Legislature(2023 - 2024)BARNES 124
02/02/2023 10:15 AM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Utility Company Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
February 2, 2023
10:15 a.m.
MEMBERS PRESENT
Representative George Rauscher, Chair
Representative Tom McKay
Representative Stanley Wright
Representative Calvin Schrage
MEMBERS ABSENT
Representative Josiah Patkotak
COMMITTEE CALENDAR
PRESENTATION(S): UTILITY COMPANY UPDATE
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
TONY IZZO, CEO
Matanuska Electric Association
Palmer, Alaska
POSITION STATEMENT: Co-presented a PowerPoint presentation,
titled "Railbelt Electric Energy System and Energy Transition."
BRAD JANORSCHKE, General Manager
Homer Electric Association
Homer, Alaska
POSITION STATEMENT: Co-presented a PowerPoint presentation,
titled "Railbelt Electric Energy System and Energy Transition."
ARTHUR MILLER, CEO
Chugach Electric Association
Anchorage, Alaska
POSITION STATEMENT: Co-presented a PowerPoint presentation,
titled "Railbelt Electric Energy System and Energy Transition."
JOHN BURNS, CEO
Golden Valley Electric Association
Fairbanks, Alaska
POSITION STATEMENT: Co-presented a PowerPoint presentation,
titled "Railbelt Electric Energy System and Energy Transition."
ACTION NARRATIVE
10:15:48 AM
CHAIR GEORGE RAUSCHER called the House Special Committee on
Energy meeting to order at 10:15 a.m. Representatives Wright,
McKay, Schrage, and Rauscher were present at the call to order.
^PRESENTATION(S): UTILITY COMPANY UPDATE
PRESENTATION(S): UTILITY COMPANY UPDATE
10:17:41 AM
CHAIR RAUSHCER announced that the only order of business would
be an update on utility companies.
10:18:38 AM
TONY IZZO, CEO, Matanuska Electric Association, co-presented a
PowerPoint presentation, titled "Railbelt Electric Energy System
and Energy Transition" [hard copy included in the committee
packet. He introduced the presenters and their companies.
10:19:15 AM
BRAD JANORSCHKE, General Manager, Homer Electric Association,
began with slide 2 and stated that the Railbelt serves 75
percent of Alaska's population. He pointed out that electricity
for the Railbelt is cheap compared to Alaska's rural communities
and expensive compared to Southeast Alaska. He explained that
this is because Southeast Alaska has hydroelectric opportunities
unavailable to the Railbelt communities. He stated that the
Railbelt utility companies use 41 percent of the natural gas
produced from Cook Inlet, with 85 percent of electricity
produced by the utilities coming from this natural gas. He
continued to slide 3 and stated that a single transmission line
connects the four different companies and their respective areas
of coverage. He added that the companies are putting $166
million towards upgrading the transmission line.
10:24:05 AM
ARTHUR MILLER, CEO, Chugach Electric Association, continued to
slide 4 and stated that the declining natural gas production in
Cook Inlet is an upcoming challenge in keeping electricity rates
competitive in the Railbelt. He continued to slide 5 and stated
that in the past the supply of natural gas was greater than the
demand, but the forecasted production shows that there is a
likelihood of the supply falling below the demand.
MR. MILLER added that the main goal of the utilities is to keep
rates as low as possible while meeting reliability standards.
He continued to slide 6 and slide 7 and suggested that there
will be a gap in energy production starting in 2027. He said
that the options for filling the gap would include using clean
energy when economically possible, pursuing natural gas options
on the North Slope, and importing liquefied natural gas (LNG).
He continued that the transition would require energy storage
and upgrades to the transmission infrastructure. He said that
the batteries being purchased by the utilities allow the
companies to better regulate the system, thus reducing cost and
increasing reliability. He said that the use of batteries will
make renewable energy more economical.
10:34:59 AM
MR. IZZO continued with slide 7 and stated that the availability
of natural gas is critical for the foreseeable future. He added
that the future would also require a diversification of
resources. He noted that this would be the third time he has
witnessed a similar situation, with each of the past situations
being resolved. He continued to slide 8 and stated that energy
security is a major goal of the utilities. He provided the
definition of "energy security" as the ability to keep the power
running. He said that utility companies are continuing to set
new goals for renewable energy in order to reduce reliance on
natural gas while maintaining the same rates.
MR. IZZO continued to slide 9 and displayed a graph showing the
historical and current prices of different forms of energy
generation in Alaska, comparing these with the prices during the
same period for different forms of energy generation in other
parts of the country. He stated that the average price of a
megawatt on the Railbelt is still cheaper than many of the other
regions in the state. He added that the price of a kilowatt on
the Railbelt is 20 cents while the U.S. average is 16 cents.
