02/06/2013 08:00 AM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| HB39 | |
| Overview (s): Renewable Energy Projects | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 39 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
February 6, 2013
8:02 a.m.
MEMBERS PRESENT
Representative Doug Isaacson, Co-Chair
Representative Charisse Millett, Co-Chair
Representative Neal Foster
Representative Pete Higgins
Representative Shelley Hughes
Representative Benjamin Nageak
Representative Andy Josephson
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 39
"An Act relating to the power cost equalization program."
- HEARD & HELD
OVERVIEW (S): RENEWABLE ENERGY PROJECTS
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 39
SHORT TITLE: POWER COST EQUALIZATION
SPONSOR(s): REPRESENTATIVE(s) EDGMON
01/16/13 (H) PREFILE RELEASED 1/7/13
01/16/13 (H) READ THE FIRST TIME - REFERRALS
01/16/13 (H) ENE, FIN
02/06/13 (H) ENE AT 8:00 AM BARNES 124
WITNESS REGISTER
REPRESENTATIVE BRYCE EDGMON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 39, as the sponsor of the
bill.
TIM CLARK, Staff
Representative Bryce Edgmon
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As staff to the bill sponsor, answered
questions during discussion of HB 39.
SARA FISHER-GOAD
Executive Director
Alaska Energy Authority (AEA)
Anchorage, Alaska
POSITION STATEMENT: Presented an overview and answered
questions on renewable energy projects.
SEAN SKALING, Deputy Director
Alternative Energy & Energy Efficiency
Alaska Energy Authority
Anchorage, Alaska
POSITION STATEMENT: Testified during the PowerPoint
presentation on Renewable Energy Projects.
ACTION NARRATIVE
8:02:41 AM
CO-CHAIR DOUG ISAACSON called the House Special Committee on
Energy meeting to order at 8:02 a.m. Representatives Millett,
Higgins, Hughes, Josephson, Nageak, and Isaacson were present at
the call to order. Representative Foster arrived as the meeting
was in progress.
HB 39-POWER COST EQUALIZATION
8:03:24 AM
CO-CHAIR ISAACSON announced that the first order of business
would be HOUSE BILL NO. 39, "An Act relating to the power cost
equalization program." He pointed out that policies should
define the strategies and should govern the approach to
affordable energy throughout Alaska. He opined that this
approach should maximize opportunity, "and not just spends the
dollars."
8:05:40 AM
REPRESENTATIVE BRYCE EDGMON, Alaska State Legislature, detailed
that the cost of energy in outlying areas that were dependent on
diesel had resulted in lower populations and a changing
demographic in the villages. He explained that his approach to
energy, "to keep an eye on the longer term," included a gas
line, large hydroelectric projects, and alternative, renewable
energy sources. He stated that it was also necessary to focus
on the present, as villages "are really just sort of buckling in
under the cost of energy." He opined that, even though the
legislature had put hundreds of millions of dollars in energy
programs during recent years, including weatherization, home
energy rebates, renewable energy grant funds, and community
revenue sharing, there was still more to do to bridge the gap.
He declared that the natural gas line would be "the great
equalizer for energy in Alaska." He pointed out that this would
be supplemented by other forms of energy and renewable energy.
He reported that Power Cost Equalization (PCE) started in the
early 1980s with a concern for providing equal access to sources
of power and, in 1984, it became more similar to the current
program. He reported that the program peaked in 1999, when it
provided 700 kilowatt hours each month to residential users,
with additional provisions for commercial users. Since that
time, the program had scaled back to 500 kilowatt hours for
residential users and commercial users were removed, as the
costs were exorbitant. He pointed out that there was now a PCE
endowment fund of $785 million allowing for 500 kilowatt hours
monthly use for each residential user. He reported that the
average residential monthly usage in many villages was about 330
kilowatt hours. He explained that proposed HB 39 would increase
the residential user threshold to 600 kilowatt hours, and would
allow commercial use for certain eligible small businesses.
8:12:20 AM
CO-CHAIR ISAACSON asked for the reason to increase the threshold
when the current average monthly usage in the bush was only 330
kilowatt hours.
