exclusion of  nuclear  energy  production from  the                                                               
definition  of  power  project, or  projects,  in  AEA  statutes.                                                               
Section 28,  a provision  in HB  196, provides  for a  variety of                                                               
capitalization sources for the  alternative energy revolving loan                                                               
fund.   Section 29,  another provision in  HB 196,  requires that                                                               
any alternative  energy project funded by  the alternative energy                                                               
revolving loan  fund be located  in Alaska.  Section  30, another                                                               
provision of  HB 196, requires  that a loan from  the alternative                                                               
energy revolving loan fund be secured  by the real property to be                                                               
improved, and sets the interest rate at between 5 and 8 percent.                                                                
                                                                                                                                
10:38:56 AM                                                                                                                   
                                                                                                                                
MR. MILLER  turned to Section  31 and  said that this  section is                                                               
also a provision from HB 196.   He asked Mr. Berg to complete the                                                               
analysis of Section 31.                                                                                                         
                                                                                                                                
10:39:39 AM                                                                                                                   
                                                                                                                                
MR.  BERG said  that the  intent  of Section  31 is  to add  high                                                               
efficiency wood  burning stoves to the  definition of alternative                                                               
energy systems, so  owners may qualify for loans.   To accomplish                                                               
this, the  language in the bill  may need to refer  to efficiency                                                               
ratings of  stoves.  In  fact, some newer woodstoves  are burning                                                               
"normal"  logs efficiently  and  should  qualify for  alternative                                                               
energy loans.                                                                                                                   
                                                                                                                                
10:40:23 AM                                                                                                                   
                                                                                                                                
MR. MILLER further explained that  the discussion of the language                                                               
in Section  31 centered on  what is "processed"  or "unprocessed"                                                               
wood.   Section  32 relates  to  a provision  in HB  191 and  its                                                               
intent is to exclude nuclear fuel  as a supplier of energy in the                                                               
definition of  an alternative energy  system.  He read  from page                                                               
20, line 5, the following:                                                                                                      
                                                                                                                                
     (A)  means   a  source   of  thermal,   mechanical,  or                                                                    
     electrical energy that  is not dependent on  oil or gas                                                                    
     for  the  supply  of  energy   for  space  heating  and                                                                    
     cooling,  refrigeration, and  cold storage,  electrical                                                                    
     power, mechanical power, or the heating of water.                                                                          
                                                                                                                                
MR. MILLER  pointed out  that this  change would  remove existing                                                               
language that  reads "or a  nuclear fuel" from the  definition of                                                               
alternative energy systems in AS 46.11.900(1).                                                                                  
                                                                                                                                
10:42:09 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  MILLETT   asked  for   clarification  on   the  federal                                                               
definition of alternative power.                                                                                                
                                                                                                                                
10:42:18 AM                                                                                                                   
                                                                                                                                
MR.  MILLER  advised  that  nuclear   energy  is  not  considered                                                               
alternative energy under the federal definition.                                                                                
                                                                                                                                
10:42:31 AM                                                                                                                   
                                                                                                                                
MR. MILLER  stated Section 33  is called the  "repealer section."                                                               
From a  provision in HB  191, it  repeals the prohibition  of the                                                               
transportation  of high  level  nuclear waste;  from  HB 218,  it                                                               
relates to the Alaska Housing  Finance Corporation (AHFC) statute                                                               
governing home  energy conservation  and weatherization;  from HB
196, it  relates to the  alternative energy revolving  loan fund,                                                               
the alternative  energy revolving  loan fund interest  rates, and                                                               
the transfer or  selling of mortgages and/or notes.   Section 34,                                                               
that is  a provision in SB  31, is a sunset  date for alternative                                                               
energy tax credits  set for 1/1/25.  Also from  SB 31, Section 35                                                               
allows unused  tax credits  to be carried  forward until  the tax                                                               
year following 12/31/25.   Section 36, that is a  provision in SB
221, gives  the AEA  six months  from the  effective date  of the                                                               
energy omnibus  bill to establish  an energy use  index database.                                                               
Section 37, that is a provision from  HB 148, SB 119, and SB 221,                                                               
requires DOT&PF  to submit a  report of recommendations  from its                                                               
energy audit  by 1/31/11.  Section  38, a provision from  HB 218,                                                               
relates to the  initial appointment of public members  to the AEA                                                               
board.                                                                                                                          
                                                                                                                                
10:45:26 AM                                                                                                                   
                                                                                                                                
CO-CHAIR EDGMON asked for recognition  of the bills, and sponsors                                                               
thereof, from which the omnibus bill was compiled.                                                                              
                                                                                                                                
10:45:52 AM                                                                                                                   
                                                                                                                                
MR. BERG  recognized the  following:   HB 148,  Energy Efficiency                                                               
Standards for  Public Buildings, sponsored by  Representative Les                                                               
Gara;   HB   191,   Nuclear  Power   Production,   sponsored   by                                                               
Representative  Craig  Johnson;  HB  196, HB  218,  and  HB  219,                                                               
sponsored  by  the House  Special  Committee  on Energy;  SB  31,                                                               
Renewable  Energy   Tax  Credits,  sponsored  by   Senator  Lesil                                                               
McGuire;  SB 71,  Alternative Energy  Systems  for Public  Works,                                                               
sponsored by  Senator Gene Therriault; SB  121, Energy Efficiency                                                               
Standards  for   Public  Buildings,   sponsored  by   the  Senate                                                               
Resources  Standing  Committee;  and   SB  115,  Emerging  Energy                                                               
Technology Fund, sponsored by Senator Lesil McGuire.                                                                            
                                                                                                                                
                                                                                                                                
10:46:59 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  MILLETT expressed  her belief  that a  lot of  work was                                                               
done  to  take  the  best  parts  of  the  aforementioned  bills;                                                               
however,  there are  issues not  addressed in  the omnibus  bill,                                                               
such  as  the  Integrated  Resource Plan,  the  Greater  Railbelt                                                               
Energy  and Transmission  Corporation (GRETC),  the in-state  gas                                                               
pipeline, and the needs of  Southcentral.  In fact, the committee                                                               
plans to  complete a comprehensive  side-by-side analysis  on the                                                               
Chakachamna Hydropower  project, the Susitna  River hydroelectric                                                               
project,   Mt.   Spurr,  the   Fire   Island   Wind  Farm,   coal                                                               
gasification, and other  projects that are similar  in nature and                                                               
that provide  a level  of energy.   She opined  that the  time to                                                               
advocate  for one  project over  another is  not until  after the                                                               
comprehensive analyses and energy  costs are completed during the                                                               
first month  of the  legislative session.   At that  time, public                                                               
and expert  testimony on each project  will be heard.   Also, she                                                               
assumed  other ideas  will be  offered  during the  session.   In                                                               
addition, because there is not a  fiscal note on the omnibus bill                                                               
as  yet, it  remains  a  "work in  progress."   Co-Chair  Millett                                                               
concluded  the first  draft of  the  bill will  continue to  move                                                               
Alaska along the road to an energy plan.                                                                                        
                                                                                                                                
10:51:12 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  EDGMON pointed  out  that a  lot  of the  appropriation                                                               
measures  that support  energy programs  are tied  to the  budget                                                               
process, which is  out of the realm of  the proposed legislation.                                                               
Furthermore, since  the bill  is a committee  bill, it  cannot be                                                               
prefiled and will  remain a working draft until  the beginning of                                                               
the legislative session on 1/19/10.                                                                                             
                                                                                                                                
10:51:49 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE PETERSEN  stressed the importance  of establishing                                                               
a state  energy department.   Energy development is  an important                                                               
issue  for the  future  of  the state,  and  placing the  various                                                               
energy  agencies "in  one category  ... will  make it  easier for                                                               
businesses and individuals  to get the best use out  of our state                                                               
administration."                                                                                                                
                                                                                                                                
