Legislature(2011 - 2012)BARNES 124
02/08/2011 03:00 PM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| Presentation(s) on Reports Required by the Alaska Sustainable Energy Act of 2010. | |
| Office of the Governor or Designee, "how Best to Structure State Energy Programs" | |
| Department of Transportation & Public Facilities, "retrofitting State Buidings to Improve Energy Efficiency" & "using Compressed Natural Gas to Power Vehicles" | |
| Department of Revenue, "creating a Municipal Energy Improvements Financing Program" | |
| Office of Management & Budget, "standardized Way to Collect Data on Energy Consumption and Costs" | |
| 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
February 8, 2011
3:14 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Lance Pruitt, Co-Chair
Representative Bob Lynn
Representative Kurt Olson
Representative Dan Saddler
Representative Pete Petersen
Representative Chris Tuck
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION(S) ON REPORTS REQUIRED BY THE ALASKA SUSTAINABLE
ENERGY ACT OF 2010.
OFFICE OF THE GOVERNOR OR DESIGNEE~ "HOW BEST TO STRUCTURE STATE
ENERGY PROGRAMS"
DEPARTMENT OF TRANSPORTATION & PUBLIC FACILITIES~ "RETROFITTING
STATE BUIDINGS TO IMPROVE ENERGY EFFICIENCY" & "USING COMPRESSED
NATURAL GAS TO POWER VEHICLES"
DEPARTMENT OF REVENUE~ "CREATING A MUNICIPAL ENERGY IMPROVEMENTS
FINANCING PROGRAM"
OFFICE OF MANAGEMENT & BUDGET~ "STANDARDIZED WAY TO COLLECT DATA
ON ENERGY CONSUMPTION AND COSTS"
-HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
SARA FISHER GOAD, Executive Director
Alaska Energy Authority (AEA)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Testified on the Office of the Governor
report titled, "How Best to Structure State Energy Programs."
JOEL ST. AUBIN, Chief-Statewide Public Facilities
Office of the Commissioner
Department of Transportation & Public Facilities (DOTPF)
Anchorage, Alaska
POSITION STATEMENT: Testified on the Department of
Transportation & Public Facilities (DOTPF) report titled,
"DOT&PF Retrofitting of State Facilities."
DIANA ROTKIS, Manager-Statewide Equipment Fleet
Office of the Commissioner
Department of Transportation & Public Facilities (DOTPF)
Anchorage, Alaska
POSITION STATEMENT: Testified on the State of Alaska Vehicle
Fleet Compressed Natural Gas Pilot Program.
BOB BREAN, Director
Research & Rural Development
Alaska Housing Finance Corporation (AHFC)
Anchorage, Alaska
POSITION STATEMENT: Offered to provide written information on
the Alaska Energy-Efficiency Revolving Loan Fund program.
JERRY BURNETT, Deputy Commissioner
Treasury Division
Department of Revenue (DOR)
Juneau, Alaska
POSITION STATEMENT: Testified on the report titled, "Alaska
Department of Revenue Municipal Energy Improvements Financing
Report January 31, 2011."
CRAIG KAHKLEN, Policy Analyst
Office of Management & Budget (OMB)
Office of the Governor
Juneau, Alaska
POSITION STATEMENT: Testified on the report titled, "SB220
Alaska Sustainable Energy Act," dated January 31, 2011.
ACTION NARRATIVE
3:14:00 PM
CO-CHAIR NEAL FOSTER called the House Special Committee on
Energy meeting to order at 3:14 p.m. Representatives Foster,
Saddler, Petersen, Tuck, Olson, and Pruitt were present at the
call to order. Representative Lynn arrived as the meeting was
in progress.
3:14:34 PM
^PRESENTATION(S) ON REPORTS REQUIRED BY THE ALASKA SUSTAINABLE
ENERGY ACT OF 2010.
PRESENTATION(S) ON REPORTS REQUIRED BY THE ALASKA SUSTAINABLE
ENERGY ACT OF 2010.
3:14:45 PM
CO-CHAIR FOSTER announced that the first order of business would
be presentations on reports required by the Alaska Sustainable
Energy Act of 2010, beginning with the executive director of AEA
reporting on how best to structure state energy programs.
