Legislature(2021 - 2022)BARNES 124
03/17/2022 10:15 AM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| HB301 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 301 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
March 17, 2022
10:21 a.m.
MEMBERS PRESENT
Representative Calvin Schrage, Chair
Representative Matt Claman
Representative Tiffany Zulkosky
Representative George Rauscher
Representative Zack Fields
MEMBERS ABSENT
Representative Chris Tuck
Representative James Kaufman
COMMITTEE CALENDAR
HOUSE BILL NO. 301
"An Act relating to the establishment of a renewable portfolio
standard for regulated electric utilities; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 301
SHORT TITLE: UTILITIES: RENEWABLE PORTFOLIO STANDARD
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/04/22 (H) READ THE FIRST TIME - REFERRALS
02/04/22 (H) ENE, L&C, FIN
03/08/22 (H) ENE AT 10:15 AM BARNES 124
03/08/22 (H) Heard & Held
03/08/22 (H) MINUTE(ENE)
03/10/22 (H) ENE AT 10:15 AM BARNES 124
03/10/22 (H) Heard & Held
03/10/22 (H) MINUTE(ENE)
03/15/22 (H) ENE AT 10:15 AM BARNES 124
03/15/22 (H) Heard & Held
03/15/22 (H) MINUTE(ENE)
03/17/22 (H) ENE AT 10:15 AM BARNES 124
WITNESS REGISTER
BRAD JANORSCHKE, General Manager
Homer Electric Association, Inc.
Homer, Alaska
POSITION STATEMENT: Co-provided a PowerPoint presentation,
discussed proposed amendments, and answered questions on HB 301.
BRIAN HICKEY, Chief Operating Officer
Chugach Electric Association, Inc.
Anchorage, Alaska
POSITION STATEMENT: Co-provided a PowerPoint presentation,
discussed proposed amendments, and answered questions on HB 301.
DANIEL HECKMAN, Regulatory Analyst
Golden Valley Electric Association
Fairbanks, Alaska
POSITION STATEMENT: Co-provided a PowerPoint presentation,
discussed proposed amendments, and answered questions on HB 301.
ACTION NARRATIVE
10:21:02 AM
CHAIR CALVIN SCHRAGE called the House Special Committee on
Energy meeting to order at 10:21 a.m. Representatives Claman,
Rauscher, and Schrage were present at the call to order.
Representatives Zulkosky and Fields arrived as the meeting was
in progress.
HB 301-UTILITIES: RENEWABLE PORTFOLIO STANDARD
10:21:38 AM
CHAIR SCHRAGE announced that the only order of business would be
HOUSE BILL NO. 301, "An Act relating to the establishment of a
renewable portfolio standard for regulated electric utilities;
and providing for an effective date."
10:22:26 AM
BRAD JANORSCHKE, General Manager, Homer Electric Association,
Inc. (HEA), thanked the committee and introduced the co-
presenters.
10:22:54 AM
BRIAN HICKEY, Chief Operating Officer, Chugach Electric
Association, Inc. ("Chugach"), thanked the committee and
expressed interest in Renewable Portfolio Standards (RPS) and
the decarbonization of the economy.
10:23:17 AM
DANIEL HECKMAN, Regulatory Analyst, Golden Valley Electric
Association (GVEA), thanked the committee and expressed his
support for a sustainable, renewable standard for the Railbelt.
10:23:52 AM
MR. JANORSCHKE began the Railbelt utilities' PowerPoint
presentation [included in the committee packet] on slide 3,
which showed a brief overview of HB 301. He shared that the
Railbelt utilities sent a letter to the governor in January
[2022], relating their support of diversifying the energy mix.
As 85 percent of Railbelt electricity comes from natural gas, he
expressed the opinion that, from a business perspective, none of
the Railbelt utilities want to be dependent on one resource. In
example, he referenced that Harbor Electric requested bids three
years ago for a five-year natural gas contract. He emphasized
that there had been only one bid to meet 85 percent of members'
needs. He said that when a fuel component represents one-third
of the electric bill, "it is hard to look a member in the eye
and say, 'I got you the best deal possible.'" He expressed
appreciation of the supplier, but from a business perspective,
"it is putting a lot of eggs in one basket." He explained the
biggest challenge would be the lack of transmission in the
system. He stated, with support, a more robust transmission
system could be built, which would enable diversification of the
generation portfolio to include other resources. He expressed
the opinion that the only way forward, so the ratepayers are not
carrying all of the burden, would be participation from the
state.