10:52:46 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  TUCK warned  that the  proposed legislation  must                                                               
meet  the state's  future energy  needs, as  well as  its current                                                               
needs.  He noted that the supply  of energy will play a huge role                                                               
in  future economic  development  and in  building an  industrial                                                               
base in the state.                                                                                                              
                                                                                                                                
10:54:32 AM                                                                                                                   
                                                                                                                                
STEVEN   HAAGENSON,  Statewide   Energy  Coordinator;   Executive                                                               
Director, Alaska Energy Authority  (AEA), Department of Commerce,                                                               
Community, &  Economic Development (DCCED), agreed  with Co-Chair                                                               
Millett  that the  stakeholders, though  a diverse  group, worked                                                               
through some  rough issues and  came to solid solutions.   During                                                               
his review  of the  energy policy,  he noticed  that it  is well-                                                               
aligned with  Governor Parnell's four  pillars of energy:   using                                                               
fossil fuels,  including coal, natural  gas, and  oil; developing                                                               
renewable   resources,   including   geothermal,   wind,   solar,                                                               
hydroelectric, hydrokinetic, tidal,  wave, and biomass; promoting                                                               
conservation   and  efficiency;   and  providing   assistance  to                                                               
Alaskans.  Mr.  Haagenson said he was pleased to  see an economic                                                               
development section  in the  proposed legislation,  as that  is a                                                               
critical piece to the long-term health of Alaska.                                                                               
                                                                                                                                
10:56:17 AM                                                                                                                   
                                                                                                                                
CO-CHAIR EDGMON asked for comments on components of the bill.                                                                   
                                                                                                                                
10:56:36 AM                                                                                                                   
                                                                                                                                
MR. HAAGENSON said "It's a little early to comment on that."                                                                    
                                                                                                                                
10:56:55 AM                                                                                                                   
                                                                                                                                
SARA  FISHER-GOAD,  Deputy   Director-Operations,  Alaska  Energy                                                               
Authority (AEA),  Department of  Commerce, Community,  & Economic                                                               
Development   (DCCED),  called   the  committee's   attention  to                                                               
Sections 12 and 13 of the  draft omnibus energy bill, relating to                                                               
the renewable energy  fund, and said that some of  the changes to                                                               
AEA programs  were recommended by  the audit report  issued after                                                               
rounds one  and two evaluations of  last year.  She  informed the                                                               
committee that AEA has made  changes in analyses since rounds one                                                               
and two,  and has adopted  regulations that will  further clarify                                                               
its processes.   At this time, AEA  is in the midst  of its round                                                               
three evaluation.   Ms. Fisher-Goad  pointed out that AEA  uses a                                                               
[Benefit Cost  (BCR)] ratio  analysis through  the stage  two and                                                               
stage three reviews of its  projects; therefore, the BCR analysis                                                               
is  about  16  percent  of  the total  review.    Alaska  statute                                                               
requires that highest  "weight" [in the analysis] is  the cost of                                                               
energy, and the percentage in rounds  one and two was 30 percent.                                                               
However, in round three, AEA will  use 25 percent for the cost of                                                               
energy.   In addition, Alaska  statute requires that  "match" and                                                               
"regional spreading"  carry significant  weight in  the analysis.                                                               
Regarding regional spreading, she  explained that this allocation                                                               
is  done after  the  project analysis;  so, although  significant                                                               
weight is  attached, it is on  a different track and  is factored                                                               
by AEA's  advisory committee.   The match requirement  for rounds                                                               
one and  two was 25  percent of  "the feasibility" and  for round                                                               
three it is  20 percent.  Ms. Fisher-Goad  reminded the committee                                                               
of  other   factors  such  as  project   feasibility,  scope  and                                                               
schedule,    qualifications   of    the   applicant,    technical                                                               
feasibility,  a financial  plan,  economic  feasibility, and  the                                                               
readiness of  the applicant to  complete the project.   She noted                                                               
that the weight of readiness  of the applicant was increased from                                                               
5 percent  in rounds one and  two, to 10 percent  in round three.                                                               
During  the third  stage  of analysis,  a  detailed and  thorough                                                               
study  is  made  of  additional   and  other  benefits,  economic                                                               
feasibility, local support, and  the sustainability of a project.                                                               
She  assured  the  committee  that AEA  strives  to  treat  every                                                               
applicant fairly  and that  every project is  reviewed in  a fair                                                               
manner.  Ms. Fisher-Goad offered  to work with staff with respect                                                               
to  what is  perceived  to  be missing  from  the AEA  evaluation                                                               
process.                                                                                                                        
                                                                                                                                
11:00:53 AM                                                                                                                   
                                                                                                                                
MS. FISHER-GOAD  turned to the  economic analysis in  Section 13,                                                               
that requires  AEA to contract  with an economist or  a financial                                                               
analyst,  and said  that  AEA currently  uses  the Institute  for                                                               
Social  and  Economic  Research   (ISER),  University  of  Alaska                                                               
Anchorage (UAA),  and other sources  for financial analyses.   In                                                               
fact, AEA  is now  using ISER  in a  quality control  capacity to                                                               
provide consistency  in reports  and to streamline  the reporting                                                               
process.    She  suggested  that the  committee  refine  what  is                                                               
expected in a report from AEA to the legislature.                                                                               
                                                                                                                                
11:01:54 AM                                                                                                                   
                                                                                                                                
CO-CHAIR EDGMON  pointed out  that a provision  of the  bill asks                                                               
for either an  economist or a financial  analyst, with experience                                                               
in the field  of renewable energy, prepares  a written evaluation                                                               
for each project.  He asked if AEA does this now.                                                                               
                                                                                                                                
11:02:19 AM                                                                                                                   
                                                                                                                                
MS.  FISHER-GOAD said  yes.    However, the  evaluation  is in  a                                                               
point-basis   spreadsheet  format   that  could   be  made   more                                                               
"readable."   ISER is the  lead contractor tasked  with providing                                                               
consistency in economic reports.   She also assured the committee                                                               
that AEA already provides activity  project reports through grant                                                               
processes  as  required in  Section  12.   Ms.  Fisher-Goad  also                                                               
suggested   that   the   committee  clarify   the   legislature's                                                               
expectation of what an activity report should include.                                                                          
                                                                                                                                
11:03:57 AM                                                                                                                   
                                                                                                                                
GENE  THERRIAULT, Senior  Policy Advisor/In-state  Energy, Office                                                               
of the  Governor, in response  to Co-Chair Edgmon, said  that the                                                               
governor questioned  whether the expense  of a new  department of                                                               
energy is necessary.  He remarked:                                                                                              
                                                                                                                                
     I think he  does agree that there  could be, certainly,                                                                    
     some  focus brought  on the  overall  state efforts  on                                                                    
     energy  that would  make  the  existing structure  more                                                                    
     efficient.  I think part  of the governor's ... concern                                                                    
     stems  from  the  fact  that he  was  involved  in  the                                                                    
     legislature  years ago  when money  was very  tight and                                                                    
     the  legislature  took  steps   to  do  away  with  one                                                                    
     department.                                                                                                                
                                                                                                                                
MR. THERRIAULT then  pointed out that [Director of  the Office of                                                               
Management and Budget] Karen Rehfeld  was not able to accommodate                                                               
all  of the  funding  requests  from the  state  agencies in  the                                                               
current budget.   He  expressed the  administration's willingness                                                               
to  work with  the legislature  to ensure  that the  structure of                                                               
state  government  is efficient,  gets  the  work done,  provides                                                               
oversight, and  that the  citizens of the  state are  directed to                                                               
the  proper   agencies;  however,  spare  dollars,   rather  than                                                               
covering  the overhead  of another  department,  will be  steered                                                               
"into some of the existing areas where money is tight."                                                                         
                                                                                                                                