3:15:03 PM
^OFFICE OF THE GOVERNOR OR DESIGNEE, "HOW BEST TO STRUCTURE
STATE ENERGY PROGRAMS"
OFFICE OF THE GOVERNOR OR DESIGNEE, "HOW BEST TO STRUCTURE STATE
ENERGY PROGRAMS"
3:16:06 PM
SARA FISHER GOAD, Executive Director, Alaska Energy Authority
(AEA), Department of Commerce, Community & Economic Development
(DCCED), informed the committee the report from the governor's
office titled "How Best to Structure State Energy Programs,"
required an examination of the powers and duties of AEA and its
relationship with the Alaska Industrial Development & Export
Authority (AIDEA). She said AEA has become a key agency for the
planning of energy infrastructure financing by issuing grants
through the Renewable Energy Grant Fund and Recommendation
Program and the Emerging Energy Technology Fund program. Also,
AEA has managed the construction of many rural energy
infrastructure projects, and provided technical assistance and
training to local power plant and bulk fuel operators. In
partnership with the Regulatory Commission of Alaska (RCA), AEA
also manages the Power Cost Equalization (PCE) program.
However, AEA does not have the ability to own and operate new
energy projects or to hire staff; in fact, AIDEA staff manages
most AEA programs. Ms. Fisher Goad stated that authorizing
statutes in proposed HB 103 would restore AEA's power and allow
it to hire staff. She provided a brief history of the
governance of AIDEA and AEA by their boards of directors, and
advised that AIDEA and AEA are now allowed "to move forward with
their separate and distinct missions as State of Alaska
corporations." The aforementioned pending legislation, if
enacted, will provide the next step and allow AEA to hire staff
for the purpose of managing its programs. She pointed out that
the report makes two recommendations: 1. The Bulk Fuel Loan
fund - managed by AEA - and the Bulk Fuel Bridge Loan Fund
(BFBLF) - managed by DCCED - should be merged into one program;
2. AEA, working with AIDEA and DCCED, should explore options to
address the energy efficiency needs of commercial buildings
through the Alaska Commercial Energy Audit Program. The report
also directed that coordination between commissioners, staff,
the Office of Management and Budget (OMB), and the governor's
office for the management of energy programs is provided by the
Energy Policy Coordinator (EPC), whose mission is to help ensure
that the state's energy resources and energy programs are
devoted to advance the state's energy policy priorities. Ms.
Fisher Goad concluded that the governor's report also
recommended that the EPC further evaluate services and programs
to measure their results and make additional changes, if
necessary. She opined the overall message is that services and
programs should be reevaluated and reviewed for their
effectiveness in providing value to the residents of the state.
3:22:21 PM
CO-CHAIR FOSTER asked for Ms. Fisher Goad's opinion on creating
a department of energy.
3:22:54 PM
MS. FISHER GOAD said:
What we have found is that, you know, any coordination
of the variety of projects and programs for energy
across several, several state agencies, and creating a
department of energy, may not provide any additional
services and enhancements of those services to the, to
the communities and the residents of the state of
Alaska. And so I think the Energy Policy Coordinator
in the governor's office - and the governor's office
has also always played the role of the coordination -
would be able to, to coordinate those programs without
making a restructuring process that would move, for
example, AEA programs or commerce programs, into some
type of other entity.
^DEPARTMENT OF TRANSPORTATION & PUBLIC FACILITIES, "RETROFITTING
STATE BUIDINGS TO IMPROVE ENERGY EFFICIENCY" & "USING COMPRESSED
NATURAL GAS TO POWER VEHICLES"
DEPARTMENT OF TRANSPORTATION & PUBLIC FACILITIES, "RETROFITTING
STATE BUIDINGS TO IMPROVE ENERGY EFFICIENCY" & "USING COMPRESSED
NATURAL GAS TO POWER VEHICLES"
3:24:34 PM
JOEL ST. AUBIN, Chief-Statewide Public Facilities, Office of the
Commissioner, Department of Transportation & Public Facilities
(DOTPF), informed the committee the Alaska Sustainable Energy
Act requires DOTPF retrofit at least 25 percent of all state
public facilities that are in excess of 10,000 square feet no
later than January 1, 2020. As a first step, DOTPF is gathering
utility bills for the past two years for all state buildings
that meet the criterion. Most agencies have provided this
information and his department is generating energy-use indices
in order to prioritize need. The department and AEA have
collaborated on this approach to prioritize the facilities and
to group projects by location if feasible; however, grouping
facilities may mean improvements are not made in the exact order
of need based on the baseline energy-use index. Mr. St. Aubin
advised that DOTPF has issued a request for proposal (RFP) for
energy performance contracting and has begun negotiations with
energy service companies. The retrofit process will take many
years, although the initial costs of $10 million will be paid by
the American Recovery and Reinvestment Act (ARRA) through the
U.S. Department of Energy, and must be spent by March 2012.
