Legislature(2019 - 2020)FBX LIO Conf Rm
08/07/2020 09:00 AM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Sb 123 Implementation by the Rca | |
| 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
Fairbanks, Alaska
August 7, 2020
9:00 a.m.
MEMBERS PRESENT
Representative Grier Hopkins, Chair
Representative John Lincoln (via teleconference)
Representative Tiffany Zulkosky (via teleconference)
Representative George Rauscher (via teleconference)
Representative Mike Prax (via teleconference)
MEMBERS ABSENT
Representative Ivy Spohnholz, Vice Chair
Representative Zack Fields
OTHER LEGISLATORS PRESENT
Representative Bryce Edgmon (via teleconference)
Representative Kelly Merrick (via teleconference)
Representative Steve Thompson (via teleconference)
Senator Cathy Giessel (via teleconference)
Senator Elvi Gray-Jackson (via teleconference)
COMMITTEE CALENDAR
PRESENTATION(S): SB 123 IMPLEMENTATION BY THE RCA
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
BOB PICKETT, Commissioner/Chair
Regulatory Commission of Alaska (RCA)
Palmer, Alaska
POSITION STATEMENT: Provided a presentation on SB 123
Implementation by the RCA.
ANTONY SCOTT, Commissioner
Regulatory Commission of Alaska (RCA)
Anchorage, Alaska
POSITION STATEMENT: Provided information during the
presentation on SB 123 Implementation by the RCA.
STEVE COLT, Ph.D., Research Professor
Alaska Center for Energy and Power (ACEP)
University of Alaska Fairbanks (UAF)
Anchorage, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation, titled
"SB 123 Opportunities for Alaska," dated 8/7/20.
SENATOR JOHN COGHILL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Commented on the PowerPoint presentation,
titled "SB 123 Opportunities for Alaska."
ACTION NARRATIVE
9:00:27 AM
CHAIR GRIER HOPKINS called the House Special Committee on Energy
meeting to order at 9:00 a.m. Representatives Rauscher (via
teleconference), Prax (via teleconference), Zulkosky (via
teleconference), Lincoln (via teleconference), and Hopkins were
present at the call to order. Also present (via teleconference)
were Representatives Edgmon, Merrick, and Thompson and Senators
Giessel and Gray-Jackson.
^PRESENTATION(S): SB 123 Implementation by the RCA
PRESENTATION(S): SB 123 Implementation by the RCA
9:03:14 AM
CHAIR HOPKINS announced that the only order of business would be
a presentation on SB 123 Implementation by the Regulatory
Commission of Alaska (RCA). He noted the governor signed the
Railbelt Electrical Act into law in late spring 2020. The
committee held many hearings on the companion bill, HB 151. He
explained that today's hearing is for informational purposes
only. He advised that today's presentation might be helpful to
any committee member wishing to submit comments to the RCA as it
continues the implementation process.
CHAIR HOPKINS introduced RCA commissioners Bob Pickett and
Antony Scott. He related that Mr. Pickett was appointed to the
RCA in 2008 by Governor Palin and has served five times as chair
of the commission. In 2014 Governor Parnell appointed Mr.
Picket to a second term. Before his appointment to the RCA, Mr.
Picket had more than 30 years of statewide experience in
Alaska's housing industry, including 21 years at the Alaska
Housing Finance Corporation (AHFC). Chair Hopkins related that
Mr. Scott has served as chief economist to the RCA, as well as
12 years at the Department of Natural Resources as a commercial
analyst, petroleum investment manager, and commercial manager
working to maximize state benefits for oil and gas ownership.
Between 2012 and 2015, while at the University of Alaska
Fairbanks, Mr. Scott largely focused on electric utilities and
challenges to product development and system innovation. In
2016, he began serving as director of programs and policy at
Anchorage Municipal Light and Power. Governor Walker appointed
Mr. Scott to the RCA in 2018.
9:06:58 AM
BOB PICKETT, Commissioner/Chair, Regulatory Commission of Alaska
(RCA), noted that Governor Dunleavy appointed him to a third
term earlier this year. He thanked the House and Senate members
who have worked since 2014 to get to this point. He said SB 123
was passed by the legislature on 3/20/20. Signed into law on
4/29/20, it started the process for a very tight timeframe for
rulemaking. The RCA must complete this process by July 1, 2021.
On 4/15/20, the RCA at a public meeting began outlining a
general approach and strategy for this rulemaking. The
commission opened up the rulemaking docket and scheduled a
technical conference on 6/3/20 to begin outlining some of the
key issues. Staff summarized this technical conference at the
RCA's public meeting on June 24.