11:06:00 AM                                                                                                                   
                                                                                                                                
CO-CHAIR MILLETT opined  that this is not an  opportunity to grow                                                               
government, but to streamline government.   The original language                                                               
of the  proposed legislation  was developed  after many  trips to                                                               
hear testimony from rural areas,  and to hear conversations about                                                               
energy  throughout the  state.   She  related  citizens feel  our                                                               
government   is  not   "user-friendly;"  in   fact  there   is  a                                                               
duplication of  work in different departments.   Co-Chair Millett                                                               
encouraged  the  governor,  the  legislature,  and  the  affected                                                               
departments to look  for duplication and take  the opportunity to                                                               
streamline  agencies,  either under  a  department  of energy  or                                                               
within  the  DCCED.    She   applauded  the  appointment  of  Mr.                                                               
Therriault and  stressed the need  for a position at  the cabinet                                                               
level  to  assure  Alaskans that  the  governor  understands  the                                                               
importance  of  energy  to  the overall  health  of  the  state's                                                               
economy and citizens.  Co-Chair  Millett then restated her belief                                                               
that  as the  state  energy  policy is  developed,  there is  the                                                               
opportunity to streamline the process  for those citizens who are                                                               
in  "dire  need."    Although  Governor  Parnell  has  been  very                                                               
responsive to  the legislative  energy committees,  she expressed                                                               
her hope to  "further the conversation so we can  make sure that,                                                               
as we go forward with our overarching energy policy, it works."                                                                 
                                                                                                                                
11:08:43 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  EDGMON added  that  the committee  has  heard from  all                                                               
corners of  the state, including  mayors, who expressed  the need                                                               
to  consolidate all  of  the different  entities  that deal  with                                                               
energy issues.   He welcomed Mr. Therriault to  his new position,                                                               
and  said  there are  compelling  reasons  to  talk about  a  new                                                               
department of  energy, as  energy is  "the underpinning  of every                                                               
one of  the other 14  departments, and every facet  of government                                                               
and the private sector in  Alaska."  In addition, testimony heard                                                               
by the  committee favored  a centralized  agency for  federal and                                                               
Outside sectors  to work with  on energy issues, such  as federal                                                               
sources of money for tribal and energy matters.                                                                                 
                                                                                                                                
11:10:26 AM                                                                                                                   
                                                                                                                                
MR. THERRIAULT asked whether the  creation of a new department is                                                               
the way  to respond to  the needs of the  public, or if  there is                                                               
another  structural change  that should  take place.   He  agreed                                                               
that this  is a  good opportunity for  the legislature  to review                                                               
the previous limitations put on AEA  that may have led to some of                                                               
the concerns heard  today.  Finally, he  expressed the governor's                                                               
appreciation  of  the  committee's  work  and  opined  the  draft                                                               
omnibus bill  will "pull together different  parts, and different                                                               
pieces  of  legislation,  so  that   you  can  really  focus  the                                                               
attention, when you start your 90-day session."                                                                                 
                                                                                                                                
11:12:11 AM                                                                                                                   
                                                                                                                                
CO-CHAIR MILLETT opened public testimony.                                                                                       
                                                                                                                                
11:12:39 AM                                                                                                                   
                                                                                                                                
MARILYN  LELAND, Executive  Director,  Alaska Power  Association,                                                               
informed the  committee that the  Alaska Power  Association (APA)                                                               
is the  trade association for  the electric utilities  around the                                                               
state.    As a  member  of  the  energy stakeholders  group,  she                                                               
thanked  the  committee co-chairs  for  their  time and  support.                                                               
Although  APA membership  has  not developed  a  position on  the                                                               
proposed   legislation,  she   read   the  following   resolution                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     A   Resolution  Issuing   an  Urgent   Legislative  and                                                                    
     Administrative Call to Action for an Energy Policy.                                                                        
                                                                                                                                
     The entire state of Alaska  is facing an energy crisis.                                                                    
     Alaska's  economy  was   built  on  affordable  energy.                                                                    
     Communities statewide  are faced with  aging generation                                                                    
     and transmission  facilities.   The unstable  price and                                                                    
     supply  of  fuel  is  increasingly  impacting  Alaskans                                                                    
     everywhere.                                                                                                                
                                                                                                                                
     Without leadership  from policy makers  Alaska's entire                                                                    
     economy  will crumble.   Policy  makers must  adopt and                                                                    
     implement  a statewide  energy policy  that focuses  on                                                                    
     regional  priorities, provides  commitments to  short-,                                                                    
     mid-,   and  long-term   generation  and   transmission                                                                    
     facilities,  and   facilitates  fuel   development  and                                                                    
     storage   infrastructure    projects   with   financial                                                                    
     commitments from the State.                                                                                                
                                                                                                                                
     A large  hydro electric  project, developed  similar to                                                                    
     the Bradley  Lake Hydro project, should  be the primary                                                                    
     long-term generation  priority of the State  of Alaska,                                                                    
     since  it  will  meet  the needs  of  75%  of  Alaska's                                                                    
     population  well into  the future.   Additionally,  the                                                                    
     State  should develop  and  implement viable  long-term                                                                    
     generation  options  for  Alaskans not  served  by  the                                                                    
     Railbelt   system,  such   that  affordable,   reliable                                                                    
     electricity is  available to every  Alaskan, regardless                                                                    
     of where they might reside.                                                                                                
                                                                                                                                
     Finally, the State of Alaska  must ensure that reliable                                                                    
     and affordable  fuel is available for  power generation                                                                    
     across the state.  The State  of Alaska must do more to                                                                    
     encourage natural  gas exploration  in Cook  Inlet; and                                                                    
     should financially participate  in building natural gas                                                                    
     storage and pipeline infrastructure.   The State should                                                                    
     ensure  that  generation  fuel  for  non-interconnected                                                                    
     utilities is available at a  cost per BTU comparable to                                                                    
     the cost of Railbelt fuel sources.                                                                                         
                                                                                                                                
     Alaska  Power  Association  urges the  Legislature  and                                                                    
     Administration  to make  energy policy  development the                                                                    
     highest priority for the 2010 legislative session.                                                                         
                                                                                                                                
11:16:54 AM                                                                                                                   
                                                                                                                                
MEERA   KOHLER,  President   &  CEO,   Alaska  Village   Electric                                                               
Cooperative, Inc. (AVEC), informed  the committee that the Alaska                                                               
AVEC  participated as  a  member of  the  stakeholders group  and                                                               
noted that  the advisory  group process "does  really given  us a                                                               
voice   into  the   process.     She  acknowledged   that  small,                                                               
geographically  remote communities  in rural  Alaska have  a very                                                               
high  cost   of  energy   and  these   costs  "are   killing  our                                                               
communities."   This  issue must  be addressed  by the  state; in                                                               
fact, she has proposed an  all-Alaska generation and transmission                                                               
concept and expressed her hope that  it will be looked at because                                                               
it  offers a  near-term option  that could  lead to  reliable and                                                               
affordable energy in rural Alaska.                                                                                              
                                                                                                                                
11:18:19 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  EDGMON  recalled  there  are  three  wind  turbines  in                                                               
Kasigluk that  at peak power  could provide  up to 40  percent of                                                               
the  local electrical  needs.   He  asked whether  AVEC has  data                                                               
available that  recognizes that diesel  fuel will continue  to be                                                               
the prominent fuel supply to  the utilities, along with renewable                                                               
sources.                                                                                                                        
                                                                                                                                