After the initial funds are committed, additional funding will
be through the Alaska Energy-Efficiency Revolving Loan Fund
program administered by the Alaska Housing Finance Corporation
(AHFC), but he anticipated that some projects may be funded by a
combination of these, and other sources. Mr. St. Aubin recalled
that retrofit projects prior to the passage of the Sustainable
Energy Act were completed using energy performance contracting.
The phase of these projects completed in 2006 resulted in energy
cost avoidance of $366,000 during the following year; the phase
completed in 2009 resulted in $793,000 of cost avoidance during
the following year. Finally, he noted that 16 facilities, equal
to 10 percent of the buildings affected by the Sustainable
Energy Act, have already been retrofitted either by the
Department of Administration (DOA), DOTPF, or the Department of
Corrections (DOC).
3:28:41 PM
REPRESENTATIVE TUCK asked for the amounts of energy cost
avoidance in 2007 and 2008.
MR. ST. AUBIN responded that the energy savings are continuing,
but the report indicates the dollar savings just during the
first year after.
3:29:27 PM
CO-CHAIR PRUITT asked whether additional money to fund the
program after ARRA funds are expended, is set aside, or will be
sought from federal or state government.
MR. ST. AUBIN advised the future funding source is the $250
million Energy-Efficiency Revolving Loan Fund managed through
AHFC.
3:30:27 PM
DIANA ROTKIS, Manager-Statewide Equipment Fleet, Office of the
Commissioner, Department of Transportation & Public Facilities
(DOTPF), discussed a report produced by Mercury Associates, Inc.
titled "State of Alaska Vehicle Fleet CNG Pilot Program
Recommendations/Cost," dated January 2011. She said the report
concluded that compressed natural gas (CNG) is a feasible fuel
for certain Alaska fleets and expansion of the program would be
beneficial towards Alaska's sustainability efforts required by
the Alaska Sustainable Energy Act of 2010. Phase 1 of the
pilot program would enhance the existing fuel infrastructure and
increase the number of vehicles and equipment using CNG by the
Municipality of Anchorage (MOA), the Anchorage School District
(ASD), and the state. Some of the provisions of Phase 1 are:
upgrading the five existing CNG stations; acquiring a fuel
management system for state bulk fuel tanks; conversion of
twenty-five state light-duty vehicles, four school buses, four
solid-waste trucks, and two transit buses; designating an inter-
government program coordinator to find and administer federal
grants for future phases, to acquire U.S. Department of Energy
(DOE) Clean Cities status for Anchorage, and to garner public
support for the program. Ms. Rotkis noted a complete copy of
the report and her one-page summary on the economic advantages
and disadvantages of the program are provided in the committee
packet.
3:33:11 PM
REPRESENTATIVE TUCK asked whether the state light-duty vehicles
selected for the pilot program were high-mileage vehicles.
MS. ROTKIS said the identified vehicles were high-mileage
vehicles limited to travel within the municipal boundaries, so
that they could refuel at CNG stations.
3:34:17 PM
REPRESENTATIVE PETERSEN agreed that CNG is a proven technology;
however, the supply of natural gas in Southcentral is tenuous.
He questioned whether it is wise to encourage the use of CNG.
MS. ROTKIS acknowledged that one of the economic disadvantages
identified by the report is the need for additional natural gas
storage in Cook Inlet to meet peak winter natural gas demand.
3:35:21 PM
REPRESENTATIVE SADDLER pointed out natural gas is a hydrocarbon
and asked how it qualifies as a sustainable source of energy.
MS. ROTKIS expressed her belief that the study looked at the
effect on greenhouse gases and the future availability of CNG as
a "two-sided coin." She opined sustainability is going forward
with a fleet that uses less regular fuel, costs less, has higher
engine performance, and longer-lasting vehicles.
3:36:49 PM
REPRESENTATIVE SADDLER surmised CNG vehicles cost less and run
better than those fueled by gasoline or diesel.
MS. ROTKIS clarified that natural gas vehicles do not cost less;
in fact, there is a premium on hybrid-type vehicles of $16,000-
$24,000 for a light-duty vehicle. However, they have a much
cleaner engine, so there is less preventative maintenance
needed, and a longer engine life.
3:37:39 PM
CO-CHAIR PRUITT asked where the natural gas fuel stations are
located and whether they are open to the public.
MS. ROTKIS said there is one public station in Spenard and the
others belong to MOA or Elmendorf Air Force Base.
3:38:31 PM
CO-CHAIR PRUITT asked whether the goal of the program is to only
establish a CNG program for state vehicles, or also to show that
this is a feasible option for personal-use vehicles in the long-
term.