10:27:11 AM
MR. JANORSCHKE referenced slide 4, which addressed specifics of
the proposed legislation. He pointed out the importance of
having achievable goals. He stated that transmission
constraints are one of the largest hurdles for the utilities and
the independent power producers, who need to put power on the
grid without upward pressure on rates. He argued that using
economies of scale would be the only way not to pressure rates
upward while incorporating renewable energy. Economies of
scale, whether wind or solar, mean a large number of resources
are in a single location. He emphasized that the current
transmission system could not handle this.
10:29:14 AM
REPRESENTATIVE RAUSCHER expressed the opinion that some "lofty"
goals have been set out in HB 301. In regard to 80 percent
renewables by 2040, he questioned the percentage [of renewables]
HEA is currently using.
MR. JANORSCHKE responded that HEA is using about 15 percent
renewable energy. He clarified, while renewable energy is
referred to as non-firm energy, hydroelectric is considered to
be firm energy. He indicated that 15 percent of HEA's needs are
met by the Bradley Lake and Battle Creek facilities. He
expressed the opinion that most utilities "love hydropower."
10:30:35 AM
MR. HICKEY stated that [slide 5] summarizes [the focus of the
proposed amendments that the Railbelt utilities submitted to the
governor]. Highlighting some of the points in the list, he
began by expressing the opinion that caps on costs and
reliability should be incorporated in the proposed legislation.
To stop consumer costs from becoming too high, he maintained
that the Regulatory Commission of Alaska (RCA) should be able to
suspend RPS if costs exceed a certain threshold. Directing
attention to another point, he voiced the opinion that targets
and timelines should be based on analysis and achievable.
Referencing the results from Senate Bill 123 [passed during the
Thirty-First Alaska State Legislature], he stated, since that
time, "thousands of hours" have been spent developing a Railbelt
Reliability Council (RRC). He indicated that RRC has been
incorporated, and an application for certification has been
completed and will be submitted to RCA, with the intention of
making RRC the electric reliability organization (ERO) for the
Railbelt. He voiced that, in this role, RRC would vet the
pathways forward into a "decarbonized" future, with the work
done through a consensus process. He explained that, to pass an
integrated resource plan, the consensus would entail an
agreement between utility members and stakeholders. As there
has only been one application, he expressed the belief that RRC
would be ERO for the Railbelt, and this organization would be
active as early as this fall.
MR. HICKEY, making another point, mentioned that RPS milestones
should be coordinated with the planned replacement of the
existing Railbelt generators. He expressed the expectation that
most of the generation in the Railbelt will be "rolled off the
books by 2060," depreciating current assets by 2030 or 2060. He
suggested that coordinating the targets with depreciation would
eliminate the prospect of "stranded investment" and the
associated cost. He stated that because the utilities are
cooperatives, costs would go right to the consumers. If there
are events outside the control of the utilities, he said, RCA
should be required to take this into account and allow the
utilities to skip targets.
10:34:28 AM
MR. HICKEY gave examples of the challenges for the utilities
concerning the timelines in HB 301. He stated if specific
timelines are required, the utilities would need help from the
legislature to fast-track permits. In terms of compliance, he
argued that the collected fines should be used to invest in
infrastructure supporting renewable energy. In terms of
compliance difficulties, he emphasized the following points: the
Railbelt grid is small and isolated, utilities make the only
electricity available, and limited transfer capability exists
between Kenai to Anchorage. In his next point, he maintained,
if the wind implemented in Fairbanks is to be used in Homer,
transmission interconnections would need to be enhanced. He
estimated that this would need billion-dollar investments. He
then addressed his opinion that HB 301 leans toward the use of
purchase power agreements (PPAs), which would enhance the
development of resources outside of the utilities. He expressed
the opinion that this could be cost effective, but he reasoned
it may be more cost effective to do this internally. He said,
"The legislation should be balanced as to whether the asset is
developed within the utilities' structure or purchase power
arrangements with other entities."
