Legislature(2009 - 2010)BARNES 124
03/25/2010 03:00 PM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| Overview: Biomass Energy | |
| HB182 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 182 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
March 25, 2010
3:07 p.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative Charisse Millett, Co-Chair
Representative Nancy Dahlstrom
Representative Kyle Johansen
Representative Jay Ramras
Representative Pete Petersen
Representative Chris Tuck
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
OVERVIEW: BIOMASS ENERGY
- HEARD
HOUSE BILL NO. 182
"An Act establishing the Greater Railbelt Energy and
Transmission Corporation and relating to the corporation;
relating to transition, financial plan, and reporting
requirements regarding planning for the initial business
operations of the Greater Railbelt Energy and Transmission
Corporation; relating to a report on legislation regarding the
Regulatory Commission of Alaska and the Greater Railbelt Energy
and Transmission Corporation; authorizing the Alaska Energy
Authority to convey the Bradley Lake Hydroelectric Project and
the Alaska Intertie to the Greater Railbelt Energy and
Transmission Corporation; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 182
SHORT TITLE: RAILBELT ENERGY & TRANSMISSION CORP.
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/12/09 (H) READ THE FIRST TIME - REFERRALS
03/12/09 (H) ENE, L&C, FIN
03/26/09 (H) ENE AT 3:00 PM BARNES 124
03/26/09 (H) Heard & Held
03/26/09 (H) MINUTE(ENE)
04/09/09 (H) ENE AT 3:00 PM BARNES 124
04/09/09 (H) Heard & Held
04/09/09 (H) MINUTE(ENE)
03/18/10 (H) ENE AT 3:00 PM BARNES 124
03/18/10 (H) Heard & Held
03/18/10 (H) MINUTE(ENE)
03/23/10 (H) ENE AT 3:00 PM BARNES 124
03/23/10 (H) -- MEETING CANCELED --
03/25/10 (H) ENE AT 3:00 PM BARNES 124
WITNESS REGISTER
DAVE STANCLIFF, Vice-President
Tok Chamber of Commerce
Tok, Alaska
POSITION STATEMENT: Presented a history of the biomass project
in Tok, Alaska.
CHRIS MAISCH, State Forester; Director
Division of Forestry
Department of Natural Resources (DNR)
Fairbanks, Alaska
POSITION STATEMENT: Presented a briefing paper from the Alaska
Wood Energy Development Task Group.
JEFF HERMANNS, Area Forester
Division of Forestry
Department of Natural Resources (DNR)
Tok, Alaska
POSITION STATEMENT: Presented a series of slides depicting
fires and forest practices in Tok, Alaska.
JIM STRANDBERG, Project Manager
Alaska Energy Authority (AEA)
Department of Commerce, Community, & Economic Development
(DCCED)
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 182.
BRIAN BJORQUIST, Senior Assistant Attorney General
Labor and State Affairs Section
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Presented a sectional analysis of changes
to HB 182.
ACTION NARRATIVE
3:07:49 PM
CO-CHAIR CHARISSE MILLETT called the House Special Committee on
Energy meeting to order at 3:07 p.m. Present at the call to
order were Representatives Millett, Edgmon, and Johansen.
Representatives Petersen, Ramras, Tuck, and Dahlstrom arrived as
the meeting was in progress.
3:08:01 PM
^Overview: Biomass Energy
Overview: Biomass Energy
3:08:23 PM
CO-CHAIR MILLETT announced that the first order of business
would be an overview of Biomass Energy, beginning with Dave
Stancliff.