MS. ROTKIS advised the long-term goal of the pilot program is a
public-private partnership that will create enough demand so
that CNG fueling stations - which cost between $500,000 and $1
million to build - will turn a profit. To accomplish that,
demand beyond state use is required. The Municipality of
Anchorage is seeing success with CNG school buses; in fact,
other states with solid-waste truck and transit bus programs
that use large amounts of fuel, have proven to pay for
themselves over the life of the equipment. This type of savings
is harder to achieve with light-duty equipment in an area with
limited CNG fueling stations.
3:40:43 PM
CO-CHAIR PRUITT observed that some school buses and solid-waste
trucks are run by private companies. He asked whether there is
an understanding that the state will provide subsidies to
private companies.
MS. ROTKIS stated that the pilot program school buses belong to
ASD and the solid-waste trucks and transit buses belong to MOA.
She said the study suggests that the Phase 1 "up-fit" will be
funded by government grants or legislative dollars.
3:42:33 PM
MS. ROTKIS, in response to Co-Chair Pruitt, advised that
private-sector interest in the pilot program is only in
providing fuel. In further response, she noted that Mercury
Associates, Inc. talked with local bus companies, but they are
"cautiously awaiting to see what will happen."
3:43:13 PM
BOB BREAN, Director, Research & Rural Development, Alaska
Housing Finance Corporation (AHFC), offered to provide written
information on the Alaska Energy-Efficiency Revolving Loan Fund
program to which Mr. St. Aubin referred.
3:44:08 PM
REPRESENTATIVE TUCK recalled that ENSTAR Natural Gas Company
used natural gas vehicles in its fleet. He pointed out that
clean natural gas is two-thirds the price of a gallon of
gasoline, and vehicles that were originally designed with high-
octane engines enjoy higher power and fuel economy than
retrofitted vehicles. He asked whether the vehicles in the
pilot program were retrofitted.
3:45:11 PM
MS. ROTKIS affirmed the 25 light-duty vehicles in the first part
of the study were converted with an OEM warranted retrofit,
which is not equal to "something that comes off the floor at
Ford Motor Company or Chevrolet, fully ready to go with
compressed natural gas." The school buses and solid-waste
trucks were a more advanced retrofit, by companies such as Roush
Engineering, and the performance and longevity of these vehicles
is superior to that of diesel counterparts. The transit buses
were also retrofitted.
3:46:45 PM
CO-CHAIR FOSTER referred to Ms. Rotkis's written document
provided in the committee packet that indicated $5.3 million is
required from the legislature to accomplish the work of the
pilot program. He asked if there has been a response.
MS. ROTKIS reminded the committee the report was issued 1/31/11,
thus there has been no response yet. In further response to Co-
Chair Foster, she stated that the study did not address
integration into rural areas, or even Fairbanks, because of the
cost of moving liquid natural gas (LNG) to remote locations and
converting it to CNG. However, the construction of a natural
gas pipeline providing cost-effective CNG to Fairbanks would
warrant expansion of the program.
3:48:33 PM
REPRESENTATIVE PETERSEN related his experience with CNG in other
cities and opined the price of vehicles manufactured to use CNG
will drop with increased demand.
3:49:18 PM
CO-CHAIR PRUITT asked for the energy equivalent of CNG compared
to gasoline or diesel fuel.
MS. ROTKIS said she was unsure. The department makes a
comparison on the energy savings for an individual vehicle and
the cost per gallon equivalent of vehicle performance. For
example, school buses fueled by CNG perform well except when
going up hills. Additionally, in the past CNG trucks performed
well, but could not support the installation of a snowplow. She
stated that many of these problems have been overcome by newer
retrofits, and there is no energy loss or performance difference
in the new vehicles.
^DEPARTMENT OF REVENUE, "CREATING A MUNICIPAL ENERGY
IMPROVEMENTS FINANCING PROGRAM"
DEPARTMENT OF REVENUE, "CREATING A MUNICIPAL ENERGY IMPROVEMENTS
FINANCING PROGRAM"
3:52:07 PM
JERRY BURNETT, Deputy Commissioner, Treasury Division,
Department of Revenue (DOR), informed the committee his
department was tasked with issuing a report that addresses
financing programs for energy efficiency and renewable energy
projects on residential, commercial, and industrial property
through property tax assessments. Although this is a new
program in Alaska, the first program of this type was started in
California in 2008, and now 20 states have such programs that
are known as Property Assessed Clean Energy (PACE) financing
systems. He explained that this type of financing mechanism is
similar to that of a local improvement district (LID) where the
municipal government places a special property tax assessment on
a residence for water, sewer, or for paving streets and
sidewalks. However, under the PACE program the assessment is
placed on a voluntary basis against individual properties to
allow property owners to finance projects that would result in
energy savings or clean energy projects. Unfortunately in July
2010, the Federal Housing Finance Agency (FHFA) called for a
pause in PACE programs due to the assessment's position as a
first lien. He opined that PACE is not an impractical program
if the first lien risk can be worked out with mortgage lenders.