MR. PICKETT said it became obvious at this point that separate
proceedings needed to be opened to address the different
components of SB 123 that required these new regulations.
Commissioners voted to open three separate proceedings to
address: 1) the rules and regulations governing the Electric
Reliability Organization (ERO) board composition and competency
requirements; 2) regulations regarding the integrated resource
planning (IRP) activities of the ERO and project preapproval
requirements for interconnected utilities seeking to construct
large energy facilities; and 3) filing requirements applicable
to the reliability standards and ERO rules. Commissioners voted
to have staff present options at the public meeting in early
July to focus the discussions at the July 29 technical
conference in the first docket, R20 001, designed to further
refine the ERO board composition and competency requirements.
Timing considerations were part of the rationale for separating
it into three dockets. There has been an effort by the Railbelt
Reliability Council to position itself as an applicant for ERO
status. He said the RCA is hoping to have this rulemaking out
for public comment early this fall so that the Department of Law
(DOL) can look at it and regulations can hopefully be in place
by the first of the year.
MR. PICKETT related that robust discussions took place at the
July 29 technical conference concerning: composition of the
board of directors; how to define independent boards; definition
of a balanced board of directors; concerns, questions, and
potential changes for the current composition of the Railbelt
Reliability Council (RRC); and how descriptive or prescriptive
the commission should get in the rulemaking process. The
commission is still going through the results of the
participation and is further refining for the coming public
meeting in two weeks. Noting that Mr. Scott has been designated
the docket manager, he turned to Mr. Scott to discuss the next
two dockets.
9:11:49 AM
ANTONY SCOTT, Commissioner, Regulatory Commission of Alaska
(RCA), said the RCA would be issuing an order sometime next week
requesting interested persons to suggest topics for the first
technical conference on integrated resource planning (IRP) and
large project pre-approval regulations. Once the input is
received, RCA will schedule the first technical conference to
get input from interested persons on what those regulations
should encompass and include.
MR. SCOTT explained that the docket was broken into three pieces
because, in terms of the regulation process, once proposed
regulations are noticed to the public, all of RCA's subsequent
communications with parties need to be from the dais in either a
formal hearing or written comments back to the commission.
Technical conferences allow the RCA an opportunity to gather
information and to engage in conversation on the record, but in
a more liberal and freeform way, and this can be done up until
the regulations have been noticed. The subject matter was
broken into three pieces so the commission could provide
guidance to potential applicants for the Railbelt as to what the
minimum requirements would be to be an applicant so that the
efforts of the RRC can be streamlined and conformance can be
ensured with whatever the commission determines in that regard.
Discussions haven't started yet regarding the hierarchy of large
project pre-approval. The RCA is looking to get input on how to
scope that, and the first technical conference on that subject
is expected to be sometime in September.
MR. SCOTT explained that the last regulations docket concerning
the particular finding requirements around the liability
standards, and detailed procedures around enforcement and things
of that sort, will be voluminous and detailed, and the RCA won't
get going on that until January 2021. The commission expects
that to be a lengthy and involved proceeding but also something
that doesn't need to get done right away in terms of letting the
RRC folks get going to conform their efforts on whatever is
decided by the commission.
MR. SCOTT clarified he doesn't speak for the RCA. Anything the
commission ends up doing, he advised, will be the result of what
the majority of the five commissioners decide makes sense.
9:16:48 AM
SENATOR COGHILL, Alaska State Legislature, inquired about the
timeline of the ERO board composition.
MR. SCOTT answered that the commission is hoping to vote on
direction for draft regulations towards the end of the month.
The RCA will then probably have the administrative law judge
assigned to this take the general direction the commission has
indicated and turn that into more specific regulatory language.
He said he is expecting notice of those draft regulations to
occur in September.
9:18:48 AM
CHAIR HOPKINS offered his understanding that in the coming
docket, the RCA isn't writing the integrated resource plan
itself, rather just the rules and the structure for what that
integrated resource plan is going to look like. He asked how
that process is different from the IRP that Black & Veatch put
together 10 years ago for the state.
MR. SCOTT replied that the regulations put together by the RCA
would focus on the minimal requirements for what integrated
resource plans should contain and processes for inclusion of
input from the public. Ultimately what these regulations look
like is yet to be determined, so he is telling his personal view
of how he sees it. For regulations, the legislation requires
the RCA to indicate the frequency with which integrated resource
plans are updated. The Black & Veatch study was a one-off study
that took a global look at things, but there were no parties who
were in position to act on or implement that study. The ERO
will do a first study, and according to regulations will update
that study on a Railbelt integrated basis periodically, but it
has yet to be decided what those periods will be. The plan will
have an implementation aspect because under the legislation any
large project, which is defined in the legislation, will need to
be approved by the RCA for its construction to proceed. That is
something new in Alaska. The legislation specifies that any
large project that is consistent with an integrated resource
plan that has been developed by the ERO must be approved by the
RCA unless there was overwhelming evidence that it no longer
makes sense to build that project. There is an inherent
implementation hook here in the planning process around what in
the future gets built consistent with the plan, and that is an
important distinction.