3:08:44 PM
DAVE STANCLIFF, Vice-President, Tok Chamber of Commerce,
informed the committee he was representing the Tok Chamber of
Commerce and the Gateway School District. Mr. Stancliff
observed the energy problems of the state are big questions for
those who live outside of the power grid, and in rural and Bush
areas of Alaska. He recalled when the legislature created the
Tanana Valley State Forest and pointed out that the forest was
set aside for utilization of the resource. In fact, the forest
has not been used because there has not been a market for its
resources. However, the recent and current fire hazard forced
the community of Tok to develop a safety action plan, and with
the Division of Forestry, Department of Natural Resources (DNR),
it began to clear black spruce and other non commercial trees
that grow clear to the ground and cause the spread of forest
fires. This hazardous material was supposed to be burned, but
instead, Mr. Stancliff began to research the possibility of
chipping the wood for heating systems. Subsequently, the
legislature provided a wood chipper to the community of Tok, for
which he expressed his gratitude. The chipper will produce 50
tons of fuel per hour, and each ton of fuel is equal to a cord
of wood; one cord of wood equals one hundred gallons of fuel
oil. Furthermore, the chipper produces in one hour the BTU
equivalent of five thousand gallons of fuel oil. In fact, in
six days the chipper ground up enough waste wood to heat the Tok
School for one year. The Division of Forestry has used funds
from its internal budget to clear a defensible space for fire
prevention around the school, gathering enough wood to heat the
school for another year; in fact, the Tok School will be the
first school in Alaska to heat exclusively with wood chips that
come from hazardous fuel. He pointed out the state pays $10,000
per acre to fight a wildfire, but using the wood as fuel is
worth $9,000 per acre; therefore, the value to the state of the
waste wood is $19,000 per acre as a result of the purchase of
the wood chipper. At that time, the primary contractor was
installing the new boiler at the school and he described the
process and scheduling. Mr. Stancliff then spoke of potential
commercial markets for the wood chips that would support the Tok
economy, and create 12-15 new jobs in the community. Most
importantly, if public buildings are converted to biomass,
millions of dollars that leave the state to pay for diesel fuel
would stay in the state. For the first time in the state's
history, there is an opportunity to develop a natural resource
product to sustain an economy in rural Alaska. This is a
natural resource product that the foresters need to remove to
manage the forest, and that every village could use to sustain
its economy at some level. For those villages without a
chipper, logs can be barged at competitive prices with less
danger than oil, and chips, briquettes, or pellets shipped back.
The economic loop of biomass includes foresters, truckers,
loggers, boiler keepers, and fuel distributers in a small
economy that can lead to cheaper energy. Furthermore, the
economic breakeven point between biomass and number one fuel oil
is $1.20 per gallon for fuel oil, because the average acre of
biomass around Tok and elsewhere in the Interior contains 70
cords of wood that will grow back. Also, burning wood in the
wood boiler emits zero carbon and will be eligible for future
carbon credits.
3:19:10 PM
MR. STANCLIFF continued to explain that the dollar to dollar
social economic breakeven point is $1 per gallon of fuel oil.
He thanked the Division of Forestry for its contribution to
Tok's conversion to biomass and opined that "Tok is a model that
can be scaled to fit anywhere in the state." He further
explained how the product will be utilized by the Tok School,
the power company, and the local utility company. He re-stated
the importance of safety clearing the hazardous wood around
homes and buildings in the Interior. He urged the committee to
encourage the state to use biomass energy in its facilities, and
create the markets to support this industry. Biomass burns
clean at 2,600 degrees; in fact, it produces cleaner air than
fossil fuel, with less particulate matter, zero carbon, and is
as clean as propane. He concluded by describing the process to
create wood pellets in Dry Creek.
3:24:34 PM
CHRIS MAISCH, State Forester; Director, Division of Forestry,
said he would discuss statewide applications of the biomass
program. Mr. Maisch presented a briefing paper from the Alaska
Wood Energy Development Task Group, Office of the Commissioner
and Division of Forestry, DNR, that was formed in 2004, and is
comprised of state and federal agencies. The task group
encourages the development of wood energy and the briefing paper
described the installation of GARN boilers in the communities of
Kasilof and Tanana. Mr. Maisch explained that GARN boilers are
large wood stoves with a water jacket to store heat after the
wood is combusted once or twice per day. He noted that a wood
chip burner is better suited to a larger public facility; the
first one installed in the state was in Craig, and the one in
Tok is the first to use material that comes from hazardous fuel
treatments. The burner at the school in Craig uses waste
material from the sawmill at Klawock. Mr. Maisch further
explained that the scale of heating with wood reaches from a
home wood stove to pellets and chips mixed with coal to fuel a
coal-fired facility. He related that the AEA alternative energy
program has funded 13 woody biomass projects helped with
planning for the sustainability of the wood source by the
Division of Forestry. A pellet mill is currently being built in
Fairbanks that will produce 60,000 dry tons of pellets per year.