8:12:30 AM
REPRESENTATIVE EDGMON replied that the 330 kilowatt hours of use
was an annual range dispersed over all the rural communities in
Alaska, and had been presented in a March, 2012, report by the
Institute of Social and Economic Research (ISER).
8:13:11 AM
REPRESENTATIVE FOSTER asked if the findings for use were lower
on average because people could not afford the cost of energy
use.
8:13:47 AM
REPRESENTATIVE EDGMON expressed his agreement, noting that the
lower end of costs in the PCE program was 14 cents per kilowatt
hour, which ranged up to $1 per kilowatt hour.
8:14:39 AM
REPRESENTATIVE FOSTER asked if the proposed bill was an effort
to do what could be done within the fiscal limitations.
8:15:07 AM
REPRESENTATIVE EDGMON, in response, said that a previous version
of the proposed bill had been "tailored in large part to what
the program was in 1999, although scaling back the commercial
side of things." He reported that the current version of the
proposed bill had been scaled back, after receiving the
endowment and the demand forecasts. He pointed out that,
although immediate effect of the program would require extra
money, as the endowment grew, it would require less money. He
stated that proposed HB 39 would only provide marginal benefits
to consumers, and not the full relief of a gas line.
8:16:20 AM
CO-CHAIR ISAACSON reported that 60 percent of the cost in the
Fairbanks region was thermal heating, not electricity, and he
asked how this compared with rural communities.
8:16:44 AM
REPRESENTATIVE EDGMON replied that when fuel was flown in to a
community, the cost was even higher than 60 percent. He
explained that the proposed bill would increase the residential
monthly benefit for kilowatt hours from 500 to 600, and it would
reinstate a subsidy of 600 kilowatt hours of use to those small
businesses which used less than 2400 kilowatt hours each month.
He declared that it was the small businesses which would benefit
from the proposed bill.
8:18:54 AM
CO-CHAIR ISAACSON noted that, prior to 2000, the Alaska State
Legislature supported both commercial and residential use with
PCE. He reported that since then, commercial use had been
excluded and there had been "a huge out-migration" from the
rural communities because employers could not keep the doors
open.
8:19:55 AM
CO-CHAIR MILLETT reminded the committee that, as the price of
oil dropped in 1999, oil revenues declined, and the state budget
was forced to make this change. She stated that, as oil
revenues were again going to be declining, it was necessary to
be cognizant of the budget. She expressed her pleasure with the
foresight of the legislature to fund an endowment, which would
continue to produce opportunities for energy subsidies.
8:21:33 AM
REPRESENTATIVE EDGMON stated that rural legislators had always
pointed to the symbiotic economic, cultural, and social
relationship between hub communities and outlying villages. He
acknowledged that this proposed bill would most likely not
precede the cruise ship bill to the desk of the governor, but he
expressed his hope for more debate and the opportunity to
highlight the perilous situation existing in many communities.
He opined that the challenge for affordable energy was now
statewide.
8:22:45 AM
REPRESENTATIVE FOSTER asked what the average kilowatt usage was
during the winter months.
8:23:55 AM
TIM CLARK, Staff, Representative Bryce Edgmon, Alaska State
Legislature, offering his belief that the average rural usage
was an annual calculation, declared that any small increment was
a significant help to the residents.
8:24:33 AM
REPRESENTATIVE HUGHES asked how many Alaska residents were
eligible, were they all in the "rural off the road system," and
were Fairbanks residents eligible. She asked for a sample
utility bill after the inclusion of PCE. She asked for
clarification for the logistics of payment with PCE.
8:25:45 AM
REPRESENTATIVE EDGMON suggested that the Alaska Energy Authority
(AEA) would better explain the mechanics of the program and its
impact. He shared that his summer usage did not reach 500
kilowatt hours, but, during the higher usage in winter, PCE
supplemented a benefit for about 33 percent of his bill.
8:26:45 AM
REPRESENTATIVE HUGHES asked about the cost for the other 67
percent of the bill.
8:26:52 AM
REPRESENTATIVE EDGMON replied that, in Dillingham as there were
more efficient generators and a more modern utility, the power
rate of about 40 cents per kilowatt hour, without the PCE
benefit, was lower than many of the smaller communities. He
declared that the norm for many communities was in excess of 50
cents per kilowatt hour. In response to Representative Hughes,
he said that his electric bill was more than $300 per month in
the winter.
