Legislature(2013 - 2014)BARNES 124
04/02/2014 08:00 AM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| HB340 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 340 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
April 2, 2014
8:06 a.m.
MEMBERS PRESENT
Representative Doug Isaacson, Co-Chair
Representative Charisse Millett, Co-Chair
Representative Pete Higgins
Representative Shelley Hughes
Representative Benjamin Nageak
Representative Andy Josephson
MEMBERS ABSENT
Representative Neal Foster
COMMITTEE CALENDAR
HOUSE BILL NO. 340
"An Act directing the Regulatory Commission of Alaska to provide
a report to the legislature relating to electrical transmission
in certain areas of the state; and providing for an effective
date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 340
SHORT TITLE: RCA: RAILBELT ELECTRIC UTILITY REPORT
SPONSOR(s): REPRESENTATIVE(s) MILLETT BY REQUEST
02/26/14 (H) READ THE FIRST TIME - REFERRALS
02/26/14 (H) ENE, L&C
03/19/14 (H) ENE AT 8:00 AM BARNES 124
03/19/14 (H) Heard & Held
03/19/14 (H) MINUTE(ENE)
04/02/14 (H) ENE AT 8:00 AM BARNES 124
WITNESS REGISTER
JEFF TURNER, Staff
Representative Charisse Millett
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the changes in the proposed
committee substitute for HB 340.
DUFF MITCHELL, Executive Director
Alaska Independent Power Producers Association
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 340.
GENE THERRIAULT, Deputy Director
Statewide Energy Policy Development
Alaska Energy Authority
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: On behalf of the Alaska Energy Authority,
testified in support of HB 340 and answered questions.
ACTION NARRATIVE
8:06:04 AM
CO-CHAIR CHARISSE MILLETT called the House Special Committee on
Energy meeting to order at 8:06 a.m. Representatives Josephson,
Hughes, Isaacson, and Millett were present at the call to order.
Representatives Higgins and Nageak arrived as the meeting was in
progress.
HB 340-RCA: RAILBELT ELECTRIC UTILITY REPORT
8:06:29 AM
CO-CHAIR MILLETT announced that the only order of business would
be HOUSE BILL NO. 340, "An Act directing the Regulatory
Commission of Alaska to provide a report to the legislature
relating to electrical transmission in certain areas of the
state; and providing for an effective date."
8:06:42 AM
CO-CHAIR ISAACSON moved to adopt the committee substitute (CS)
for HB 340, labeled 28-LS1408\N, Nauman, 3/12/14, as the working
draft.
8:06:54 AM
CO-CHAIR MILLETT objected for the purpose of discussion.
8:07:10 AM
JEFF TURNER, Staff, Representative Charisse Millett, Alaska
State Legislature, presented the changes in the proposed CS for
HB 340 as follows:
Page 1, line 1, replaced "provide a report" with
"recommend"
Page 1, line 2, after "legislature" inserted "an
action plan"
Page 1, line 8, replaced "July 15, 2015" with
"January 1, 2015"
Page 1, line 8, replaced "provide a report" with
"recommend"
Page 1, line 9, replaced "determining whether
creating" with "a plan to establish"
Page 1, lines 10 and 11, replaced "is the best option
to provide" with "in developing the plan, the
commission shall consider options"
Page 1, line 14, replaced "the report" with "order to
implement the plan"
Page 2, line 1, replaced "the report" with "developing
a plan"
Page 2, line 17, replaced "standards" with "standard"
and inserted "as modified to meet the needs of
the Railbelt area;"
Page 2, line 27, replaced "economical distribution"
with "economic dispatch"
Page 3, line 6, after "systems" inserted "and
ancillary services recognized by the Federal
Regulatory Commission used"
Page 3, line 11, replaced "report" with "plan"
Page 3, line 12, replaced "report" with "plan"
8:08:38 AM
CO-CHAIR MILLETT opened public testimony on HB 340.