Mr. Burnett advised that the suspension of the program at the
federal level presents specific challenges to Alaska if the
state chooses to continue the program at the state level. For
example, since PACE programs are administered at the local
level, and there are 162 local governments in Alaska and only 38
local governments implement property taxes, there must be
statewide administration of the program. On the other hand, the
state has experience with the weatherization and energy
efficiency rebate programs through the Alaska Housing Finance
Corporation (AHFC). Moreover, the existing rebate program has
proven that energy savings are being realized, and a 10-year
pay-off of the assessment is practical. In conclusion, his
department made the following recommendations: A PACE program
would require local governments to create PACE districts to
participate; Local governments would administer property tax
collection and lien implementation; A statewide issuer of bonds
would provide financing; There would be uniform statewide
standards; The legislature should consider providing for a
revolving loan fund to supply up-front capital; The state should
work with FHFA to establish standards to allow a PACE type
program that will conform to national mortgage underwriting
standards.
3:58:34 PM
REPRESENTATIVE PETERSEN heard about property owners installing
solar panels in California through PACE programs.
MR. BURNETT affirmed that in California and New York parties are
in litigation with FHFA over the program. He added that some of
the programs had standards that allowed a loan-to-value of up to
110 percent, thus after the mortgage crisis, a burden was
created for lenders.
4:00:19 PM
CO-CHAIR FOSTER asked whether members of the Alaska Municipal
League have expressed interest in the program.
MR. BURNETT said DOR has not heard from local governments.
^OFFICE OF MANAGEMENT & BUDGET, "STANDARDIZED WAY TO COLLECT
DATA ON ENERGY CONSUMPTION AND COSTS"
OFFICE OF MANAGEMENT & BUDGET, "STANDARDIZED WAY TO COLLECT DATA
ON ENERGY CONSUMPTION AND COSTS"
4:00:57 PM
CRAIG KAHKLEN, Policy Analyst, Office of Management & Budget
(OMB), Office of the Governor, reported on section 39 of SB 220,
the Alaska Sustainable Energy Act of 2010, that requires OMB to
develop standardized methodology for the collection and storage
of energy consumption cost data. He stated that OMB, the
Alaska Housing Finance Corporation (AHFC), and the Department of
Transportation & Public Facilities (DOTPF) worked to develop a
module for the Alaska Retrofit Information System (ARIS) that
will allow state employees to enter data for ARIS through the
Internet. After the data is entered, the system will allow the
information to be sorted by various factors such as facility
type, facility size, occupancy, and geographic location, and the
sorted data will then be used to manage energy consumption and
costs. It will also allow for the prioritization of retrofit
opportunities. Mr. Kahklen advised the system is in its final
phases of testing and data entry will begin soon.
4:03:44 PM
CO-CHAIR FOSTER asked for a more specific timeline.
MR. KAHKLEN expressed his understanding that the system will be
launched "in the next month or two."
4:05:10 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 4:05 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DOT&PF Report on Vehicle Fleet CNG Pilot Program.pdf |
HENE 2/8/2011 3:00:00 PM |
Department of Transportation and Public Facilities Presentation DOT |
| DOT&PF Fact Sheet for SB 220 report on CNG Fleet Use.pdf |
HENE 2/8/2011 3:00:00 PM |
Department of Transportation and Public Facilities Presentation DOT SB 220 |
| DOT&PF Retrofitting of State Facilities.pdf |
HENE 2/8/2011 3:00:00 PM |
Department of Transportation and Public Facilities Presentation |
| Governor's Report on Structuring State Energy Programs, 31 January 2011.pdf |
HENE 2/8/2011 3:00:00 PM |
Governor's Office or Designee Presentation |
| Department of Revenue Report on a Municipal Energy Improvements Financing program, 31, January 2011.pdf |
HENE 2/8/2011 3:00:00 PM |
Department of Revenue Presentation |
| OMB - Standardized Methodology to Collect and Store Energy Consumption and Expense Data.pdf |
HENE 2/8/2011 3:00:00 PM |
Office of Management and Budget |