8:28:05 AM
REPRESENTATIVE HUGHES asked again if PCE only extended to those
communities off the road system.
8:28:21 AM
REPRESENTATIVE EDGMON opined that PCE extended to about 185
communities, but Fairbanks was not awarded PCE.
8:28:40 AM
CO-CHAIR ISAACSON clarified that the average costs in Fairbanks,
Anchorage, and Juneau were used to calculate the PCE formula.
8:29:03 AM
CO-CHAIR MILLETT suggested a review to the history of PCE as it
was a complicated formula. She declared that the endowment fund
had changed the dynamics of the program from a general fund
expenditure to a percentage of market value from a fund, which
avoided crisis management of the program.
8:30:45 AM
CO-CHAIR ISAACSON agreed to schedule the discussion of PCE and
asked the committee to focus on the proposed bill.
8:31:02 AM
REPRESENTATIVE EDGMON directed attention to the attached fiscal
note [Included in members' packets]. He reported that
additional accounting personnel would be necessary, and that the
additional funding necessary for the program was listed under
Grants & Benefits. He pointed to the Fund Source and explained
that both the general fund and the PCE endowment would fund the
expanded program. He directed attention to page 2 of the fiscal
note, paragraph 1 of "Costs Breakdown", and noted that
residential use accounted for 33 percent of the additional $20
million annual cost. Moving on to the second paragraph of
"Costs Breakdown," he reported that the remaining 67 percent of
the $20 million annual cost would be allocated to eligible
commercial customers.
8:32:29 AM
REPRESENTATIVE EDGMON pointed to page 3 of the fiscal note,
which portrayed the endowment projection through FY 19.
REPRESENTATIVE JOSEPHSON asked to clarify that a larger store
would not get any subsidy.
8:35:04 AM
REPRESENTATIVE EDGMON expressed his agreement.
8:35:21 AM
REPRESENTATIVE HUGHES asked whether the endowment alone could
fund the program in the future, should the kilowatt hour usage
not be increased.
8:35:36 AM
MR. CLARK, in response, said that the endowment fund projections
and the cost estimates for increased residential usage indicated
that the endowment fund could cover the additional cost for the
commercial subsidy.
8:36:22 AM
REPRESENTATIVE EDGMON suggested that the Alaska Energy Authority
(AEA) could better clarify whether the endowment fund could
fully support the PCE program without proposed HB 39.
8:36:55 AM
REPRESENTATIVE NAGEAK asked if the endowment generated any
funding.
8:37:16 AM
REPRESENTATIVE EDGMON replied that the $785 million endowment
fund had been started in 2001 with money from major
appropriations, which included the constitutional budget reserve
and the railroad energy reserve. He reported that the endowment
fund benefit amount was annually determined from a rolling three
year average, and that the endowment was required by statute to
earn 7 percent annually.
8:38:13 AM
CO-CHAIR MILLETT pointed out that the legislature was not
prohibited from funding the endowment, and that the average cost
for PCE could increase considerably, dependent on Railbelt
costs.
8:39:08 AM
CO-CHAIR ISAACSON expressed his agreement that times were
changing in Alaska, costs were increasing, and the effectiveness
of the program could be diminished because of the high cost of
energy in the larger communities.
8:40:28 AM
REPRESENTATIVE JOSEPHSON asked what the cost, or the percentage
of usage, was for Toyo and Monitor stove use, as they were
thermal heat related.
8:41:12 AM
REPRESENTATIVE EDGMON replied that he was not aware of this
information, as the household information had not been found
during their research.
8:41:41 AM
REPRESENTATIVE FOSTER asked to clarify that Representative
Josephson was asking for the fuel consumption by Monitor or Toyo
stoves. He shared that he owned a four-plex with electric
heating and he offered to split the bill for an estimate.
[HB 39 was heard and held.]
^OVERVIEW (S): RENEWABLE ENERGY PROJECTS
OVERVIEW (S): RENEWABLE ENERGY PROJECTS
[Contains discussion of HB 39]
8:42:36 AM
CO-CHAIR ISAACSON announced that the next order of business
would be an overview of Renewable Energy Projects and would
continue the discussion of proposed HB 39.