The mill is the first new wood products facility in Interior
Alaska and is being built by a private company at a cost of $6-7
million. Another important aspect of development is the process
for permitting timber sale programs so that the public will
support this type of local industry and forest management.
Lastly, he pointed out the relationship in the Interior between
hazardous fuel and frequent fires. There is a large need to
perform hazardous fuel treatments in and around communities
after communities have a wildfire protection plan in place.
Fuel treatments are done around the highest risk areas of the
community to try and reduce the risk of fire. Mr. Maisch warned
that the Interior is an ecosystem that is designed to burn, and
the fire within a community can be the most dangerous. He
concluded, "There is a real important tie between hazardous fuel
treatments and these community plans, and the opportunity to use
this material in these bioenergy facilities."
3:30:12 PM
REPRESENTATIVE TUCK asked for the number of acres available to
provide wood to make wood chip products, and how fast the wood
is replenished.
3:30:33 PM
MR. MAISCH stated that in general, the new pellet mill in
Fairbanks would use one-third of the annual allowable cut in the
Fairbanks working circle. Most projects are for space heating
use in buildings and require several hundred acres. The Tanana
Valley State Forest has 1.8 million acres of multiple use lands
dedicated to forest management. He opined there is plenty of
resource available to meet the needs of smaller communities in
rural areas.
3:31:50 PM
REPRESENTATIVE JOHANSEN asked whether the allowable sale is
limited by state statute.
3:32:16 PM
MR. MAISCH explained that the annual allowable harvest level is
based on forest management plans; over a period of 10 years, the
harvest must stay within a sustainable cut. The division holds
several authorities to offer sales, such as value-added sales
that allow contracts for up to 10 years in length for 10 million
feet a year to a company doing value-added processing. Also,
there is the Schnabel Act that allows 20-year contracts for
resource harvesting in areas of high unemployment.
3:33:52 PM
REPRESENTATIVE JOHANSEN asked whether all of the programs comply
with the allowable sale limit.
3:34:21 PM
MR. MAISCH said, "Yes, they do. They have to fall within that
annual sale ... quantity, we can't actually offer more than what
the sustained yield calculations are for a given geographic
area."
3:34:41 PM
REPRESENTATIVE JOHANSEN asked whether the accelerated allowable
sale quantity (ASQ) that was put in effect during the Murkowski
administration only affected Southeast.
3:35:17 PM
MR. MAISCH indicated that was a special program for southern
Southeast called the "bridge timber program." In fact, in
southern Southeast all of the acres offered for sale are
processed locally, but in the Interior less than 10 percent of
the allowable cut is offered and there is a large amount of
surplus material.
3:36:21 PM
REPRESENTATIVE JOHANSEN asked whether the legal environment in
the Tok area was similar to that of Southeast.
3:36:46 PM
MR. MAISCH stated that there have been only five or six
litigated sales for this program. Unlike the federal process,
the state system is streamlined and includes public
participation and transparency. In Tok, there have been no
legal challenges to sales.
3:37:51 PM
REPRESENTATIVE PETERSEN asked whether the division replants.
3:38:18 PM
MR. MAISCH said that in Tok, aspen comes in aggressively on its
own. It is sometimes necessary to plant spruce, otherwise birch
and aspen will dominate. The forest referred to in this
presentation is not considered commercial for a sawmill or other
production; in fact, this is the first opportunity to manage
this type of forest for commercial use.
3:39:42 PM
REPRESENTATIVE PETERSEN asked for the amount of time needed for
the forest to be harvested again.
3:40:06 PM
MR. MAISCH said the objective of the hazardous fuel treatment is
to convert the tree stand from a conifer type to a hardwood
type, because hardwoods are less flammable. These trees would
be re-harvested every 15-20 years. If the area is returned to
white spruce, it would take 60-120 years.