8:08:55 AM
DUFF MITCHELL, Executive Director, Alaska Independent Power
Producers Association (AIPPA), informed the committee AIPPA
represents members all over the state in the non-utility area of
power generation. He opined HB 340 is a good framework from
which to begin resolving issues statewide; however, AIPPA would
like the committee to be aware of its concern that the
Regulatory Commission of Alaska (RCA) does not recognize the
state's energy policy. In fact, RCA interprets the state's
energy policy as aspirational rather than directive. He
stressed that the legislature needs to use the word "shall" as
opposed to "may" in its directives to RCA; if not, RCA can
exercise its right not to respond. Mr. Mitchell directed
attention to the CS beginning on page 2, line 13 which read:
(7) has the power to
MR. MITCHELL advised that this language implies RCA has a
choice, and recommended it be replaced by "shall." He said this
change would mandate the use of a nondiscriminatory electrical
transmission system. Also, he suggested that a mission
statement or directive should be added to HB 340 similar to that
of the Electric Reliability Council of Texas (ERCOT), and he
read the following:
Provide exemplary customer service by managing the
reliability and security of the ERCOT Transmission
Grid to assure nondiscriminatory transmission access
and serve the electrical needs of all retail
customers; effectively administering electricity
supply choices of all customers through the State of
Texas; providing accurate and timely usage and
settlement data to market participants to facilitate
transactions; and assuring uniform nondiscriminatory
access to public market information.
MR. MITCHELL encouraged the use of the federal definition of
nondiscriminatory - open - access. Furthermore, access to
public information is important and if matters are published and
transparent "everyone knows what the rules are." He informed
the committee that some AIPPA members support HB 340 and some
are concerned. He urged for independent power providers (IPPS),
even though they are not in the Railbelt Transmission System, to
be listed as one as the stakeholders in the bill.
8:13:44 AM
CO-CHAIR ISAACSON referred to proposed Senate legislation
related to existing statutes and revisions. He asked whether
the directives in HB 340 are sufficient to address
interconnectivity, and if the contributions and interests of
IPPs are included as needed.
MR. MITCHELL responded that the proposed Senate legislation
would upgrade the regulations of RCA to bring the regulations
current. He expressed his belief that Alaska has "the most
state overreach in retarding or prohibiting private investment
in our energy resources," thus the proposed legislation is based
on language from the federal Public Utility Regulatory Policies
Act (PURPA), which provides directed regulations. He related
that the commissioners at RCA agree that directives from the
legislature must be specific and provide clear guidance. The
proposed bill will lay the foundation prior to substantial
investment in the Railbelt Transmission System, and it is
necessary to have support from the small and large IPPs and
utilities, along with open access and participation by all
parties.
8:17:07 AM
CO-CHAIR ISAACSON inquired as to whether IPPs are satisfied that
a model, such as ERCOT, is strong enough to be used to build a
transmission system beyond the Railbelt and the highway system,
in order to incorporate rural and "disconnected" Alaska.
MR. MITCHELL stated his hope that although not in HB 340,
fundamental portions of the model can be used statewide; for
example, the Southeast Alaska Power Agency (SEAPA) Swan-Tyee
Intertie does not have open access. He was unsure whether HB
340 specifically creates open access, but it may have the
framework that could be used on other grids far into the future.
Mr. Mitchell cautioned that there will not be private investment
[in energy systems] without the certainty provided by open
access.
CO-CHAIR ISAACSON observed that HB 340 identifies that a systems
operator has operational authority over the electric
transmission facilities, and a single control area operator
facilitates regional electricity pooling and economic dispatch,
bringing the function of an independent systems operator (ISO)
and an independent transmission company (TRANSCO) into one
entity. He asked whether this type of merger causes concern for
the members of AIPPA.
8:20:18 AM
MR. MITCHELL answered that one concern would be to keep the
generation and transmission separated so that an entity that
generates power, and owns all of the transmission system, cannot
keep other power generators out of the system. Furthermore,
those who make decisions on transmission and interconnection
should not have leverage to block open access for smaller
private entities. He acknowledged that the State of New York
may own its transmission system and act as an ISO; however,
there is no clear path. The impact on AIPPA's members is
unclear until the plan is released, but it is imperative that
IPPs have "as much buy-in as possible."
CO-CHAIR MILLETT asked whether AIPPA continues to advocate for
the [Alaska-Canada Electrical Intertie Project].
MR. MITCHELL said no, not directly. The idea "comes and goes"
and a line from Skagway to Whitehorse, Yukon, has been proposed.
He opined the intertie has potential for the state in the
future. Another project that may move power from Alaska onto
the British Colombia, Canada, electrical grid is near Hyder.
REPRESENTATIVE HIGGINS asked whether RCA has done its job.
MR. MITCHELL said yes, within the guidance it is given.
8:23:53 AM
REPRESENTATIVE HIGGINS observed HB 340 directs RCA to create
another entity to do what it is tasked to do: protecting
consumers' interests and promoting economic development. The
choke points in Alaska's transmission lines are not new, but
have never been corrected. He suggested RCA should disband if
it is not doing its task.
CO-CHAIR MILLETT stated that RCA's mission is to protect the
public and the consumer, not to make rates, but to solve
disputes.