8:43:16 AM
SARA FISHER-GOAD, Executive Director, Alaska Energy Authority
(AEA), informed the committee that the endowment fund was the
most significant funding source for the PCE program, and
reminded the committee that the program funding included a
combination of general fund and endowment fund. She explained
that the annual distribution from the original $400 million
investment to the endowment fund was determined by a formula of
three years for monthly average market value. She directed
attention to page 3 of the Fiscal note for HB 39 [Included in
members' packets]. She noted that, with a statutory requirement
for a 7 percent annual return, the estimated value of the fund
was difficult to project for fiscal note purposes. She referred
to the document, "PCE Endowment Fund Real and Projected Balances
and Appropriations," [Included in members' packets] which
detailed assumptions for the fund earnings based on the use of
five percent or seven percent for the program. She pointed out
that a 5 percent usage with a 7 percent return for the endowment
fund would closely match the targeted annual cost of $40 million
for the existing program. She clarified that this assumption
did not include any changes from proposed HB 39.
8:46:30 AM
REPRESENTATIVE HUGHES asked if the addition of general funds was
for payment to the increase in kilowatt usage or for investment
into the endowment fund.
8:46:58 AM
MS. FISHER-GOAD, in response, said that the additional monies
necessary to fund the proposed program were $20.6 million, with
$14.3 million projected for the commercial customers, and $6.3
million for residential customers.
CO-CHAIR ISAACSON said that this would conclude discussion on
PCE, and discussion on the Renewable Energy Fund would now
begin.
8:48:35 AM
MS. FISHER-GOAD presented a PowerPoint titled "Alaska Energy
Authority Overview and Renewable Energy Fund Update."
Introducing slide 2, "Reducing the Cost of Energy," she
explained that the Alaska Energy Authority (AEA) mission was to
reduce the cost of energy by providing technical and community
assistance, investing in energy infrastructure, and diversifying
Alaska's energy portfolio to meet the State of Alaska goal for
50 percent of electricity use from renewable energy by 2025.
She moved on to slide 3, "Electricity Generation by Region," a
chart of regional electricity generation in Alaska, and slide 4,
"Energy Costs Vary," which showed the variance of energy and
heating costs throughout the state. She pointed out that most
of the high cost regions were lower populated areas.
8:51:21 AM
MS. FISHER-GOAD directed attention to slide 5, "Energy Policy
Development and Coordination," and said that the Deputy
Director, Gene Therriault, had taken the lead for coordination
of energy policy and planning. She listed transmission planning
and the liquid natural gas (LNG) trucking proposal as two
important upcoming issues. She declared that AEA was working on
regional energy planning, slide 6, utilizing the energy pathway
report, which was a significant inventory of the variety of
resources available to communities. She shared that utilizing
regional energy solutions had developed this into a statewide
planning process. She acknowledged that a solution for one
region was not necessarily a statewide solution.
8:53:19 AM
CO-CHAIR MILLETT asked if the committee could be provided with
the inventory of energy sources and costs for communities
throughout the state.
8:53:55 AM
MS. FISHER-GOAD agreed to provide the report. She reported on
slide 7, "Infrastructure and Large Projects," and listed the
Bradley Lake Hydro-electric project which supplied 10 percent of
the Railbelt electricity, and the Alaska Intertie, which
connected Willow and Healy. She declared that AEA was working
on the licensing for the Susitna-Watana hydro-electric project,
and explained that a significant milestone had been met with
completion of the 44 studies for the Federal Energy Regulatory
Commission (FERC). She pointed to slide 8, "Rural Energy," and
stated that the rural energy program was making progress on
rural power system upgrades that helped improve the energy
infrastructure in rural Alaska. She said that for the past five
years the State of Alaska has provided AEA with capital dollars
to continue these upgrades.
8:56:15 AM
REPRESENTATIVE NAGEAK asked if there was a memorandum of
agreement (MOA) with the Railbelt utilities and AEA.
8:56:36 AM
MS. FISHER-GOAD said that there was an intertie operating
agreement with those utilities that benefited.