MR. SCOTT noted that to some, there are three primary
differences with the Black & Veatch approach. The first is that
the plan will be a collaborative effort developed by the
utilities themselves, with a lot of input from the public and
the non-utility stakeholders of the ERO. The second is that it
will be updated on a periodic basis. The third is that it isn't
a study that just sits on the shelf. The study will also be
implemented by the relevant parties.
9:23:09 AM
CHAIR HOPKINS inquired whether the structure and framework being
developed for the IRP would address transmission and generation
or one over the other. He further inquired whether the state's
future load and supply developments also would be addressed
through the IRP that is being put together.
MR. SCOTT answered yes, the legislation indicates that the IRP
will need to integrate both generation and transmission
resources because to some degree those can be substituted one
for another as well as demand-side resources. Unusual about
this IRP compared to most other planning processes is that the
legislation directs that planning occur across utility
boundaries. Given there are many different entities in this
interconnected grid and the grid is geographically large but
with a small customer base, that kind of cross-utility planning
is relatively unusual. So, yes, integration will be across
generation and transmission resources, as well as demand-side
resources, and integration across utility boundaries.
9:25:28 AM
SENATOR COGHILL asked whether ERO applications have been seen at
this point.
MR. SCOTT replied no. He explained that the legislation sets
out a timetable for when the RCA would receive an application
for an ERO and that that really doesn't happen until it becomes
fully effective, which is summer 2021. The legislature gave the
RCA time to put together these regulations so that an applicant
knows what they should be doing and can get their application
together and then provide the fairly tight timeline by which
they need to then subsequently apply. He said he doesn't expect
the RCA to receive an applicant for the Railbelt ERO until next
summer at the very earliest and maybe not until the beginning of
the third quarter 2021.
9:26:59 AM
CHAIR HOPKINS requested that the committee be provided with a
list of those dates and timelines for those next three dockets
as far as the RCA currently has them available.
MR. SCOTT responded he could, but noted it is a pretty short
list. He said the RCA doesn't presently have a publicly
available list of technical conference and public meeting dates.
The commission is task-driven rather than schedule-driven on
this, so the RCA hasn't established those ahead of time.
Basically the next meetings where the RCA announces what it is
going to do tend to be piecemeal and one step ahead because it
is just how the RCA is able to manage its workload. He said he
would ensure that dates are forwarded to the committee.
9:29:15 AM
CHAIR HOPKINS introduced the next witness, Dr. Steve Colt of the
Alaska Center for Energy and Power (ACEP). He noted Dr. Colt is
a research professor of energy, economics, and policy at the
University of Alaska Fairbanks. Dr. Colt is working primarily
on the roles of prices, incentives, and energy policy in
supporting and accelerating a shift toward a sustainable and
resilient micro-grid and energy systems across Alaska. Prior to
joining ACEP, Dr. Colt spent 34 years as an economist at the
Institute of Social and Economic Research (ISER) at the
University of Alaska Anchorage, where he served as director from
2007-2010. Dr. Colt has also worked for the public utility
commissions in Maine and California.
9:30:11 AM
STEVE COLT, Ph.D., Research Professor, Alaska Center for Energy
and Power (ACEP), University of Alaska Fairbanks, provided a
PowerPoint presentation, titled "SB 123 Opportunities for
Alaska," dated 8/7/20. He directed attention to slide 2, titled
"Alaska Center for Energy & Power," and stated that ACEP's
mission is to promote cost-effective energy solutions for
Alaska. He moved to slide 3, titled "Some current ACEP
Partners," and said ACEP has a network of partnerships. He
stated that because ACEP prides itself on knowing what it
doesn't know, it brings in those who do, so ACEP is delighted
that the Regulatory Assistance Project (RAP) is with ACEP.