MR. HICKEY moved to [slide 6], which began the listed amendments
presented to the governor. He stated that [Amendment 1] would
shift the [RPS] requirement for each utility to a regional
requirement. He explained that a target for individual
utilities would create competition for resources; otherwise, the
resources would be developed together, generating economies of
scale. Because of the permitting and the design issues, he
expressed the opinion that the 2025 target in the proposed
legislation would not be achievable. He stated that [Amendment
2 on slide 7] would remove this, and other targets would be
adjusted. He maintained, [per Amendment 3 and Amendment 4 on
slide 8], that PPAs and internal development should be done "on
an equal footing."
10:38:13 AM
MR. HICKEY, in response to Representative Rauscher, explained
that in 2010 the upgrades to the transmission system in the
Alaska Energy Authority's (AEA's) resource plan had been
estimated to be around $900 million. He voiced the opinion that
the current cost would be closer to $2.5 billion. He said
bringing this amount to the utilities and the ratepayers would
be a "bridge too far."
10:39:22 AM
MR. HECKMAN, beginning on slide 9, stated that Amendment 5
addresses concerns on costs and reliability in the proposed
legislation. He explained that it would give RCA oversight over
RPS. If RCA finds RPS to be contrary to the public interest,
RCA will have the ability to suspend RPS, in whole or in part.
He continued, if the cost to comply [with RPS] exceeds a certain
percentage, RCA would be allowed to stay a requirement to comply
with RPS. He informed the committee that the definition of
"public interest" exists in statute and commission precedent.
He said this [amendment] pivots back to the idea that ERO would
be the proper mechanism for RPS considerations. In making the
decision to stay a requirement to comply with RPS, he stated,
RCA would take into consideration impacts to reliability,
resiliency, and security.
MR. HECKMAN, [moving to slide 10], stated that [Amendment 6],
would change language in relation to noncompliance issues. He
explained, in relation to an RPS noncompliance issue, RCA would
be required to consider events and circumstances outside of the
control of the load-serving entities. He stated that [RCA]
would be given no discretion, but it would have the ability to
revise and expand these options through its judicial process,
which is currently in statute.
MR. HECKMAN, [moving to slide 11 and Amendment 7], stated that
currently the proposed legislation would not allow for the cost
of noncompliance fines to be included in load-serving entities
rates. He explained the Railbelt is made up of electrical
cooperatives which are entirely different business models than
investor-owned utilities, and the consumers eventually pay for
the cost of electricity. Language would be modified so the
noncompliance fine must be used, either through the Renewable
Energy Fund (REF), or another fund, to invest in the renewable
energy infrastructure in the electrical region of the utility.
10:43:34 AM
REPRESENTATIVE ZULKOSKY questioned the capital needed to
implement the proposed legislation and whether the state would
be expected to invest. She expressed the understanding that the
utilities would need some level of investment, likely from REF.
MR. HECKMAN stated that the amendment did not express this;
although, there are significant capital costs which would be
incurred in order to comply with RPS. He added that the
National Renewable Energy Laboratory's (NREL's) study did not
address these costs. He expressed uncertainty whether funds
would come from REF. He deferred to his colleagues.
MR. JANORSHKE expressed agreement with Mr. Heckman, as
significant investment would be needed for transmission issues.
He mentioned Mr. Hickey's reference to over $2 billion for
improvements in a transmission plan. He expressed the opinion
that if the utilities have to fund these improvements, "they're
never going to happen," as most of the utilities are sensitive
about rates. He acknowledged that some comments have been made
which convey that the utilities had overbuilt in recent years.
He argued that those in the industry, who run the systems, "know
there is nothing further from the truth." He described the
three load-serving areas as separated by avalanche chutes, vast
mountains, and public lands. Between these areas, he said, "We
have a simple extension cord," so utilities have to be
independent and produce their own power, as the power "never
goes out when it is 60 above, it is always 30 below when the
power goes out for a long period of time." In example, he
referenced an older power system, which has been retained in the
event of a local active volcano producing fly ash. The older
system would be used as a reserve to save the newer system. He
said the older system "may burn a lot of fuel ... but with fly
ash in the area you don't care, you save your good stuff ... and
run the old stuff."