8:56:50 AM
REPRESENTATIVE NAGEAK asked if there was any financial
compensation.
8:56:59 AM
MS. FISHER-GOAD, in response, said that, although there was no
debt or profit motive with AEA, the Railbelt utilities were
responsible for the operation and maintenance of the intertie
infrastructure.
8:57:20 AM
CO-CHAIR MILLETT pointed to the significant reduction in federal
funding for the Denali Commission, and its effect on the
program. She noted that there was now the question for how that
federal funding would be replaced.
8:58:15 AM
MS. FISHER-GOAD offered to provide additional information
regarding the Denali Commission. She noted the partnership
between AEA and the Denali Commission for other ongoing
programs.
8:59:00 AM
REPRESENTATIVE NAGEAK asked if the units pictured in slide 8,
"Rural Energy," were barged up completely assembled to the
communities.
8:59:53 AM
MS. FISHER-GOAD explained that much of the powerhouse
construction was completed at the AEA Anchorage warehouse,
before they were shipped to a rural community. She mentioned
the AEA Power Project low interest loan program.
9:00:27 AM
SEAN SKALING, Deputy Director, Alternative Energy & Energy
Efficiency, Alaska Energy Authority, jumped to slide 11, "AEA
Programs," and explained that AEA had energy efficiency and
alternative energy loan programs. Directing attention to slide
12, "Energy Efficiency and Conservation," he stated that this
first step was the most important, prior to building large
systems to provide energy to structures that were not energy
efficient. He noted the two main AEA programs: Alaska
Commercial Energy Audit Program and the Village Energy
Efficiency program, slide 13. He pointed out that the AEA focus
was for commercial, small industrial, and public buildings,
while the Alaska Housing Finance Corporation (AHFC) coordinated
residential buildings. He said the commercial energy audit
program had a lot of potential with for lowering fuel
consumption. He pointed to the Alaska Energy Partnership, slide
11, as the center of the outreach efforts to align messages and
plan together for a significant impact at low cost. He stated
that the partnership's objective was to attain the state goal of
15 percent energy efficiency improvement by 2020.
9:03:25 AM
CO-CHAIR ISAACSON directed attention to slide 11, and asked for
more explanation to the coordination between State agencies.
9:03:31 AM
MR. SKALING, reflecting on the coordination between AEA and
AHFC, said this was about energy efficiency. He said that there
was not as much end use energy efficiency work with Department
of Natural Resources (DNR). He pointed to the difference
between the equipment and the system providing it. He offered
an example of the rural powerhouse program which provided
supply-side energy efficiency. He said that the Renewable
Energy Fund did coordinate with DNR for an extensive review
process of each applicant. He noted that there were 122
communities which received American Recovery and Reinvestment
Act of 2009 (ARRA) funding. He stated that efficiency programs
had immediate savings, and that the loan programs were often
paid through these savings.
9:05:53 AM
CO-CHAIR ISAACSON commented that these loans only worked when
there were sufficient funds to pay the original debt. He stated
that "in a real world" many people did not qualify for loans.
9:06:25 AM
MR. SKALING expressed his agreement that this was a hurdle for
commercial and small commercial buildings. He concluded that
energy efficiency had the most effective return within energy
programs, as the dollar savings went "straight to the end user."
Directing attention to slide 13, he explained that this "whole-
village retrofit" to reduce the cost of energy included energy
audits on many public buildings. He moved on to slide 14, "AEA
Programs," and spoke briefly about the Emerging Energy
Technology Fund, which was relatively new and was now funding 16
competitively bid projects. Addressing slide 15, "AEA
Programs," he said that the Emerging Energy Technology Fund was
a stepping stone to the Renewable Energy Fund, which focused on
generating cost effective energy. He reported that this
included renewable energy, energy efficiency technology, energy
storage, and energy transmission.
9:10:00 AM
MR. SKALING, in response to Representative Hughes, replied that
the balloon wind turbine was a project which had been funded in
Alaska, though the exact location was still being researched.
