Legislature(2009 - 2010)Anch LIO Rm 220
12/11/2009 10:00 AM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| House Draft Energy Policy Bill|| House Draft Omnibus Energy Bill | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
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 |