11:19:45 AM                                                                                                                   
                                                                                                                                
MS. KOHLER advised  that the three 100 kilowatt  wind turbines in                                                               
Kasigluk  are capable  of supplying  85 percent  of the  power at                                                               
peak production and,  on  a year-around basis, they are providing                                                               
18-20 percent  of the power  used in  two communities.   In fact,                                                               
wind turbines in Toksook Bay  have achieved over 80 percent input                                                               
at peak  production; however, due  to the intermittent  nature of                                                               
wind, the maximum displacement tends  to be less than 30 percent,                                                               
although  40  percent is  anticipated  in  Gambell and  Savoonga.                                                               
AVEC has wind projects in  nine communities with funding from the                                                               
Denali  Commission,  the  U.S. Department  of  Agriculture  Rural                                                               
Utility Service and, most recently,  the alternative energy fund.                                                               
These  projects  will  allow  AVEC to  make  inroads  toward  the                                                               
displacement  of diesel  fuel; in  fact, its  board of  directors                                                               
adopted the goal of displacing 25  percent of diesel fuel used by                                                               
the  use of  renewable  fuels  by 2020.    She acknowledged  that                                                               
diesel  will continue  to be  the mainstay  of energy  provision,                                                               
though  grants  from  state  and  federal  sources  to  construct                                                               
renewable power  generation infrastructure have reduced  the cost                                                               
of power to all of the communities served by AVEC.                                                                              
                                                                                                                                
11:22:42 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  PETERSEN  asked whether  solar  will  be used  to                                                               
displace diesel fuel in summer.                                                                                                 
                                                                                                                                
11:22:50 AM                                                                                                                   
                                                                                                                                
MS. KOHLER relayed that a 50  kilowatt solar array is planned for                                                               
a village  next year  to demonstrate  the displacement  of diesel                                                               
fuel by  solar energy.  Because  the demand for energy  is lowest                                                               
in summer,  the impact will  be limited.  However,  she suggested                                                               
that  building  with  a  "solar wall"  has  potential  value  for                                                               
village school construction.                                                                                                    
                                                                                                                                
11:24:33 AM                                                                                                                   
                                                                                                                                
JOHN  DAVIES,  Senior   Researcher/Public  Policy,  Cold  Climate                                                               
Housing Research  Center (CCHRC), noted  that he was a  member of                                                               
the stakeholders  group and appreciated the  fellow members' hard                                                               
work.   As the senior researcher  at the CCHRC, he  expressed his                                                               
strong  belief  that  it  is essential  that  energy  issues  are                                                               
elevated  to   department  or  cabinet   level  focus   in  state                                                               
government.    Additionally, he  is  concerned  that the  efforts                                                               
toward  conservation  and efficiency  in  the  bill will  take  a                                                               
second place  behind the  search for supply.   To  illustrate the                                                               
value of  conservation and efficiency,  he said gas and  oil heat                                                               
for a  building costs $10-20  per million BTUs; whereas,  with an                                                               
energy  conservation effort  saving  25  percent, when  amortized                                                               
over  about  30  years,  the  cost  is  $3-6  per  million  BTUs.                                                               
Moreover,  the  savings  from energy  conservation  will  support                                                               
economic development in  the local economy.   Finally, Mr. Davies                                                               
stated  his   intention  to  produce  a   model  residential  and                                                               
commercial  building  code  based  on  the  International  Energy                                                               
Conservation  Code  (IECC),  and  that  can  be  adapted  by  any                                                               
community in the state.                                                                                                         
                                                                                                                                
11:28:52 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  EDGMON   recalled  that   energy  conservation   was  a                                                               
prominent point  of discussion during the  stakeholders meetings.                                                               
The draft legislation  calls for a 15 percent  increase in energy                                                               
efficiency  on a  per capita  basis between  2010 and  2020.   He                                                               
asked whether this was a realistic goal.                                                                                        
                                                                                                                                
11:30:01 AM                                                                                                                   
                                                                                                                                
MR. DAVIES said it was.   However, larger reductions are possible                                                               
"on   the  space   heating  side   with  energy   efficiency  and                                                               
conservation, then it is on the  electrical use side."  He opined                                                               
the  targets  in  the  proposed  bill  are  very  reasonable  and                                                               
significant  numbers.   In further  response to  Co-Chair Edgmon,                                                               
Mr.  Davies advised  that conservation  goals need  to be  in the                                                               
bill and he would help craft them.                                                                                              
                                                                                                                                
11:32:02 AM                                                                                                                   
                                                                                                                                
ALBERT  LUKE, Asa'carsarmuit  Tribal  Council, Mountain  Village,                                                               
informed  the committee  he was  in Anchorage  for three  days of                                                               
training  about  energy efficiency  such  as  solar panels,  wind                                                               
turbines,  and heating  water  by solar  hydronics.   During  his                                                               
training, Mr.  Luke learned that  energy generation  through wind                                                               
turbines and  solar panels is  a clean, reliable,  and economical                                                               
source of  energy for rural  Alaskans.  Currently,  the villagers                                                               
in Mountain Village are paying $6  per gallon for diesel fuel and                                                               
$0.75 cents per kilowatt hour  for electricity.  Mr. Luke relayed                                                               
that conversion  to wind  turbines in  the village  of Perryville                                                               
brought the  cost down  to $0.04  per kilowatt  hour.   He opined                                                               
that  making  wind turbines  available  for  more communities  in                                                               
rural Alaska  would prevent AVEC  from "shut[ing] our  power down                                                               
because ... a  lot of people out there can't  afford the energy."                                                               
Mr.  Luke concluded  that wind  turbines and  solar panels  are a                                                               
good source of reliable and cheap energy.                                                                                       
                                                                                                                                
11:34:29 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  MILLETT   pointed  out  that  work   force  development                                                               
training  will  allow  necessary   equipment  maintenance  to  be                                                               
performed by local residents.                                                                                                   
                                                                                                                                
11:34:47 AM                                                                                                                   
                                                                                                                                
PAUL D.  KENDALL, expressed his regret  at not being a  member of                                                               
the "inside  stakeholders group."   He opined this  discussion is                                                               
not about  carbons, hydrocarbons, or stakeholders,  but about the                                                               
very  serious  business  of  energy.     Energy  belongs  to  the                                                               
residents  of the  state,  and he  expressed  his frustration  at                                                               
accommodating "those people  who want to feed off  the energy for                                                               
revenue  generation."   Regarding  the  proposed legislation,  he                                                               
stated  his belief  that energy  belongs to  every person  in the                                                               
state at  a given annual  allotment for  no charge.   Mr. Kendall                                                               
explained the  need for a  residential, all-electric,  model home                                                               
of 1,000 square feet to use as  a common base model.  This model,                                                               
complete  with   an  electric   vehicle,  finance,   gas,  water,                                                               
electricity,  and social  services, would  serve as  a foundation                                                               
for the "new  frontier."  He predicted that the  planet will "de-                                                               
carbon"  and that  means the  carbon  market has  snapped up  all                                                               
sectors of society,  leaving no place for free  enterprise to go.                                                               
He  encouraged  the  committee  to  research  patents  issued  to                                                               
organizations  and  individuals such  as  VW,  Honda, and  a  MIT                                                               
professor, to  see how the  world is about  to change.   In fact,                                                               
Alaska has a chance to lead the  rest of the world "if it can get                                                               
past  the corruption."   The  proposed legislation  is a  bill of                                                               
insiders and  the stakeholders group  should have been  opened up                                                               
to  public members  and the  meetings made  available for  public                                                               
viewing.     Mr.  Kendall  stated   he  was  glad  to   hear  the                                                               
representatives  from rural  Alaska  discussing the  use of  wind                                                               
energy;  moreover, Alaska's  true partnership  is with  water and                                                               
its potential for detonation, and  the opportunities for the Cook                                                               
Inlet, the Knik  Arm, and the Susitna River.   He opined the Cook                                                               
Inlet, 200  miles long, 10-30  miles wide, and 60-125  feet deep,                                                               
"has  enough  water to  push  large,  huge, cities."    Scotland,                                                               
Ireland, England, and India have  projects and Alaska should have                                                               
15-20  projects  in  the  Cook  Inlet,  the  Knik  Arm,  and  the                                                               
meandering  body of  the Susitna  River; projects  such as  these                                                               
should be  partnered with  the federal  government and  others to                                                               
spawn  "one  new  idea  after another."    Mr.  Kendall  strongly                                                               
encouraged  the committee  to "decouple"  the residential  energy                                                               
generation, supply, and  storage from all other  sectors in order                                                               
to foster  inspiration.  Mr.  Kendall warned that this  moment in                                                               
history is so  large, there is no applicable model  and when that                                                               
happens "you have  to drop back and protect your  family and your                                                               
neighbor,  and   those  things  transcend  ...   code  terms  for                                                               
nonsense."  He concluded that  the world will be changing rapidly                                                               
and said "You cannot conduct business  as you did as usual in the                                                               
past  in these  unusual and  wonderful, magnificent  times.   And                                                               
Alaska stands  to lead  the way  because you  had the  ability to                                                               
reach into this inlet out  here and become the first zero-carbon,                                                               
residential,  all-electric, city  on  the planet."   Mr.  Kendall                                                               
thanked the chair for hearing his testimony.                                                                                    
                                                                                                                                