3:40:43 PM
CO-CHAIR EDGMON asked about the possibilities in the next five
to ten years for using biomass as a primary fuel source in
Alaska.
3:41:25 PM
MR. MAISCH predicted there is a lot of potential for use in a
number of communities in the Interior for space heating in
public buildings and schools. The 13 projects funded by AEA
will serve as demonstration projects to prove the effectiveness,
the benefits, and cost savings of this technology. Although
Fairbanks has had air quality problems with wood smoke, these
fuel products are dry and meet Environmental Protection Agency
(EPA) standards for particulate and emissions. There are many
possibilities for urban and rural applications.
3:43:15 PM
JEFF HERMANNS, Area Forester, Division of Forestry, Department
of Natural Resources (DNR), informed the committee Tok is part
of the fire ecosystem. He presented a map that showed the area
surrounding Tok that has burned since 1935, and said, "History
proves that the chances are we're going to burn." In 1990, fire
threatened the town, and the state spent $30 million to fight
the fire. Only a shift in the wind saved the town. In 2001,
the Red Fox fire burned 120 acres in 2 hours and cost $1.2
million. This was a wind driven fire, and with the abundant
fuel there was a danger of firefighters "getting burned over."
One slide showed a house that was saved because the land was
cleared of trees for 100 feet. Mr. Hermanns showed several
other slides of fires and noted the state has spent $50 million
fighting fires in the Tok area over the last 25 years.
3:48:11 PM
CO-CHAIR EDGMON observed there is tremendous cost to retain a
helicopter service.
3:48:30 PM
MR. HERMANNS advised that in the last 20 years, the forest has
grown and there are more residents, thus the Tok area is in as
dangerous position as in 1990. The state fire management plan
requires fighting fires around homes so the hazardous fuels
continue to grow.
3:50:06 PM
CO-CHAIR MILLETT asked whether the forest management plan
removes trees from around homes.
3:50:14 PM
MR. HERMANNS said Tok has received $320,000 in funding for fuel
reduction from the federal government since 1990, and no funds
from the state. Also, fire management options address attacking
the fire, but not removing the fuel before the fire strikes.
Several slides showed roads and driveways that would be
dangerous to travel to escape a fire and Mr. Hermanns described
how people are trapped by fire. He recommended that the
property around a home is cleared of trees for 100 feet to
create a defensible zone; however, Tok has 10,000 trees per acre
and this is a job beyond most homeowners' capabilities. Within
Tok's wildfire plan there are 38,000 acres of high volume
hazardous fuels, without a break in the stand of trees, and
1,500 residents. The Tok Community Wildfire Protection Plan
(CWPP) priorities are: remove fuels from Tok School and the
Department of Transportation & Public Facilities and Forestry
state communications tower; safe evacuation routes and road
rights-of-way; senior citizens defensible space; create
effective fuel breaks and anchors for our firefighters. He said
he told the residents of the depth of the danger but some people
can not afford to clear, or are unable to clear, their property.
Regarding the stand conversion of spruce to aspen, he explained
that the aspen root system is in the ground and after a fire
kills the spruce, the natural cycle grows the aspen first, and
then it is overtaken by spruce, until a lightning strike starts
another fire.
3:57:42 PM
MR. HERMANNS, returning to the Tok plan, said the community
began the process of clearing the problem areas around the
school and the communications tower. He described various fire
scenarios and the need to clear large areas of land to create an
effective firebreak. The division worked to determine how much
energy is in the forest and found out there can be 6,000 to
10,000 trees per acre for a weight of 33-187 tons per acre.
Using an average of 60 tons per acre, there is an average of 548
million BTUs per acre in Tok. That is equal to 21 trillion BTUs
in the Tok stand of trees. The fuel oil equivalent is
153,934,964 gallons.