MR. MITCHELL stated he has come to understand that RCA is
directed by the legislature and is willing to do its tasks if
there are clear directives from the legislative body. He said
he also did not support adding another layer of bureaucracy and
more expense to ratepayers, but the intent of HB 340 is to
reduce costs.
REPRESENTATIVE HIGGINS paraphrased from the CS beginning at page
1, line [8] as follows:
recommend to the legislature a plan to establish an
independent entity that meets the requirements of this
section
8:26:59 AM
MR. MITCHELL explained an ISO must be independent from RCA to
administer the interconnection, and cannot be owned by utilities
or IPPs. He said he was unsure if RCA could administer the
system as it is organized to adjudicate regulatory procedures
related to telephone, electricity, and natural gas; on the other
hand, an ISO forecasts and sends electrical loads in a technical
sense. The present situation is management by a patchwork of
multiple utilities that functioned well in 1960.
CO-CHAIR MILLETT stated the bill would be held in committee
because at this point two utilities are not in support of an
ISO. Further work will be done in the interim by the Alaska
Railbelt Cooperative Transmission & Electric Company (ARCTEC).
In response to Co-Chair Isaacson, she said ARCTEC - rather than
the committee - will be the body to work on the bill because it
can come to agreement with the utilities.
8:30:20 AM
REPRESENTATIVE HUGHES asked whether the board of directors -
made up of stakeholders - is sufficiently defined in the bill to
ensure that IPP's are not left out.
MR. MITCHELL agreed that the stakeholders need to be
specifically defined, and IPPs need to be represented to ensure
that the nondiscrimination and open access portions of the
decision-making process of the bill are upheld.
CO-CHAIR MILLETT, in response to Representative Hughes, said the
stakeholders in ARCTEC are the main utilities of the Railbelt,
and she was unsure about the Homer Electric Association Inc.
(HEA) and the Seward Electric System (SES). When IPPs enter
into a utility structure, the IPP project must be economically
feasible, and also that the additional cost of transmission does
not fall to one utility, but is shared by the IPP. Open access
does not mean an entity can use a transmission line for free,
but that power generation is offered at an economical cost; in
fact, RCA's role will be to adjudicate cases related to IPPs
integrating with utilities. Unless the additional generation
provides fiscal benefits to consumers, RCA will not agree to the
sale. Co-Chair Millett said there is a way to protect consumers
and still have IPPs "at the stakeholders' table," providing IPPs
understand the goal is to provide the lowest cost energy to the
Railbelt. In addition, sources of renewable energy must be
economical and cause no damage to the electrical grid. Power
generation from IPPs can add cost to transmission and thereby to
consumers. She explained that the separate entity created in HB
340 would decide which transmission programs would be built, and
would propose projects for approval by RCA and to the state for
financing without a "tug-of-war capital budget fight every year
... that's what ... this legislation is a start of, is having
utilities come together as a group."
8:35:25 AM
GENE THERRIAULT, Deputy Director, Statewide Energy Policy
Development, Alaska Energy Authority, Department of Commerce,
Community & Economic Development, said AEA believes the
recommendation created by HB 340 would be beneficial. His
agency has spent considerable time and money reviewing the
current problems in the Railbelt Transmission System, seeking
solutions and cost savings. He urged for continued discussion
that would foster legislation that is supported by all of the
affected parties. Mr. Therriault agreed that there are models
from out-of-state that could be modified and applied in Alaska
in order to develop a robust and reliable transmission system.
To that end, AEA will make all of the data collected from
previous studies available. As an aside, he informed the
committee that the state owns the section of the transmission
system between Wasilla and Healy - operated through the Intertie
Management Committee - which is an example of successful
cooperation between the state and the utilities to operate a
transmission system. He expressed AEA's support of the content
of the legislation and of any changes or additions to statute
that may be necessary.
8:38:41 AM
CO-CHAIR MILLETT restated her preference to hold the legislation
until all of the utilities have reached agreement; this is a
lesson learned from the failed Greater Railbelt Energy and
Transmission Corporation (GRETC) legislation [House Bill 182,
introduced in the 26th Alaska State Legislature].
CO-CHAIR ISAACSON remarked:
The RCA, as we've talked about, oversees and regulates
the ISOs, the TRANSCO, and the utilities. The ISO
would manage the load and economic dispatch. The
TRANSCO would own the transmission and currently ...
the utilities own the customer, they own generation,
they own transmission, and they own debt service.
IPP's own generation - but that's a wholesale - and
then the state, as you said, currently owns
generation, and owns transmission.