11:47:08 AM                                                                                                                   
                                                                                                                                
CLIFFORD FITKA informed  the committee he is  an electrician from                                                               
the Native village  of Marshall on the lower Yukon  River, and he                                                               
uses his trade to help with local  housing.  Mr. Fitka said he is                                                               
a member of  the Marshall Tribe, and he is  attending training on                                                               
renewable energy sponsored  by the Ohogamiut Tribe  and the Yukon                                                               
River  Inter-Tribal   Watershed  Council.     He   expressed  his                                                               
excitement  about  the use  of  wind  and  solar power  in  rural                                                               
communities.  He is planning on  using these power sources in his                                                               
own home  due to the high  cost of heating fuel  and electricity.                                                               
However,  his local  electric utility  is against  using personal                                                               
wind  generation  and does  not  allow  net  metering.   He  also                                                               
referred  to Perryville  and its  successful use  of wind  energy                                                               
technology.   The windmills  in Perryville are  tied to  the grid                                                               
and are  installed and  maintained by the  villagers.   Mr. Fitka                                                               
explained the difficulty  of life "off the grid ...  but my heart                                                               
is also out there and ... I have  a right to live there as well."                                                               
He stressed  the need  for long-term  solutions, so  that village                                                               
residents do  not have  to make choices  between buying  food and                                                               
fuel, as  has happened when his  light bill was $3,000.   Instead                                                               
of   hand-outs,  his   community   wants   solutions  and   self-                                                               
determination.   He  reiterated that  windmills are  small enough                                                               
for  the villagers  to  install  and maintain.    Mr. Fitka  then                                                               
pointed  out  the  value  of  projects  that  can  be  built  and                                                               
maintained by  local workers, unlike  the new school  in Marshall                                                               
that  is  being  built  by  outside labor.    He  encouraged  the                                                               
committee to review net metering  and restated the value of solar                                                               
and wind generation solutions for the Bush communities.                                                                         
                                                                                                                                
11:58:27 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  EDGMON  asked whether  the  community  of Marshall  was                                                               
taking action by accessing tribal or federal resources.                                                                         
                                                                                                                                
11:59:26 AM                                                                                                                   
                                                                                                                                
MR. FITKA explained  that he was not on the  tribal board, but in                                                               
Anchorage for training.  However,  he related that individuals in                                                               
the community that were looking  at grants and the possibility of                                                               
installing wind generators for homes "were stonewalled by AVEC."                                                                
                                                                                                                                
12:01:04 PM                                                                                                                   
                                                                                                                                
CO-CHAIR EDGMON stressed  that energy solutions will  come from a                                                               
partnership  effort   involving  communities,   individuals,  and                                                               
elected officials working together.                                                                                             
                                                                                                                                
12:01:51 PM                                                                                                                   
                                                                                                                                
MR. FITKA assured  the committee he will share  his training with                                                               
his community.   He then invited the representative  from AVEC to                                                               
visit his community.                                                                                                            
                                                                                                                                
12:02:51 PM                                                                                                                   
                                                                                                                                
CO-CHAIR  MILLETT said  it was  good to  see Alaskan  communities                                                               
learning  from  each  other  and   participating  in  work  force                                                               
training  for  their  local  residents.    It  is  important  for                                                               
communities  to  be proactive  and  to  take ownership  of  their                                                               
energy issues.                                                                                                                  
                                                                                                                                
12:04:40 PM                                                                                                                   
                                                                                                                                
DEWAYNE  COOPER, Construction  Project Manager,  Native Tribe  of                                                               
Marshall, listed his  professional qualifications and educational                                                               
background.    Mr.  Cooper  stated that  he  generated  about  $3                                                               
million  worth of  housing  funding for  the  tribe, including  a                                                               
contract for  $1.2 million of  America Recovery  and Reinvestment                                                               
Act of  2009 (ARRA) stimulus  money to  build seven homes.   This                                                               
new construction will use energy  efficient materials with a R-48                                                               
[energy  efficiency]  value.    He  noted that  his  job  was  to                                                               
implement  policies and  regulations  regarding construction  and                                                               
energy efficiency,  and to "get the  most ... for the  buck."  He                                                               
advised the  committee that in  Marshall, the cost of  a kilowatt                                                               
hour is seven times greater than  in Anchorage.  He opined a wind                                                               
generation  system could  share information  with AVEC's  grid in                                                               
case of an  emergency; however, the tribe is  being denied access                                                               
to the grid.                                                                                                                    
                                                                                                                                
12:08:41 PM                                                                                                                   
                                                                                                                                
CO-CHAIR MILLETT  explained that  net metering was  not addressed                                                               
in the proposed legislation because  the Regulatory Commission of                                                               
Alaska (RCA) is  in the process of issuing  rules and regulations                                                               
on this  issue.   At this  time, net metering  can be  offered by                                                               
utilities on  a voluntary basis.   She said she was  available to                                                               
hear further discussion on net metering in her office.                                                                          
                                                                                                                                
12:09:49 PM                                                                                                                   
                                                                                                                                
MR.  COOPER  agreed  that  there should  be  regulations  on  the                                                               
utilities.  He expressed his  support of the proposed legislation                                                               
and then  referred to  pending changes in  federal law  that will                                                               
allow the tribe  to start its own housing authority.   Mr. Cooper                                                               
suggested  the need  for  a regional  shareholders  group as  the                                                               
Yukon-Kuskokwim Delta is  not being represented.   He advised the                                                               
committee  that  his organization  will  request  funds from  the                                                               
Denali Commission  for small windmills;  in fact,  his commitment                                                               
to wind generation  inspired him to transport  tower materials at                                                               
considerable personal risk.                                                                                                     
                                                                                                                                
12:13:38 PM                                                                                                                   
                                                                                                                                
CO-CHAIR  EDGMON  encouraged  Mr.   Cooper  to  provide  comments                                                               
regarding the proposed legislation.                                                                                             
                                                                                                                                
12:14:23 PM                                                                                                                   
                                                                                                                                
MR. COOPER suggested that there  can be further discussion on all                                                               
of these issues at a later date.                                                                                                
                                                                                                                                