4:04:06 PM
MR. HERMANNS said the fuel oil equivalent for the value of the
forest within the Tok plan is $307 million and the biofuel
equivalent is $140 million. Mr. Hermanns estimated that 3,300
acres need to be cleared, of which 500 acres are private
properties. Mechanical harvesters can remove two acres per day
at a cost of $1,000 to $1,200 per acre, or $15 per ton. The
total cost to remove the hazardous fuel around Tok is $5.7
million without commercial resale. The effort to clear land
began with the school as a safety issue; $50,000 was spent to
clear 50 acres, and the fuel will be used to heat the school for
one year. This was a collaborative effort and the process
educated students to the danger of fire. He presented a slide
that showed small trees can be handled and chipped as a bundle.
Mr. Hermanns opined this process turned a huge liability for the
state into an asset for the community.
4:11:14 PM
MR. HERMANNS recalled that the division used to burn hazardous
material and waste the energy. Now the chipper machine takes a
whole tree or a bundle of hazardous tree waste and makes fuel
ready to go into a boiler. He showed slides of the fuel going
into the boiler at the school. This technology has been proven
in Montana and on the East Coast for 20 years, and is completely
automated using a computer to boost efficiency. He predicted
the Tok School will have a net savings of $7.8 million over 30
years. He urged the state to "get serious" about fuel reduction
and invest $1,000 in fuel reduction versus $10,000 to fight an
urban interface fire. Let nature burn it, or control and
harvest the forest, and benefit from the energy. In response to
Representative Johansen, Mr. Hermanns said he was the Area
Forester for the state in Tok, which is the equivalent to a
District Ranger.
4:20:07 PM
REPRESENTATIVE TUCK asked whether there was covered storage for
the fuel.
4:20:27 PM
MR. HERMANNS explained that two month's supply of fuel is stored
inside at the Tok School. There is a plan to build outside
storage later, but the area only receives 10 inches of rain per
year.
4:21:11 PM
CO-CHAIR MILLETT expressed her appreciation for the information
provided.
4:21:33 PM
CO-CHAIR EDGMON encouraged the committee to visit Tok and Dry
Creek to see the business potential there.
4:23:02 PM
REPRESENTATIVE JOHANSEN asked whether there was a bottleneck
within the administration that stops the forestry division from
requesting the equipment and funding needed.
4:24:04 PM
MR. MAISCH said the division competes for federal funding with
all of the other states, and there has been no state funding
from the general fund for hazardous fuel mitigation projects.
His department intends to request more funding though the normal
budget process. Regarding policy, he said he hopes that the
governor's office will recommend that CWPPs are completed for
each community in a fire-prone area of the state, so they can be
used as a blueprint for fuel mitigation projects.
4:25:52 PM
REPRESENTATIVE JOHANSEN asked whether the division could
authorize clearing by a private company that could profit from
the wood.
4:26:40 PM
MR. MAISCH said the market has not matured to that point yet.
Interest from the private sector is growing, but investors must
be educated that this material is commercial.
4:27:51 PM
REPRESENTATIVE JOHANSEN observed that this legislature has
ignored opportunities such as this.
CO-CHAIR EDGMON suggested the presenters attend the Rural Energy
Conference.
4:29:17 PM
MR. MAISCH re-stated the need for the state to act as a venture
capitalist.
CO-CHAIR MILLETT agreed that the legislature focuses on oil and
gas as the state's only resource.
MR. STANCLIFF suggested the committee hear a private
presentation from Thomas Deerfield of Dalson Energy.
4:31:14 PM
The committee took an at-ease from 4:31 p.m. to 4:35 p.m.
4:35:34 PM
HB 182-RAILBELT ENERGY & TRANSMISSION CORP.
CO-CHAIR MILLETT announced the next order of business would be
HOUSE BILL NO. 182, "An Act establishing the Greater Railbelt
Energy and Transmission Corporation and relating to the
corporation; relating to transition, financial plan, and
reporting requirements regarding planning for the initial
business operations of the Greater Railbelt Energy and
Transmission Corporation; relating to a report on legislation
regarding the Regulatory Commission of Alaska and the Greater
Railbelt Energy and Transmission Corporation; authorizing the
Alaska Energy Authority to convey the Bradley Lake Hydroelectric
Project and the Alaska Intertie to the Greater Railbelt Energy
and Transmission Corporation; and providing for an effective
date."