DR. COLT displayed slide 4, titled "What should RCA consider as
it sets rules for reliability [standards] and integrated
resource planning?" He explained he would phrase his thoughts
as four questions, with the first question about reliability and
the other three questions about integrated resource planning
(IRP). He drew attention to slide 5, titled "1. How should
Alaska's 'reliability' standards address 'resilience'?" He
advised that this question is front and center in national and
general discussions of reliability and is especially important
to Alaska. The question in Alaska is, How should Alaska's
reliability standards address the related question of
resilience? When considering the question, he continued,
[earthquakes, wildfires, transmission outages, and fuel supply
cut-offs, all while cold and dark] are some obvious reasons why
Alaska's grid may need to be reliable in a manner different from
other grids. He turned to slide 6, titled "What should RCA
consider when setting rules for IRP?" He said IRP came into
vogue in the 1980s, so he considers it to be a Twentieth Century
beast that needs to be adapted for the Twenty-First Century and
for Alaska. [The questions listed on the slide ask: What is a
resource? How can we integrate? What is planning?]
DR. COLT addressed slides 7, 8, and 9. He brought attention to
slide 7 and recommended that the first question the RCA must
think hard about is: What is a resource? In the Twentieth
Century version of the IRP, he continued, the focus was on
generation, rightly so, and the Twentieth Century IRP did a good
job of helping to broaden the mix of generation. Moving to
slide 8, he suggested that in the Twenty-First Century the IRP
process has already evolved to recognize transmission,
distribution, and most recently storage, as critical resources
that need to be considered. But it needs to go further, he
advised. Displaying slide 9, he pointed out that loads are the
latest center stage resource. Loads are coming into their own
as flexible resources that can provide storage, a beneficial use
that helps the customer, the ratepayer, and the grid. Key with
flexible loads is that they must be networked into the system
and somehow under some control of the utilities for the good of
the system. He emphasized that control can be direct along with
indirect via prices, incentives, and information.
9:36:02 AM
DR. COLT moved to slide 10, titled "In other words," and stated
that it might be said, "It's the network, stupid!" He explained
that any resource that helps the network do its job better ought
to be considered in the IRP process.
DR. COLT showed slide 11, titled "1. What is a resource..."? He
stated he thinks it is critical to recognize that people are
really the most important resource in this whole challenge.
People have always made the decisions that determine the
electric loads that utilities are driven to meet. Going forward
people will become even more important actors in forming and
using the grid. They will be acting as consumers and
ratepayers, as well as energy producers, buyers, business
people, sellers, and stewards of electric energy. He suggested
that an electric vehicle owner might best illustrate that new
idea of the person acting in multiple roles with respect a
robust grid.
DR. COLT drew attention to slide 12, titled "2. How do we
integrate resources?" He suggested that the Twentieth Century
version of the IRP focused firmly on quantities what to build,
when, and where. The term of art in those days was, and to some
extent still is, the capacity expansion plan. That was a good
start, he said, but economists are continually debating about
whether a focus on quantities is the right way to organize the
economy, or whether to focus equally or more on prices. He
moved to slide 13, titled "2. How can we integrate resources?"
He suggested that the IRP process, which is going to be formed
here, can and should focus on prices. Through this process
discussions can take place to consider rules for encouraging
incentives, markets, and mechanisms to empower people to act to
build out, operate, and use the grid. He pointed out photos on
the slide that depict electric vehicle owners, wind turbines
built by a Native corporation, entrepreneurs, and how prices are
being used by another utility to motivate behavior that benefits
the load and the grid.
DR. COLT spoke to slides 14 and 15, titled "3. What is
[integrated resource] Planning?" Showing slide 14, he
highlighted the difference between a plan and the process. He
noted that the slide depicts snippets from the 2010 Black &
Veatch plan. The slide may or may not be a caricature of the
Black & Veatch plan, he allowed, but it became "a plan to build
stuff." He explained that the famous singer, Peggy Lee,
depicted on the slide is singing her song that asks, "Is that
all there is?"
DR. COLT displayed slide 15 and advised that planning needs to
be "a lot more than just a plan to build more stuff." He
suggested that planning could be something that: is an ongoing,
transparent process; is iterative and adaptive; looks for shared
goals using shared data; develops effective mechanisms to
achieve goals; provides criteria for assessing specific projects
and schemes; and keeps people front and center at all times.
DR. COLT concluded his presentation with slide 16, titled
"Regulatory Assistance Project". He stated that RAP is no
stranger to Alaska and that David Farnsworth was a lead author
of a very good report titled "Sustainable Energy Solutions for
Rural Alaska" which summarized the challenges off the road
system. Just weeks ago Mr. Farnsworth and his RAP colleague
Mark LeBel participated in the Alaska electric vehicle virtual
workshop that was cohosted by ACEP and the U.S. Arctic Research
Commission. He said ACEP reached out to RAP because the people
at RAP "really do know their stuff" and he "is eager to hear
from them."