12:14:54 PM                                                                                                                   
                                                                                                                                
TOM  LAKOSH  expressed  his  hope that  the  allegations  in  his                                                               
testimony can  be substantiated and/or investigated  further.  He                                                               
opined  that  the  proposed  policy  bill  does  not  reflect  an                                                               
appreciation  for the  impediments to  the implementation  of its                                                               
goals.   Although the  bill sets policy  guidelines, it  does not                                                               
contain a  means to  bridge the gaps  between the  utilities, the                                                               
public  interest,  private   power  producers,  and  conservation                                                               
organizations.   Mr. Lakosh suggested  an amendment  is necessary                                                               
to  require strict  renewable energy  portfolio and  conservation                                                               
standards,  and advised  that such  standards  are available;  in                                                               
fact, the  committee can call  on AEA to present  realistic goals                                                               
from  research on  known projects.   Referring  to the  wind farm                                                               
project  at Fire  Island, he  said  he found  the utilities,  the                                                               
private  power   producers,  and  the  AEA   have  their  special                                                               
interests  and  are  competing,  rather  than  cooperating.    He                                                               
restated  the  need  for   obtainable  standards  with  penalties                                                               
applied for  non-compliance.  The  state needs a  "2012 Renewable                                                               
Portfolio Standard" so  it can undertake the  steps necessary "to                                                               
get  these projects  off the  ground."   Mr.  Lakosh assumed  the                                                               
aforementioned  was  the  purpose   of  the  Regional  Integrated                                                               
Resource Plan  (RIRP) and GRETC; however,  allowing provisions in                                                               
these programs to be voluntary is not going to work.                                                                            
                                                                                                                                
12:21:37 PM                                                                                                                   
                                                                                                                                
CO-CHAIR MILLETT  explained that GRETC  was not addressed  by the                                                               
proposed legislation because of the on-going negotiations.                                                                      
                                                                                                                                
12:21:55 PM                                                                                                                   
                                                                                                                                
MR. LAKOSH  maintained that a  bill "being totally  voluntary and                                                               
advisory, isn't worth the paper it is written on."                                                                              
                                                                                                                                
12:22:11 PM                                                                                                                   
                                                                                                                                
CO-CHAIR  MILLETT asked  Mr. Lakosh  to return  to the  committee                                                               
during a hearing on the GRETC bill.                                                                                             
                                                                                                                                
12:22:27 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  PETERSEN  acknowledged   that  mandates  for  the                                                               
utilities are necessary  in order to meet goals.   He agreed that                                                               
the  states  that are  making  progress  toward renewable  energy                                                               
goals have  mandated that  utilities reach  benchmarks by  a date                                                               
certain.                                                                                                                        
                                                                                                                                
12:23:12 PM                                                                                                                   
                                                                                                                                
MR. LAKOSH continued  to say the GRETC  legislation that proposes                                                               
a voluntary  association provides  no incentive  for cooperation.                                                               
Regarding  the production  tax subsidy,  he encouraged  expanding                                                               
the  tax  to include  renewable  fuels,  so  that there  will  be                                                               
competition in the home heating  and transportation fuels market.                                                               
Mr. Lakosh returned to Section  20 of the proposed energy omnibus                                                               
bill  and   suggested  that  the   language  of  the   goals  for                                                               
maintenance include "the highest benefit  to cost ratio should be                                                               
pursued."  In  Section 22, "meet or  exceed applicable standards"                                                               
should be added.  Mr. Lakosh  questioned the value of an advisory                                                               
policy statement  versus strict standards  in the policy,  and in                                                               
the  regulations, for  the proposed  department of  energy.   His                                                               
recommendation  was  to  use  international  standards,  adjusted                                                               
according to the specifics of  Alaska, and including a method for                                                               
adjudication for non-compliance.                                                                                                
                                                                                                                                
12:27:36 PM                                                                                                                   
                                                                                                                                
WILLIAM WARREN  informed the committee  he is a  58-year resident                                                               
of  Alaska and  a retired  pipefitter/welder.   He addressed  the                                                               
proposed energy policy bill and  said he supports the development                                                               
of natural  gas and using  the byproducts  of propane in  much of                                                               
Alaska.  In addition, Mr.  Warren expressed support for using the                                                               
Alaska  Natural   Gas  Development  Authority  (ANGDA)   for  the                                                               
construction of a "stand alone  system" that would merge with the                                                               
future  natural gas  pipeline  "megaproject."   Regarding  energy                                                               
conservation,  he  suggested  the implementation  of  a  two-tier                                                               
pricing system with very low rates  for a 1,000 square foot house                                                               
with a Four-Star Energy Rating  limited to 150 million cubic feet                                                               
of natural gas  per year, and higher rates  charged for exceeding                                                               
the  limit, or  for  a  house with  a  Three-Star Energy  Rating.                                                               
Turning to  the cost  of piping, he  encouraged the  committee to                                                               
find a  way to "get mainline  extensions to people."   Mr. Warren                                                               
concluded by  referring the committee  to the energy  policies of                                                               
Utah,  where  compressed  natural  gas  will  be  used  to  power                                                               
automobiles.   Natural gas is good  for all of Alaska,  and "will                                                               
treat us well."                                                                                                                 
                                                                                                                                
12:31:42 PM                                                                                                                   
                                                                                                                                
FREYA  CHAY informed  the committee  she is  a freshman  at Kenai                                                               
Central  High School.   Referring  to Section  1 of  the proposed                                                               
energy policy bill, she noted  that the intent of the legislation                                                               
is that the state receives  50 percent of its electric generation                                                               
from  renewable  energy  sources  by 2025.    She  expressed  her                                                               
support of  this goal and suggested,  as part of her  "Caring for                                                               
the  Kenai"  project,  that the  legislature  exempt  alternative                                                               
energy  systems from  real property  tax assessments.   Ms.  Chay                                                               
opined  that to  achieve  the  2025 goal  it  will  be useful  to                                                               
promote alternative energy at the  homeowner level, as well as at                                                               
the  commercial  level.    An  alternative  energy  property  tax                                                               
exemption  would  serve as  an  incentive  to homeowners  and  is                                                               
simple to implement;  however, in order for  local governments to                                                               
do so, there must be enabling  state legislation.  She stated her                                                               
intent to  find a  sponsor for her  proposal during  the upcoming                                                               
legislative session.                                                                                                            
                                                                                                                                
12:33:31 PM                                                                                                                   
                                                                                                                                
CO-CHAIR MILLETT  encouraged Ms.  Chay to  contact the  mayors of                                                               
the Kenai Peninsula Borough and the  City of Kenai to discuss how                                                               
to fund the tax exemption.                                                                                                      
                                                                                                                                
12:34:48 PM                                                                                                                   
                                                                                                                                
JERRY MEHLBERG  said he was  a 28-year  resident of the  state, a                                                               
licensed plumber, a heating technician,  and a member of the City                                                               
of Valdez  Energy Task  Force.  He  expressed his  agreement with                                                               
the comprehensive bill and described  how the proposed bill would                                                               
have  an impact  by incorporating  alternate fuels  into new  and                                                               
existing  public  work  projects.   Specifically,  if  the  state                                                               
installed  wood   pellet  burners  into  existing   state  boiler                                                               
systems, there  would be  a large,  long-term commercial  user of                                                               
wood pellets  and an alternative to  fuel oil.  This  would be an                                                               
incentive  for  the development  of  wood  pellet plants  in  the                                                               
state,  further reducing  the cost  of the  pellets; furthermore,                                                               
wood pellet plants produce excess power  to sell to the grid.  He                                                               
advised that wood pellets have  about a 40 percent cost advantage                                                               
over  oil  at  today's  prices,  but market  demand  by  a  large                                                               
commercial user is needed.                                                                                                      
                                                                                                                                