10:47:18 AM
REPRESENTATIVE ZULKOSKY, with a follow-up question, mentioned
AEA's initial presentation, and its reference to $261 million in
transmission line and energy-storage projects for the proposed
legislation. She suggested that [these funds] could also help
achieve some other projects and goals. She questioned the
utilities' involvement in the assessment and the timeframe for
capital projects needed to achieve the goals of HB 301.
MR. JANORSCHKE responded that there have been discussions
between Railbelt utilities, AEA, and the Bradley Project
Management Committee. He said the utilities concur with AEA's
analysis on the transmission upgrades, pointing out the
bottleneck between Soldotna and Anchorage. He described HEA's
Tesla batteries, which would help provide frequency
stabilization for the Bradley Lake facility. He added that the
batteries also help with real-time reserves and create an
opportunity in the future to integrate non-firm resources. He
said, "There is a lot the state can do to help the utilities
resolve some issues and make some of the milestones ... in this
proposed legislation a reality."
10:50:41 AM
MR. HICKEY, also responding to Representative Zulkosky's
question, expressed the belief that [$261 million] would not be
the final amount, as the numbers AEA provided were step 1 and
step 2 out of the 14-step process to build assets in the
Railbelt. He stated that this sum would only provide a
[transmission] line halfway from the Bradley Lake facility to
Anchorage. Listing other projects, he stated that Kenai needs a
new line, the central region of the Railbelt needs improvements,
and a line from Anchorage to Healy needs to be built. He
estimated that $2.5 billion would be needed. Per Mr.
Janorschke's other point, he said, in a power-pool arrangement,
Chugach and the Matanuska Electric Association are constructing
a 70-megawatt battery in Anchorage designed to provide
reliability and correct frequency-control issues concerning the
Bradley Lake facility. He emphasized the necessity to repair
this problem. He added that this battery fix could also
integrate more renewables and reduce the fuel burn.
REPRESENTATIVE ZULKOSKY, after hearing the details of achieving
the goals in HB 301, expressed the realization that this would
take decades of work.
MR. HICKEY responded in the affirmative.
10:54:05 AM
REPRESENTATIVE RAUSCHER questioned [GVEA's] current percentage
of renewables.
MR. HECKMAN responded that he does not have the exact numbers.
He stated that GVEA has a 26 percent carbon-reduction goal. He
offered to follow up after the meeting with the requested
information.
REPRESENTATIVE RAUSCHER, directing a question to Mr. Hickey,
asked whether the Fire Island Wind Farm goals were achieved. He
requested any details Mr. Hickey may have.
MR. HICKEY responded that slide [19] in the presentation shows
the actual cost of the various non-dispatchable renewables on
the Railbelt grid. He explained that the Fire Island Wind Farm
was built as a "hedge" on the projection of rising fuel prices,
but fuel prices have not risen as projected. Noting that a part
of the graph's legend is missing, he indicated the brown line in
the middle of the graph represents the Fire Island Wind Farm's
cost going back to 2013. He stated that Chugach's avoided cost
is below this and is depicted as the red-dotted line.
MR. HICKEY, in response to a follow-up question, stated if a
"hedge" is bought and prices rise, this would be considered a
"win." He explained that because the price of fuel has not
risen as fast as projected, the [Fire Island Wind Farm] is
costing money; however, risks for potential higher [fuel] cost
have been mitigated.
REPRESENTATIVE RAUSCHER commented that the discussion of [HB
301] has been based on projected-fuel [prices], not capital
costs. He stated that the Fire Island Wind Farm [was built] on
projected-fuel cost, but the results "came up different." He
pointed out the difficulty in basing the proposed legislation on
a projection, and he posited whether this "is a good idea."
10:58:01 AM
REPRESENTATIVE FIELDS commented that Mr. Hickey has already
partly answered his question. Continuing, he questioned the
difference between shovel-ready projects in the Railbelt, which
would total $995 million, and projects that "we actually need"
that are not shovel ready. He expressed the assumption that
some projects, which are not shovel ready, are actually needed
for integration and renewables. He questioned the projects
which would require further planning. He expressed the belief
that Mr. Hickey anticipated around $2.5 billion in transmission
costs for integrating intermittent energy sources in the
Railbelt.