9:10:21 AM
MR. SKALING reported that the Emerging Energy Technology Fund
was a valuable program which was just beginning. He declared
that the Renewable Energy Fund projects were competitive and
were lowering costs. He explained that this was a
recommendation program, with a long vetting process, and that it
was currently in Round 6.
9:12:13 AM
REPRESENTATIVE HIGGINS asked if applicants had to show that
energy could be added to the grid.
9:12:45 AM
MR. SKALING explained that the applicant was required to own the
energy and have a power sales agreement, if they were an
independent power producer. He reported on slide 16, "Renewable
Energy Fund: Evaluation Process," and said that this process had
an intensive four stage review, which included Department of
Natural Resources, AEA, independent economic evaluations, ISER,
and subject matter experts.
9:13:55 AM
CO-CHAIR ISAACSON asked for clarification on the global
application with regard to other projects of Stage 4, "Regional
Spreading."
9:14:35 AM
MR. SKALING explained that the recommendations were presented to
the legislature in its report. He said that the Stage 2
technical score criteria reflected the economic feasibility, and
Stage 3 reported the scoring utilizing the statutory guidelines,
with the cost of the energy as the most heavily weighted
guideline factor. He described that the recommended
applications were geographically spread by formula, Stage 4,
which reviewed the underrepresented energy regions of the state
in the fund.
9:16:33 AM
REPRESENTATIVE HUGHES asked for clarification of the ISER
review.
9:16:59 AM
MR. SKALING explained that AEA hired economic firms to review
and analyze the projects, and then ISER reviewed and verified
these findings.
9:17:54 AM
CO-CHAIR MILLETT reported that she would provide to the
committee the Legislative Audit Division recommendations on
House Bill 152 and House Bill 306, which offered background
information to the expectations and evolution for the renewable
energy fund.
9:18:45 AM
REPRESENTATIVE JOSEPHSON asked if the spreadsheet was included
in the January report.
9:19:13 AM
MR. SKALING, in response to Representative Josephson, said that
it was included in that report. He concluded by explaining that
the projects were forwarded, after Stage 4, to the Renewable
Energy Fund Advisory Committee and then those recommendations
were provided to the Alaska State Legislature by the tenth day
of the legislative session. He moved on to slide 17, "Renewable
Energy Fund Projects," a map showing the diverse regional spread
of the projects in Rounds 1-5. He pointed to slide 18,
"Construction Projects," which depicted construction projects in
Alaska, either underway or completed.
9:20:20 AM
REPRESENTATIVE JOSEPHSON asked if the projects were only on
state land.
9:20:30 AM
MR. SKALING replied that the projects could be on state,
federal, or private land, as long as there were rights to the
land.
9:20:40 AM
REPRESENTATIVE JOSEPHSON asked about the process on federal
land.
MR. SKALING stated that there was a lot of federal scrutiny.
9:20:49 AM
MS. FISHER-GOAD clarified slide 18, explaining that there was an
analysis for recommendation and, then the follow up was the
grant process. She pointed out that the construction projects
required site control by the applicant.
9:21:27 AM
MR. SKALING pointed out that the process compared projects side
by side.
9:22:26 AM
REPRESENTATIVE HUGHES returned attention to slide 18, and asked
if the majority of interest and applications had been for wind
projects.
9:22:38 AM
MR. SKALING explained that the wind projects tended to be
quicker to construct. He pointed out that the hydro projects
were more expensive and took "a long time to go step by step to
get to construction."
9:23:12 AM
CO-CHAIR ISAACSON asked if hydro projects were being removed
from federal funding opportunities.
9:23:31 AM
MS. FISHER-GOAD observed that more preliminary work had been
done with federal funds for "shovel ready" wind projects, as
there was often less of a permitting process than for hydro
projects. She expressed agreement that it was a longer process
to permit and develop a hydro project in Alaska, hence the
significant development of wind projects. She pointed out that
a wind project could be financially scaled up or down depending
on the number of turbines, but a hydro project was subject to
the spending caps on the AEA projects.
9:25:43 AM
CO-CHAIR ISAACSON opined that strategies were created just to
complete projects, when in fact the goal and the policy should
direct the strategies of the projects. He suggested that a goal
of renewable, sustainable, long term, and low cost energy should
be headed by hydro projects wherever possible, even if wind
projects were easier and faster to facilitate. He stated that
wind projects always required diesel to ensure there was a
reliable source of energy.