12:37:09 PM                                                                                                                   
                                                                                                                                
RICH WILSON,  speaking on behalf  of Alaska  Ratepayers, informed                                                               
the  committee  Alaska  Ratepayers  is  a  consumer  organization                                                               
formed  to address  related issues  and  educate residents  about                                                               
energy needs of the Railbelt "and  beyond."  Energy needs are not                                                               
a Railbelt  issue or  a rural issue,  but everyone  together must                                                               
find common  ground in order to  "get a consensus through."   Mr.                                                               
Wilson   expressed  Alaska   Ratepayers'   appreciation  to   the                                                               
legislature and  the administration  for their work  so far.   He                                                               
called attention  to the draft policy  bill goals that are:   (1)                                                               
institute a comprehensive and  coordinated approach to supporting                                                               
energy  efficiency  and   conservation;  (2)  encourage  economic                                                               
development;   (3)  support   energy  research,   education,  and                                                               
workforce   development;   and    (4)   coordinate   governmental                                                               
functions.  He opined that as a  matter of policy, "we need to go                                                               
beyond  the word  'encourage economic  development'.   Mr. Wilson                                                               
reminded the  committee that the  Four Dam Pool Power  Agency and                                                               
the Bradley Lake  project would not have  been successful without                                                               
the equity commitment [by the state].   He agreed with the Alaska                                                               
Power  Association  that a  large  hydro  project should  be  the                                                               
centerpiece of energy legislation  for the Railbelt, with Susitna                                                               
being the  preferred project.   His  organization is  looking for                                                               
the  long-term solutions  to  predictable  and affordable  energy                                                               
prices.     However,  state  participation  is   necessary.    In                                                               
totality,  it  appears  that  the  omnibus bill  puts  a  lot  of                                                               
emphasis  on [demand  side  management/energy efficiency]  issues                                                               
and not enough on the resources needed for implementation.                                                                      
                                                                                                                                
12:41:58 PM                                                                                                                   
                                                                                                                                
CO-CHAIR MILLETT  agreed that there  are not any  funding sources                                                               
in the proposed  legislation.  She advised that  the committee is                                                               
waiting for  the administration  to issue  its AEA  Power Project                                                               
Fund appropriation amount.   In fact, it is  more appropriate for                                                               
the  administration to  decide what  the state  investment should                                                               
be.                                                                                                                             
                                                                                                                                
12:42:27 PM                                                                                                                   
                                                                                                                                
MR. WILSON  expressed his belief  that if there is  investment in                                                               
major  projects in  the Railbelt  "there  is no  reason we  can't                                                               
craft a  joint benefit allocated out  of that effort.   The funds                                                               
that are  allocated, that are  invested in that big  ... Railbelt                                                               
program would drive rates down in  the Railbelt ... but there's a                                                               
way to  take the  write-down of  the cost  per kilowatt  hour and                                                               
share that."                                                                                                                    
                                                                                                                                
12:43:37 PM                                                                                                                   
                                                                                                                                
CO-CHAIR  EDGMON  asked  Mr.   Wilson  about  his  organization's                                                               
opinion on the creation of a department of energy.                                                                              
                                                                                                                                
12:43:56 PM                                                                                                                   
                                                                                                                                
MR.  WILSON responded  that his  organization  has not  discussed                                                               
this  issue; however,  it  is clear  the state  has  to be  well-                                                               
organized  and  well-staffed,  and  must  also  have  legislative                                                               
direction, to  do the job.   He said his personal  preference was                                                               
for a  single, cabinet level,  department working to  keep energy                                                               
issues "the priority."                                                                                                          
                                                                                                                                
12:44:51 PM                                                                                                                   
                                                                                                                                
CO-CHAIR   MILLETT  expressed   her  interest   in  receiving   a                                                               
comprehensive   report   provided   by  the   Alaska   Ratepayers                                                               
organization.                                                                                                                   
                                                                                                                                
12:45:12 PM                                                                                                                   
                                                                                                                                
MS. HIGGINS  expressed her appreciation  to the committee  and to                                                               
the  stakeholders  group.    She  said  the  Alaska  Conservation                                                               
Alliance (ACA) is very supportive  of the bill, especially of the                                                               
legislative  intent language  setting  up the  specific goals  of                                                               
energy efficiency, renewable energy  production, and in-state gas                                                               
supply.    She related  that  her  organization has  stated  that                                                               
natural  gas can  be  a  "bridge fuel"  into  a renewable  energy                                                               
economy;  however,  the  state   energy  plan  should  have  much                                                               
stronger  language  to  prioritize  energy  efficiency.    Energy                                                               
efficiency is  the cheapest and  most cost effective way  for the                                                               
state  to  reduce   its  overall  energy  demand.     Through  an                                                               
independent company, the Alaska  Conservation Alliance will issue                                                               
a report on  how much energy efficiency Alaska can  achieve.  Ms.                                                               
Higgins praised  the second goal  pertaining to  renewable energy                                                               
and  said  since  Alaska  has  been  a  leader  in  oil  and  gas                                                               
development,  it should  use all  of  its potential  to become  a                                                               
leader in  renewable energy technology  for the benefit  of rural                                                               
and urban Alaska.                                                                                                               
                                                                                                                                
12:47:32 PM                                                                                                                   
                                                                                                                                
CO-CHAIR MILLET acknowledged that progress  may seem too slow for                                                               
some of the stakeholders.                                                                                                       
                                                                                                                                
12:48:03 PM                                                                                                                   
                                                                                                                                
CO-CHAIR  EDGMON  asked  Ms.  Higgins  if  her  organization  had                                                               
developed efficiency  conservation numbers  that are  higher than                                                               
the goals in the bill.                                                                                                          
                                                                                                                                
MS.  HIGGIN  said   not  yet.    She  then   clarified  that  her                                                               
organization  would   like  to   see  the  numbers   codified  in                                                               
legislation.    In  further  response  to  Co-Chair  Edgmon,  she                                                               
anticipated  the  ACA  report  on  energy  efficiency  should  be                                                               
available before the beginning of the next legislative session.                                                                 
                                                                                                                                
12:49:02 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE PETERSEN  asked whether  the mandates  requiring a                                                               
certain portion  of energy generation  by renewable  sources, and                                                               
by a certain date, should be in law.                                                                                            
                                                                                                                                
MS. HIGGINS  indicated yes.   She  suggested that  the uncodified                                                               
language goals could  be in the energy policy, and  then have the                                                               
actual specific goals adopted in a state energy plan.                                                                           
                                                                                                                                
REPRESENTATIVE PETERSEN concurred.                                                                                              
                                                                                                                                
                                                                                                                                
12:50:12 PM                                                                                                                   
                                                                                                                                
MS.  KOHLER  called the  committee's  attention  to the  previous                                                               
testimony from residents  of Mountain Village and  Marshall.  She                                                               
informed the committee that since the  1980s, AVEC has had in its                                                               
tariff  a  co-generation  tariff  based  on  the  Public  Utility                                                               
Regulatory Policies Act of 1978 (PURPR).  She remarked:                                                                         
                                                                                                                                
     It's  actually   a  mandate  that  energy   that's  co-                                                                    
     generated by  an end-user has  to be purchased  back by                                                                    
     the utility at  a rate to be determined  by the utility                                                                    
     but that  has to be  at least  the avoided cost  of the                                                                    
     electricity being,  being produced....   What we  do is                                                                    
     we limit the  total amount of connected  ... power that                                                                    
     can flow onto  the grid, and we have  probably the most                                                                    
     generous allowance of anywhere  in the country, we will                                                                    
     allow more than 5 percent  off the connected load to be                                                                    
     co-generated by  another provider....   In  Marshall, I                                                                    
     think it's  10 kilowatts  and in Mountain  Village it's                                                                    
     22.5 kilowatts.                                                                                                            
                                                                                                                                