MR. HICKEY expressed the understanding that Representative
Fields was correct. He pointed out the change in the value of
money between 2010 and 2022, which represents a large amount of
the costs. He gave examples of Chugach's increased costs. He
explained that the cost to build transmission in the Railbelt
would be about $1 million per mile. He described the various
components in the process to build transmission and said the
$2.5 billion is a "very, very rough" estimate, but not "off the
charts."
11:00:04 AM
MR. HICKEY moved to slide 12, which compares the Railbelt and
the Lower 48. He indicated that the state produces an estimated
35 million metric tons of carbon per year, and the Railbelt
produces 7.7 percent of this. He expressed the opinion that the
decarbonization of the economy would require a decarbonized-
electric grid. He expressed excitement concerning the
challenge, referring to [part of the challenge] as balancing
rates in a cost-effective way. He described a key issue as the
transition away from natural gas in Cook Inlet. Depending on
the utility, he said, 70 percent of the electricity produced [in
the Railbelt] is generated from Cook Inlet natural gas. He
said, "None of us like that, but that is the reality." In
addition to this, he said, most of the home heating in the
Matanuska-Susitna Borough and the Municipality of Anchorage is
from this source. He stated that moving away from Cook Inlet
natural gas could impact home-heating prices. He said, "I think
we have to look at it from a holistic perspective - of how we
move off of this, and how we don't get too far away from what we
need - to keep the lights on and heat homes in the wintertime."
MR. HICKEY reiterated that the Railbelt utilities are
cooperatives, with no shareholders, so the costs go directly to
the ratepayers. He addressed the issue concerning redundancy in
the Railbelt grid, expressing the opinion that the grid does not
have redundancies. Concerning isolated grids in Alaska, he
stated that these do not operate the same as grids in the Lower
48. He explained that the things which happen over hours on
large grids would happen within seconds in the Railbelt. He
referred to [electrical] frequency as the primary operating
variable; when there is rapid change [in frequency], blackouts
happen. As a last point, he said, "As we move into this
decarbonized future, I think we have to be very careful. I
think that technology is going to advance rapidly over the next
10 or 20 years." He continued, stating that [new] power could
come from small nuclear, electro fuel, or hydrogen based, as
billions of dollars are being put into research. He reasoned
that, while Alaska needs to move forward, the state does not
need to be locked into a 20- or 30-year investment when other
technology becomes viable. He expressed the opinion that the
Susitna-Watana Hydroelectric Project ("Susitna-Watana") may have
to be built, but this should be put off as long as possible, as
other technologies may be developed. He moved to [slide 13],
pointing out the "great work" in NREL's study; however, the
study was only the first step of many steps which need to be
completed.
11:05:51 AM
MR. JANORSHKE, in closing the presentation, thanked the
committee. As the longest serving utility manager on the
Railbelt, he voiced excitement for the new collaboration in the
Railbelt. Concerning HEA, he related that many investments over
the years have been made to utilize natural gas more
efficiently; however, he stated that "it does make me nervous"
when 85 percent of the energy comes from a single supplier and
resource. He concluded that, as a result, the Railbelt
utilities are actively trying to reduce risk, improve the system
with non-firm and renewable options, maintain the quality of
service, and not raise rates. He expressed appreciation for the
committee's support.
11:08:02 AM
REPRESENTATIVE FIELDS referenced the testimony in a previous
committee meeting which conveyed that the grid in Colorado is
isolated. In relation to an isolated grid, he questioned
whether the Railbelt learned from Colorado's operations.
MR. HICKEY expressed his understanding that, while Colorado has
isolated power plants that replicate Alaska, its grid is heavily
connected at the Four Corners to the Western Interconnection.
He stated that some of the events in Colorado have been studied
but only in the isolated areas.
REPRESENTATIVE FIELDS, with a follow-up question, related that
Colorado has intermittent sources of energy. When these sources
are not "cranking-out" energy, he questioned whether Colorado is
pulling energy from across the West.
MR. HICKEY responded in the affirmative.