CO-CHAIR ISAACSON recalled that an ISO would manage load and
economic dispatch and would recommend the tariff, and would also
recommend generation and transmission. He asked whether the
state and the utilities would transfer ownership of the
transmission system to the TRANSCO.
8:41:26 AM
MR. THERRIAULT said that is a possibility because the state owns
a component of the transmission, and some generation, in the
Railbelt. The bill is focused on the transmission component and
there is the potential that a business structure is adopted in
which the state-owned asset becomes a part of the overall
system, through a long-term lease or a contribution, thus the
state must act in the same manner as all of the other parties.
CO-CHAIR ISAACSON has heard that Wall Street is interested in
the construction of transmission lines in Alaska. He asked how
the state ensures that private enterprise would be allowed to
build the system, but avoids adding another layer of
bureaucracy.
MR. THERRIAULT advised that the structure should not preclude
private participation in the financing and operation of the
transmission system, which is a policy call for the legislature
and the administration to make, after the matter has been
discussed during interim, and debated during the next session.
8:45:05 AM
CO-CHAIR MILLETT, after ascertaining no one else wished to
testify, closed public testimony.
REPRESENTATIVE HUGHES observed that the bill contains language
that mandates tasks but is silent on compliance or enforcement.
She questioned how certain activities could be mandated without
including a component for enforcement in the bill.
8:46:10 AM
CO-CHAIR MILLETT recalled the previous proposed legislation that
required mandatory compliance failed. The situation of mutual
asset-owning and mutual asset-building between utilities is
difficult until the utilities decide to do what is best for all.
The transmission system requires most of the investment right
now and ARCTEC has advised on its needs and priorities for the
transmission lines, but support is lacking from HEA and SES at
this time.
REPRESENTATIVE HUGHES asked if after HEA and SES comply, the
sponsor does or does not see a need for an enforcement component
in the bill.
CO-CHAIR MILLETT expressed her intention that the utilities
would enter the binding contract voluntarily, but there may be
discussion about including language for an "out" clause.
HB 340 was heard and held.
8:48:15 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 8:45 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 340 Letter of Support-CIRI.pdf |
HENE 4/2/2014 8:00:00 AM |
HB 340 |
| HB 340 Sponsor Statement.pdf |
HENE 3/19/2014 8:00:00 AM HENE 4/2/2014 8:00:00 AM |
HB 340 |
| HB0340A.pdf |
HENE 3/19/2014 8:00:00 AM HENE 4/2/2014 8:00:00 AM |
HB 340 |
| HB 340 ISO Fact Sheet.pdf |
HENE 3/19/2014 8:00:00 AM HENE 4/2/2014 8:00:00 AM |
HB 340 |
| HB 340 Letter of Support -Griffith MEA.pdf |
HENE 3/19/2014 8:00:00 AM HENE 4/2/2014 8:00:00 AM |
HB 340 |
| HB 340 AEA PowerPoint 03192014.pdf |
HENE 3/19/2014 8:00:00 AM HENE 4/2/2014 8:00:00 AM |
HB 340 |
| HB 340 APA 2014 ResolutionUTS.pdf |
HENE 3/19/2014 8:00:00 AM HENE 4/2/2014 8:00:00 AM |
HB 340 |
| HB340 Fiscal Note DCCED-RCA-03-14-14.pdf |
HENE 3/19/2014 8:00:00 AM HENE 4/2/2014 8:00:00 AM |
HB 340 |
| HB 340 CEA Evans PowerPoint 03192014.pdf |
HENE 3/19/2014 8:00:00 AM HENE 4/2/2014 8:00:00 AM |
HB 340 |
| HB 340 CEA CEO Evans Letter.pdf |
HENE 3/19/2014 8:00:00 AM HENE 4/2/2014 8:00:00 AM |
HB 340 |
| HB 340 Letter of Support CEA.pdf |
HENE 3/19/2014 8:00:00 AM HENE 4/2/2014 8:00:00 AM |
HB 340 |
| HB 340 Summary of Changes.pdf |
HENE 3/19/2014 8:00:00 AM HENE 4/2/2014 8:00:00 AM |
HB 340 |
| HB 340 Blank CS version N.pdf |
HENE 3/19/2014 8:00:00 AM HENE 4/2/2014 8:00:00 AM |
HB 340 |
| HB 340 Letter of Support ARCTEC.pdf |
HENE 4/2/2014 8:00:00 AM |
HB 340 |
| HB 340 Stuart Goering AAG DOL 03242014.pdf |
HENE 4/2/2014 8:00:00 AM |
HB 340 |