9:26:47 AM
MS. FISHER-GOAD, in response to Co-Chair Isaacson, explained
that the Renewable Energy Fund development of projects was one
strategy which the State of Alaska had funded AEA to address.
It was designed for local projects and was only one strategy.
She agreed that another strategy through AEA was the development
of hydro projects. She shared that the primary goal of AEA,
when established in 1976, was to develop energy projects, but
that the Renewable Energy Fund was only one strategy for energy
projects, and it was for development using local resources.
9:28:52 AM
CO-CHAIR MILLETT said that not every community would have access
to hydro power. She declared that the idea of the program was
to find renewable resource projects that would work for each
specific community. She pointed to the recognition that, as not
every area would have the same type of renewable energy, it was
necessary to find what was best for each community. She stated
that the realistic goal was to replace diesel with a reliable
source of energy.
9:31:02 AM
CO-CHAIR ISAACSON expressed his agreement that community goals
should have integration with the region, and that the goal for
lower cost energy projects should be strategic, not reactive.
He reiterated that "the policy should inform our projects, not
our projects our strategies."
9:31:41 AM
REPRESENTATIVE HUGHES asked what the goal was for renewable
energy for the state, and whether hydro projects were considered
as renewable projects.
9:32:08 AM
MS. FISHER-GOAD replied that the goal was for 50 percent
renewable energy use by 2025. She said that there were aspects
of federal funding for renewable projects which did not include
hydro as a renewable resource.
9:33:12 AM
REPRESENTATIVE HUGHES asked to clarify that the definition had
not been changed, but that there was not the funding.
9:33:15 AM
MS. FISHER-GOAD replied that, although it was dependent on the
program, federal programs did not recognize large hydro projects
as a renewable energy resource. She noted that there were
subtleties for the requirements of certain loan programs and the
State of Alaska did urge the federal government to recognize
hydro as a renewable resource.
9:34:10 AM
REPRESENTATIVE HUGHES asked which form of renewable resource had
"the most value, as far as bang for the buck."
9:34:31 AM
MS. FISHER-GOAD, in response to Representative Hughes,
referenced Kodiak as the poster community for the Renewable
Energy Fund. She noted that Kodiak had successfully developed
wind and hydro projects. She said that different regions could
take appropriate advantage of the surrounding resources.
9:35:57 AM
REPRESENTATIVE NAGEAK suggested a discussion for the use of
methane gas for power.
9:36:59 AM
CO-CHAIR ISAACSON recommended that committee members read
"Pathways," an AEA energy book.
9:37:22 AM
CO-CHAIR MILLETT declared the importance for committee members
to familiarize themselves with both House Bill 306 and House
Bill 152, as it was necessary to have an historical perspective.
9:37:56 AM
REPRESENTATIVE JOSEPHSON asked for an explanation to the federal
government not recognizing hydro as a renewable resource.
9:38:31 AM
MS. FISHER-GOAD, in response to Representative Josephson, said
that she did not want to speculate for reasons behind federal
decisions although, she pointed out, there were federal
financial resources available for hydro projects. She offered
her belief that there was a federal preference for solar and
wind projects over hydro projects. She said that the FERC
process for Susitna-Watana Hydroelectric project required a
great deal of work.
9:39:59 AM
CO-CHAIR MILLETT explained that the federal government did not
recognize hydroelectric as a renewable resource because of the
effect of dams on land and fishing. She alluded that poor
project management when planning for environmental impacts in
the Lower 48 had led to the removal of hydro as a renewable
resource. She said that the high lake dams in Alaska were
different than the damming of rivers in the Lower 48, and that
in Alaska there was an insignificant impact to the environment
and the fishing industry. She acknowledged that the federal
government recognized that "Alaska is different" and was
receptive to funding hydro projects and expediting the FERC
process in Alaska. She stated that Alaska was not damming
rivers.
9:41:57 AM
REPRESENTATIVE JOSEPHSON clarified that Alaska was not yet
damming rivers.