REPRESENTATIVE FIELDS expressed shock at the drop in costs in
the Lower 48 for wind-plus-storage and solar-plus-storage
[installations]. He questioned the cost of this in Alaska. He
suggested that the cost margin would be geographically driven.
11:10:11 AM
MR. JANORSCHKE deferred the question to Mr. Heckman and Mr.
Hickey.
MR. HECKMAN explained that GVEA has not issued a request for
proposals (RFPs); rather, it has issued a request for
information (RFI). He stated that this was issued with the
intention to get project proposals from different vendors to
help meet carbon-reduction goals, while not impacting
reliability or rates. He described GVEA as being at the
northern end of the Railbelt. He stated that none of RFIs
"moved the mark" with the carbon-reduction goals, so no action
has been taken. He added that this has not stopped the process,
and GVEA is still looking to integrate these sources. He
speculated that, depending on the interconnection and the fuel
source, the costs could be high.
REPRESENTATIVE FIELDS, with a follow-up question, asked whether
any of the providers stated a cost.
MR. HECKMAN responded that he is not at liberty to speak to this
specific information.
11:12:13 AM
MR. HICKEY explained that Chugach had recently collected
responses to its RFP. Per the prices, he directed attention to
[slide 19] and the green line at the top of the graph, which
represents pricing of PPAs for wind and solar in Hawaii. He
compared this with the brown line at the bottom of the graph,
which represents PPAs in the Southern U.S. He stated that the
reason for the price difference is financiers are unwilling to
take on the avoided cost in Hawaii because it has no market. He
deduced that Alaska would have the same challenge. Comparing
the [lower] prices in the Southern U.S., he stated that Chugach
has received RFPs, but they are unregulated, and regulation in
Alaska can double the cost of projects. He stated that Chugach
received a broad range of prices from 13 proposals, with 3
proposals being from outside of Alaska. He offered that Chugach
has not acted on any of them.
REPRESENTATIVE FIELDS questioned whether Mr. Hickey was at
liberty to talk about the price range he has experienced.
MR. HICKEY responded that the price is somewhere between
Chugach's avoided cost and the current cost of the Fire Island
Wind. He pointed out that the areas [outside of Alaska] started
small and "got their feet under them." He opined that the
[Railbelt] utilities perform competently, and "if our directive
is to make this happen, we will make it happen."
11:16:08 AM
REPRESENTATIVE ZULKOSKY offered her appreciation for the candid
conversation. She stated that the testimony has underscored the
lack of resiliency and redundancy. She expressed the opinion
that rural Alaska is years behind the Railbelt. She underscored
the need for capital projects to build the grid out in an
equitable way. She referenced the number of years the Railbelt
utilities have taken to come into alignment with [Senate Bill
123]. Concerning the implementation of HB 301, she mentioned
the significant investment Mr. Hickey's testimony addressed.
She said, "What we see in rural Alaska is that renewable energy
is certainly not a magic silver bullet for affordability." She
stated that renewables had been sold with this idea for a number
of years. Considering the required capital projects, the actual
cost, and the economies of scale, she said [implementation of
the proposed legislation] would need to be done in a thoughtful
way, even in urban Alaska. She offered her appreciation for the
consideration of the unique demographics in the state in the
pursuit of energy diversification. She reiterated her
appreciation of the "thoughtful, candid" presentation.
11:19:01 AM
REPRESENTATIVE FIELDS, voicing agreement with Representative
Zulkosky, stated that it is important to approach this in a
thoughtful way. He expressed hope that the administration would
make capital investments. He shared that he had done the math
on the transmission cost, and, as a ratepayer, he voiced the
opinion that the cost would be reasonable. He allowed that some
[ratepayers] may not be able to absorb the cost. He expressed
the opinion that the oil-revenue windfall could be used to pay
down transmission costs, for example. Concerning intermittent
energy generation and the need for storage, he referenced NREL's
study and assumed that Susitna-Watana would not be built. He
expressed the belief that gas generation would be kept online
when renewables are not being produced. He questioned whether
the only backup energy would be gas and pump storage. Given the
latitude and isolation of the grid, he questioned whether there
would be other alternatives.