4:35:48 PM
REPRESENTATIVE RAMRAS withdrew his objection made at the hearing
of 3/18/10.
CO-CHAIR MILLETT withdrew her motion to adopt the committee
substitute (CS) for HB 182, 26-GH1041\E, Bailey, 3/18/10, made
at the hearing of 3/18/10. She then moved to adopt CSHB 182 26-
GH1041\S, Chenoweth/Bailey, 3/24/10, as the working document.
4:36:41 PM
CO-CHAIR EDGMON objected for discussion purposes.
CO-CHAIR MILLETT explained that the working document was drafted
for the Senate.
4:36:50 PM
JIM STRANDBERG, Project Manager, Alaska Energy Authority (AEA),
Department of Commerce, Community, & Economic Development
(DCCED), informed the committee he was speaking to the bill on
behalf of the administration. Referring to the meeting on
3/18/10, he said there were questions raised regarding the
financial status of the utility companies. He presented
documents from Seattle-Northwest Securities that looked at the
financial condition of the utilities.
4:39:46 PM
CO-CHAIR MILLETT advised there are attachments to the working
document.
4:40:29 PM
MR. STRANDBERG related that the administration was pleased with
the effort on the part of the Railbelt utilities to create a new
corporation to respond to the energy future. The Alaska Energy
Authority (AEA) and the governor's office were partners in the
effort, and assisted in the first step to get all six utilities
at their board, CEO, and technical levels to work together. He
said this was a positive action and he expressed his hope the
committee would consider the bill as such.
4:42:41 PM
CO-CHAIR EDGMON observed Homer Electric Association (HEA) had
backed away from the CS.
4:43:30 PM
MR. STRANDBERG said his understanding was the matter would be
addressed by testimony at the Senate Resources Standing
Committee meeting.
4:44:05 PM
CO-CHAIR EDGMON asked what would happen if all six utilities are
not in agreement.
MR. STRANDBERG acknowledged AEA was also concerned.
4:44:57 PM
CO-CHAIR MILLETT offered to provide copies of a letter from HEA
to the committee.
4:45:36 PM
BRIAN BJORQUIST, Senior Assistant Attorney General, Labor and
State Affairs Section, Department of Law (DOL), informed the
committee his primary clients are AEA and the Alaska Industrial
Development & Export Authority (AIDEA), Department of Commerce,
Community, & Economic Development (DCCED).
4:47:09 PM
CO-CHAIR MILLETT asked Mr. Bjorkquist to point out major items
that were not in the original bill.
4:47:12 PM
MR. BJORKQUIST agreed. He explained that this legislation
creates an energy and transmission corporation modeled after a
generation and transmission (G&T) cooperative. In this type of
entity, public utilities collectively plan for, develop, and
implement their G&T needs; however, the public utilities remain
distribution utilities providing electricity to their retail
customers. The original bill created one specific corporation,
but the CS creates a statutory scheme, an energy and
transmission corporation, and also provides authority for the
Greater Railbelt Energy and Transmission Corporation (GRETC) to
be formed. The [CS] provides that four or more municipal or
cooperative electric utilities form together to acquire or
operate a project from AEA, to plan for an interconnected
system, and to create an energy and transmission corporation, if
it is first approved by the legislature. Section 13 of the work
draft provides the legislature authority for this specific
corporation to be formed. Mr. Bjorkquist pointed out that this
change from the original bill was for two reasons: (1) to avoid
a constitutional issue regarding local and special legislation;
(2) to shift the model for the corporation from the Commercial
Fishing and Agriculture Bank (CFAB), which is a specific quasi-
public corporation established in statute, to a private style
with more freedom and flexibility as to how the utilities
operate within GRETC. The utilities desire the ability to
develop their own projects, rather than the expectation that the
new corporation will be the sole provider of G&T services. He
further explained that the process is starting "where there is
nothing, basically," and this will allow for more of an
evolution of the corporation instead of forcing the utilities
into an entity. The legislation gives more freedom to the
utilities, but with an expectation that the entity will evolve
into the provider of public services in the Railbelt. Mr.