10:42:59 AM
JOHN BURNS, CEO, Golden Valley Electric Association, continued
to slide 10 and stated that the goal of the utilities is to
reduce the price as much as possible along the Railbelt. He
advised that achieving this goal would require a "reliable,
redundant, and resilient" transmission system. He stated that
accomplishing the vision of the utilities would require
upgrading the current transmission lines, adding additional
lines, and increasing the ability to store energy.
MR. BURNS added that past decisions to build new projects have
made a significant impact on the future and referenced the
Bradley Lake Hydroelectric Project. He stated that the vision
for the Railbelt would be a 10-to-12-year commitment and cost
approximately $250 million. He noted that the utilities have
already invested $166 million.
10:51:06 AM
MR. BURNS continued to slide 11 and stated that completing the
Railbelt's vision would result in increased energy generation,
including: renewable energy; increased ability to transport
energy; an increase in the scale at which energy can be
generated; increased ability to support military facilities in
Alaska; increased economic development; and increased rate
stability. He added that the utilities would need help from the
legislature to avoid putting the burden on the ratepayers.
MR. BURNS continued to slide 12 and stated that there are four
priorities that the utilities hope the legislature will
accomplish. He listed the priorities: working with the
utilities to find a long-term and in-state supply of natural
gas; creating a transmission and energy storage infrastructure;
leveraging state and federal funding; and creating an economic
path to energy sources that will reduce carbon emissions.
10:59:03 AM
MR. BURNS, in response to a series of committee questions,
answered that 33 percent of Golden Valley Electric's energy
generation comes from coal, and while it has one plant that
works very well, its second plant, Healy Two, has frequent
issues. He answered that the energy Golden Valley Electric can
buy from Southcentral Alaska is cheaper than producing energy at
Healy Two because of Healy Two's frequent issues. He answered
that the situation underscores the current need for natural gas
availability and the need that the utilities work together.
11:03:45 AM
MR. IZZO, in response to a committee question concerning the
decline of natural gas production in Cook Inlet, answered that
gas prices increased dramatically in the early 2000s after the
natural gas supply found in the 1950s and 1960s had been
depleted. He added that the prices at the time were quite high,
and this was an incentive for companies to fund new explorations
of natural gas reserves. He stated that in 2006, the prices had
another dramatic increase because of companies such as Chevron
and Marathon leaving the state. He explained that these
companies left the state because of Alaska's lack of connection
to the Henry Hub system. He said that in 2014 tax credits
brought new companies and investments to Alaska. He stated that
a 10-year agreement with another undisclosed utility would have
greatly reduced rates, but the deal fell through when the new
tax credits were vetoed.
MR. IZZO stated that this began a period of short-term contracts
of 1 to 2 years between utilities and natural gas producers. He
said that Hilcorp "picked up the pieces" by offering 5-year
contracts to supply natural gas. He stated that this experience
has led to the utilities creating plans to diversify energy
sources. He reiterated that building up the transmission system
is important, as doing this would allow for greater
diversification. He added that diversification of different
power sources is important because power from different parts of
the state can be transferred.
11:14:21 AM
REPRESENTATIVE MCKAY stated that previously he had been a
petroleum engineer. He warned that because of the number of
years that natural gas has been produced from Cook Inlet, the
possibility of running out is serious. He stated that something
needs to be done immediately because five years is a short
amount of time in the oil and gas industry. He expressed the
belief that the Cook Inlet natural gas situation may be the most
important issue the legislature faces, as there is the
possibility that Alaska will need to rely more on coal. He
expressed the belief that the U.S. Department of Defense should
be more involved in discussions about power and the Port of
Anchorage because of the strategic importance of Alaska. He
asked if it was true that most of the reserve natural gas stored
in Anchorage had been used last winter.
MR. MILLER responded that this is correct. He added that the
storage facility in Anchorage is not big enough to properly
serve Southcentral Alaska.
11:21:57 AM
REPRESENTATIVE MCKAY asked how many billion cubic feet (BCF) of
natural gas is needed to meet demand per year.
MR. MILLER answered that the total number is 70 BCF. In
response to a follow-up question, he said the storage facility
is currently full.
11:23:19 AM
REPRESENTATIVE SCHRAGE stated that renewable energy sources are
becoming less expensive while the price of natural gas
increases, and he asked what the utilities are doing to increase
their percentage of generation coming from renewable sources.
He said that with the issue of people leaving the state, he is
not sure about the importance of building the suggested amount
of transmission line, and he asked what areas the utilities
believe are the most important in which to build the
transmission lines.
11:25:31 AM
CHAIR RAUSCHER stated that because of time constraints, these
questions would have to be answered at a later time.
11:26:04 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at [11:26]
a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Energy Committee Schedule 30 Jan-3 Feb 2023.pdf |
HENE 2/2/2023 10:15:00 AM |
Committee Schedule Jan 30-Feb 3 |
| Railbelt Legislative Presentation.FINAL v2.pdf |
HENE 2/2/2023 10:15:00 AM |
Railbelt Legislative Presentation |