MS.  KOHLER further  explained that  non-utility  power will  de-                                                               
stabilize the grid and cause  problems.  In Shakoolik, a consumer                                                               
is co-generating with  wind power and AVEC pays  avoided cost for                                                               
excess power generated at more than  $.25 per kilowatt hour.  She                                                               
concluded  that AVEC  is very  pro-active  and participates  with                                                               
private development;  in fact it owns  five meteorological towers                                                               
that have been installed to provide wind measurements.                                                                          
                                                                                                                                
12:52:59 PM                                                                                                                   
                                                                                                                                
DAVID  KARABELNIKOFF informed  the  committee he  was a  graduate                                                               
student  at the  School for  Renewable Energy  Sciences (RES)  in                                                               
Iceland.   He  is working  on his  thesis on  the integration  of                                                               
transportation  into a  renewable energy  system, using  St. Paul                                                               
Island  as an  example.   Mr. Karabelnikoff  opined that  lacking                                                               
from  the bill  is not  the clear  statement of  desire for  what                                                               
should happen, but there is no  function mechanism of how it will                                                               
happen.   In comparison, European  Union (EU) policies  are based                                                               
on  who has  the  ability  to pay;  for  example, countries  with                                                               
higher  capital  income  should   have  higher  renewable  energy                                                               
standards, or pay for renewable  energy in other countries.  This                                                               
makes  the   EU  standard  system  comprehensive   with  detailed                                                               
analysis on  how the mandates  will be fiscally implemented.   In                                                               
Alaska, a  similar mandate could be  tied to a percentage  of oil                                                               
revenue  taxes,   or  be   a  budget   item.     Thus,  petroleum                                                               
exploitation would fund the future  by investing in the renewable                                                               
side of  energy generation.   Mr. Karabelnikoff  said he  did not                                                               
see the instruments  in place that would result  in the standards                                                               
that  are set  in  the proposed  policy.   He  asked whether  the                                                               
provisions regarding  nuclear energy establish nuclear  energy as                                                               
renewable.                                                                                                                      
                                                                                                                                
CO-CHAIR MILLETT  explained that nuclear energy  is being defined                                                               
as alternative energy.                                                                                                          
                                                                                                                                
MR. KARABELNIKOFF asked whether the  sources of energy were being                                                               
looked at  on an economic scale.   He pointed out  that there was                                                               
not  a distinction  between renewable  and alternative  energy in                                                               
the  bill.   Additionally,  without a  clear  statement from  the                                                               
state on  the definition  of CO2  emissions, there  is no  way to                                                               
weight  these alternatives.    In fact,  the  wording related  to                                                               
emissions levels  and the measurement of  emissions is ambiguous,                                                               
and possibly  in conflict  with federal  Environmental Protection                                                               
Agency (EPA)  regulations.  Mr. Karabelnikoff  suggested that the                                                               
state  be active  in  establishing guidelines,  and  not to  lump                                                               
alternative  energy  in  with renewable  energy.    Referring  to                                                               
AVEC's  co-generation  policy,  he   opined  5  percent  is  low,                                                               
especially when  the percentage comes  from renewables.   He then                                                               
described the energy utility system on St. Paul Island.                                                                         
                                                                                                                                
1:00:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PETERSEN  assumed the  speaker supported  the idea                                                               
of  financial  incentives  to   individuals  for  development  of                                                               
private renewable sources of energy.                                                                                            
                                                                                                                                
MR. KARABELNIKOFF explained that a  clear economic policy must go                                                               
beyond  simple   avoided  cost   repayment  for   private  energy                                                               
generation.  For example, avoided  cost repayment in the Railbelt                                                               
region runs about "2-3 cents  a generation."  In contrast, Europe                                                               
has gone to fluctuating demand  load curves; thus, a premium rate                                                               
is paid during high demand,  and when additional co-generation is                                                               
not needed,  it can be  shut down.   This flexibility  allows the                                                               
grid to remain stabilized and  competitive rates are paid for the                                                               
renewable power.   He noted  that he has been  following Alaska's                                                               
efforts regarding  energy legislation  from Iceland,  "across the                                                               
pole."                                                                                                                          
                                                                                                                                
1:02:56 PM                                                                                                                    
                                                                                                                                
MR.  KENDALL  offered   his  services  to  the   committee.    He                                                               
encouraged  the  committee  to  hear  details  from  all  of  the                                                               
interested parties  on this very  important topic.   In addition,                                                               
the committee  should take additional  time, as much as  30 days,                                                               
and televise its meetings, because the  stakes are so high.  This                                                               
is  not  the  time  to   continue  to  conduct  business,  or  to                                                               
communicate, "Stuck in old ways."                                                                                               
                                                                                                                                
1:06:56 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  EDGMON  agreed  that comprehensive  energy  legislation                                                               
hearings  could be  held in  Anchorage and  Fairbanks during  the                                                               
session.  Last  session there were beneficial  hearings in remote                                                               
Western  Alaska.   However, he  defended the  composition of  the                                                               
stakeholders  group and  pointed  out that  anyone could  testify                                                               
during the  hearing process.   Lastly, Co-Chair  Edgmon expressed                                                               
his understanding that, at this  time, profits are not being made                                                               
from tidal and wave energy applications.                                                                                        
                                                                                                                                
1:10:29 PM                                                                                                                    
                                                                                                                                
MARVIN YODER  informed the committee  that he worked  with Galena                                                               
on  its small  nuclear power  plant.   Firstly, he  commended the                                                               
committee  on the  bill and  expressed his  appreciation for  the                                                               
sense of urgency.   Secondly, he said the first  priority was the                                                               
need to diversify  the economy, and meet  timetables, by building                                                               
short projects  that can be done  in the next decade.   Mr. Yoder                                                               
reminded  the committee  that hydro  is expensive  and long-term,                                                               
and  short-term projects  are  low cost  and  "sustainable."   He                                                               
thanked the  committee for  including provisions  from HB  191 in                                                               
the draft bill.                                                                                                                 
                                                                                                                                
1:11:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHANSEN  opined  a  structural  change  to  move                                                               
different areas  of government under  one house comes at  a cost;                                                               
however, the  idea of a new  department of energy idea  has "buy-                                                               
in,  from Haines  to  Dillingham, all  the way  up  to the  North                                                               
Slope."  He expressed his hope  that a decision will not be based                                                               
on a minimal  positive fiscal note.  Even though  the cost is not                                                               
yet known, the  cost is not "the  proper way to analyze  it."  He                                                               
then  recalled that  many  of the  challenges  to connecting  the                                                               
hydro   projects   in  Southeast   were   the   demands  of   the                                                               
environmental and  conservation community that added  millions of                                                               
dollars, and a decade of  delay onto the project.  Representative                                                               
Johansen  encouraged   an  open   and  public  dialogue   on  the                                                               
intentions of the environmental community.                                                                                      
                                                                                                                                
1:15:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT noted  that because neither bill  has been filed                                                               
yet, there still is the opportunity  to make changes.  Members of                                                               
the public can  find information on the draft  legislation at the                                                               
committee  link on  the House  Majority  website.   She said  the                                                               
commitment made  by the stakeholders,  the committee,  and staff,                                                               
"is none that I have ever seen before."                                                                                         
                                                                                                                                
1:18:41 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Special Committee on Energy meeting was adjourned at 1:18 p.m.                                                                  
                                                                                                                                

Document Name Date/Time Subjects
2009 11 24 Energy Policy Draft.pdf HENE 12/11/2009 10:00:00 AM
Agenda 12112009.doc HENE 12/11/2009 10:00:00 AM
Draft Omnibus Energy Bill.pdf HENE 12/11/2009 10:00:00 AM
Energy Policy for Alaska Presentation 11.17.09.pdf HENE 12/11/2009 10:00:00 AM
HB 306