MR. JANORSCHKE voiced agreement with Representative Fields'
comments and responded that there are some options. He provided
the opinion that, considering implementation of RPS, gas would
be relied on for "many, many, many years to come" because wind
and solar are not reliable in the winter. He pointed out that
the Dixon Diversion Hydro Project is an opportunity which should
be considered. He voiced the opinion that the storage
capabilities of the Bradley Lake and Battle Creek facilities are
"fantastic" but easy to discount. Referring to lightweight gas
units currently in use, he said that because they can be backed-
off easily, they are considered efficient storage units in real
time. He voiced the opinion that storage hydro is another
alternative, and, since 2004, batteries have had a positive
impact on GVEA's grid. He stated that the Railbelt utilities
are continuing to invest in batteries. Comparing the Railbelt's
grid to large grids in the Lower 48, he explained that when a
unit is tripped in the Railbelt, every utility is immediately
aware, creating a panic; however, when a unit trips in an
extremely large plant, it is hardly detectable in the grid's
frequency. Referring to the Railbelt, he said, "It is a very
tightrope we are walking right now."
11:24:05 AM
MR. HICKEY pointed out the importance of the distinction between
energy and capacity: energy is used in kilowatt hours, while
capacity is the amount of energy available for delivery in a
given moment. Every year, on an energy basis, the Railbelt uses
about 4,800 gigawatt hours, while Fire Island Wind produces
about 50 gigawatt hours, Bradley Lake produces about 400
gigawatt hours, and Dixon Creek produces around 200 gigawatt
hours. He postulated, if Susitna-Watana were built, it would
produce 2,800 gigawatt hours every year. Concerning the
magnitude of replacing [the entire Railbelt's] energy generation
in 18 years, he expressed the opinion that there needs to be an
understanding of the amount of wind actually there and its cost.
He acknowledged that he did not answer the question and
requested Representative Fields to follow up.
REPRESENTATIVE FIELDS responded with a follow up:
notwithstanding gas and developing technologies, he inquired
whether there are other practical options available to provide
reliability with intermittent generation.
MR. HICKEY responded that there has been a large amount of
interest in pump storage. He said that, generally, the
economics of pump storage are effective. He stated that very
large power plants cannot be shut down below the minimums, so a
pump-storage facility would be built to utilize the [residual]
energy. Qualifying this, he stated that pump storage losses can
be significant, and the Railbelt does not have large enough
units to explore this. He allowed that RPS requirements, or a
carbon tax, could change the economics for building pump
storage. He added that the utilities are still looking at pump-
storage options.
11:27:41 AM
REPRESENTATIVE CLAMAN expressed his understanding of the
importance of RPS and needing a consensus among the utilities.
He stated that while a consensus is being worked out,
significant markets focused on other renewables [could be
considered]. Considering the legislation may take a few years
and the idea that the gas supply is limited, he questioned the
most viable alternative to incorporate into the system.
MR. Hickey responded that building a big hydro [plant would be
the solution].
MR. HECKMAN responded in the affirmative regarding the
implementation of big hydro.
MR. JANORSCHKE agreed with the solution of big hydro. He added
that to accommodate big hydro a robust transmission system would
need to be built, with some battery storage; this would be the
only way to get the economies of scale to drive down the cost to
benefit everybody. He referred to Mr. Heckman.
MR. HECKMAN responded in the affirmative. He stated that this
level of hydro would not be possible without a big transmission
system to accommodate the power and integration of more
renewables.
CHAIR SCHRAGE commented on the unity within the utilities.
[HB 301 was held over.]
11:29:50 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 10:30 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 301 Railbelt Utilities Presentation.pdf |
HENE 3/17/2022 10:15:00 AM |
HB 301 |
| HB 301 Railbelt Utilities Presentation Corrected Slide 19.pdf |
HENE 3/17/2022 10:15:00 AM |
HB 301 |
| HB 301 Schrage Transmission Letter FINAL.pdf |
HENE 3/17/2022 10:15:00 AM |
HB 301 |
| HB 301 Final-transmission-plan-draft-11-18-16.pdf |
HENE 3/17/2022 10:15:00 AM |
HB 301 |
| HB 301 transmission-plan-economics-3-3-17.pdf |
HENE 3/17/2022 10:15:00 AM |
HB 301 |