CO-CHAIR MILLETT replied that this was not a fair comment, as
Alaska was "pretty cognizant of not, we're pretty good at
determining that we won't sacrifice one resource for another
resource."
9:42:04 AM
MR. SKALING continued with slide 20, "Independent Program
Review," and said that AEA had sought a third party review on
the Rural Energy Fund (REF) during the past year, and those two
reports had been published. He pointed to slide 21, "Economic
Benefits," which reflected the net present value costs versus
the net present value benefits for the first 62 projects of the
program that made it to the construction phase. He noted the
high profit. He said that diesel equivalent fuel savings were
at or above projection and would continue to rise, slide 22,
"Avoided Fuel." He projected slide 23, "PCE Communities," which
reflected the impact of the REF on Power Cost Equalization (PCE)
in communities. He stated that the largest impact of REF
benefit had been for commercial buildings, which were PCE
ineligible, and that the State of Alaska was also a beneficiary
of the program. Speaking to slide 24, "Lowering the Cost of
Energy," he compared the total cost of Diesel Generation for
twenty years versus a wind project. The wind project cost was
reflected with Renewable Energy Fund (REF) and without REF
capital costs. The REF support for wind projects had lowered
and stabilized the costs compared to diesel. Slide 25,
"Community Highlight: JBER," listed the landfill-gas-to-energy
project which allowed the methane to be regulated and not escape
into the environment. The project now had the methane collected
and directed through gas fired units to produce about 26 percent
of the JBER energy needs. Slide 26, "Delta Junction," depicted
the Delta Junction School biomass project for heat, which used
the wood chips from a local saw mill, saving $153,000 and 53,000
gallons in heating for the school during the first winter. He
pointed out that the system was low maintenance, and was being
considered for expansion into the elementary school. Slide 27,
"Atka," portrayed a small hydro project that was generating
energy to provide 100 percent of the community energy needs.
9:48:39 AM
MR. SKALING directed attention to slide 28, "Round 6
Recommendations," which listed hydro projects as high value. He
clarified that ideas went through a feasibility study,
reconnaissance, and final design before moving into
construction.
9:50:16 AM
MS. FISHER-GOAD pointed to slide 29, "Active Energy Projects,"
which listed the renewable energy programs and other projects
that were active, alongside the funding which had been provided
beyond the Renewable Energy Fund. She concluded with Slide 31
"Projects Under Construction," a map of Alaska depicting the
projects under construction during the previous summer, and
slide 31, "By the Numbers," which showed the FY 14 summary and
budget request.
9:52:02 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 9:52 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Energy Committee Agenda.pdf |
HENE 2/6/2013 8:00:00 AM |
|
| HB 39 Sponsor Statement 2013.23.1.pdf |
HENE 2/6/2013 8:00:00 AM |
HB 39 |
| HB 39.pdf |
HENE 2/6/2013 8:00:00 AM |
HB 39 |
| HB 39 Leg Research 00.022 PCE 1981 to 1999.pdf |
HENE 2/6/2013 8:00:00 AM |
HB 39 |
| HB 39 Leg Research 06.016 PCE 2005.pdf |
HENE 2/6/2013 8:00:00 AM |
HB 39 |
| HB 39 PCE Blue Ribbon Report 1999.pdf |
HENE 2/6/2013 8:00:00 AM |
HB 39 |
| HB 39 PCE Program Guide 2009.pdf |
HENE 2/6/2013 8:00:00 AM |
HB 39 |
| HB 39 PCE Endowment Fund Appropriations Estimates.pdf |
HENE 2/6/2013 8:00:00 AM |
HB 39 |
| HB039-DCCED-AEA-02-01-13.pdf |
HENE 2/6/2013 8:00:00 AM |
HB 39 |
| HB 39 PCE Endowment Current Statutes.pdf |
HENE 2/6/2013 8:00:00 AM |
HB 39 |
| HB39--PCE Bill--Support from Kokhanok Resident.txt |
HENE 2/6/2013 8:00:00 AM |
HB 39 |
| AEA Overview House Energy 02 06 13.pdf |
HENE 2/6/2013 8:00:00 AM |
|
| Energy Cheat Sheet diagram.pdf |
HENE 2/6/2013 8:00:00 AM |