9:42:30 AM
SENATOR GIESSEL offered her appreciation for Dr. Colt's emphasis
that this is about people.
CHAIR HOPKINS followed up on this being about people as opposed
to infrastructure. He asked how Dr. Colt sees that process
playing out in terms of flexibility going into the future as
this is implemented, as opposed to "this is a plan for building
things." He further inquired about how much flexibility should
be needed going forward given there isn't much redundancy in
Alaska and things might change in the future.
DR. COLT replied that it is a great question, but he doesn't
have a great answer. He specified that one way this could play
out with emphasis on people is that the IRP playing process
could be directed by the rule, which is what is really being
talked about today. It could be directed to encourage or even
require some ongoing process of what entrepreneurs call customer
discovery some way of finding out what people want from their
electric grid and what they are willing to pay for and using
this to build out beneficial loads. Dr. Colt said these could
be things that can't be foreseen clearly now, but he thinks the
electric vehicle (EV) is poster child number one for this idea.
There is a lot of talk about EVs but precious little data about
whether people really are willing to adopt them in numbers.
Another idea, Dr. Colt suggested, is that the IRP process could
somehow include or embody what has come to be known in other
jurisdictions as the regulatory sandbox. It's sort of a
regulatory space where utilities are encouraged to innovate, try
pilot projects, and to experiment without having to do a rate
filing every time they want to try helping people to install a
Tesla power wall in their house for resilience after an
earthquake, for example. He deferred to RAP to answer further.
9:46:00 AM
SENATOR COGHILL recounted that throughout the process of SB 123
it was highlighted that the RCA truly is a consumer protection
agency because so many places are being dealt with that are kind
of monopolistic. The whole idea of having an IRP, a reliability
organization, was to start thinking about the whole system with
regard to the ratepayer, instead of the individual utilities.
It is a new thought process, he said, so he appreciates Dr.
Colt's comments because that was the goal.
9:47:58 AM
CHAIR HOPKINS introduced the next presenters, Michael Hogan and
David Farnsworth, representing the Regulatory Assistance Project
(RAP). He explained that RAP is an independent, nonpartisan,
nongovernmental organization composed of former utility and
environmental regulators, industry executives, system operators,
and other officials with extensive experience in the power
sector. The RAP team focuses on the world's four largest power
markets responsible for half of the global power generation,
including China, Europe, India, and the U.S.
CHAIR HOPKINS related that Mr. Hogan has been a senior advisor
to RAP since 2010 in the power industry's de-carbonization in
the areas of wholesale market design as demand response and
system integration of intermittent supply. Mr. Hogan previously
directed the European Climate Foundation's (ECF) power program
and the ECF's landmark roadmap 2050 de-carbonization study. In
18 years in the private power industry Mr. Hogan was responsible
for development, financing, acquisition, and operations for tens
of thousands of megawatts of generation from independent power
plants on four continents. He began his career in power systems
marketing with General Electric (GE) and earned degrees in
business, engineering, and management from Harvard, MIT, and
University of Notre Dame. Today Mr. Hogan will provide a
presentation on wholesale power system reliability, metrics that
are appropriate for assessing system readiness, and mechanisms
for ensuring delivery at lowest reasonable cost, as well as
provide a brief description of best practices in the use of
integrated resource planning to assist in delivering reliability
with integration of variable renewables.
[Mr. Hogan and Mr. Farnsworth were not available due to
technical difficulties.]
9:51:00 AM
The committee took an at-ease from 9:51 a.m. to 10:00 a.m.
10:00:51 AM
CHAIR HOPKINS called for another 5-minute break for "technical
issues" [waiting for presenters from RAP to call in].
10:00:55 AM
The committee took an at-ease from 10:01 a.m. to 10:07 a.m.
10:07:50 AM
CHAIR HOPKINS explained he would have to recess the meeting due
to technical difficulties.
10:08:36 AM
ADJOURNMENT
The House Special Committee on Energy meeting was recessed to
the call of the chair at 10:08 a.m. [The meeting was reconvened
on 8/14/20, at 9:00 a.m.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2020-08-07 - Steve Colt Presentation.pdf |
HENE 8/7/2020 9:00:00 AM |
Senate Bill 123 Implementation |
| 2020-08-07 - David Farnsworth Presentation.pdf |
HENE 8/7/2020 9:00:00 AM |
Senate Bill 123 Implementation |
| 2020-08-07 - Michael Hogan Presentation to Energy Committee.pdf |
HENE 8/7/2020 9:00:00 AM |
Senate Bill 123 Implementation |