Bjorkquist began a sectional analysis, and said Sections 1, 4,
and 5 deal with rate regulation by the Regulatory Commission of
Alaska (RCA), and municipalities. Sections 1 & 4 determine that
when GRETC is not regulated by the RCA, it is also not regulated
by municipalities. Section 5 provides for the exemption from
regulation by the RCA. These provisions would become effective
8/16/15, five years after the organization of GRETC, thus there
would be five years of full regulation by the RCA and five years
into the future the exemption from rate regulation would take
place. He cautioned that there is an inconsistency in the
language regarding regulation, but the amendment corrects that.
4:55:03 PM
CO-CHAIR MILLETT observed that GRETC would be a third party
storage facility without RCA regulation. This is contradictory
to proposed legislation, and she questioned the reasoning.
4:56:08 PM
MR. BJORKQUIST referred to language on page 2, line 15, which
deals with "related contracts for wheeling, storage,
regeneration." He expressed his belief that this does not
concern gas storage, but affects water storage related to
hydroelectric projects.
4:57:20 PM
CO-CHAIR MILLETT pointed out another reference to fuel storage
on page 4, line 5.
4:57:25 PM
MR. BJORKQUIST noted on page 14, lines 15-17, there was a
provision for fuel supplies. He said he was unfamiliar with
contradictory legislation; however, he suggested including the
exemption by language on page 18, line 8, which deals with
certain components that are related to regulation.
4:59:18 PM
CO-CHAIR MILLETT advised that there is also a contradiction in
whether the interconnection by an independent power producer
(IPP) has to conform to the corporation's interconnection
guidelines and standards. This sets up an adversarial role for
the IPP as it would need to appeal to the RCA to get
interconnection within GRETC.
5:00:24 PM
MR. BJORKQUIST stated the provisions regarding where GRETC takes
a role on interconnection are intended to replace a void in the
interconnection reliability standards throughout the Railbelt.
In fact, the Alaska Intertie Agreement is not signed by all of
the Railbelt utilities, and will terminate next October. These
provisions would have GRETC fill that void and become the entity
to deal with interconnection standards. Furthermore, there is
the provision that allows the RCA to compel interconnection.
The first step for interconnection is the obligation on the
utilities to negotiate terms and conditions with each other. If
unsuccessful, the RCA can open a docket and compel
interconnection with the terms and conditions established by the
RCA. This second step is less cumbersome than litigation
between parties, and he gave an example. Section 2 also deals
with the RCA and provides that power sales agreements between
GRETC and public utilities would not be subject to review or
approval by the RCA. The provision would apply as long as there
is long-term debt associated with the power project, as in the
Bradley Lake, Swan Lake, and Lake Tyee projects. The purpose of
Sec. 2 is to provide assurance and protection for financing.
For example, if power sales agreements were subject to
regulatory review, the review may affect the source of re-
payment. In addition, GRETC is forward-looking, and this
applies only to new projects. Section 3 deals with rate-
setting, and is identical to the provision in rate-setting that
would become effective in 2015. Further discussion on this
section is forthcoming later in the analysis. Section 6 begins
with general law on the energy and transmission corporation.
5:08:08 PM
CO-CHAIR MILLETT suggested the analysis stop at page 3, line 15,
Chapter 50, of the [CS].
5:08:24 PM
REPRESENTATIVE TUCK observed a title change was needed.
5:08:42 PM
CO-CHAIR MILLETT announced that HB 182 was held over.
5:09:18 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 5:09 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Tok DOF Hazardous Forest Fuels & Wood Energy Chris Edit.pdf |
HENE 3/25/2010 3:00:00 PM |
|
| CS HB 182 3-24-10.PDF |
HENE 3/25/2010 3:00:00 PM HENE 3/30/2010 3:00:00 PM |
HB 182 |
| HB 182 Amendment 1.PDF |
HENE 3/25/2010 3:00:00 PM |
HB 182 |