Legislature(2023 - 2024)BARNES 124
03/16/2023 10:15 AM House ENERGY
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Renewable Energy Alaska Project | |
| 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
March 16, 2023
10:15 a.m.
MEMBERS PRESENT
Representative George Rauscher, Chair
Representative Tom McKay
Representative Josiah Patkotak
Representative Stanley Wright
Representative Mike Prax
Representative Calvin Schrage
Representative Ashley Carrick
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION: RENEWABLE ENERGY ALASKA PROJECT
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
CHRIS ROSE, Founder and CEO
Renewable Energy Alaska Project
Juneau, Alaska
POSITION STATEMENT: Gave a presentation titled "Renewable
Energy Alaska Project."
ACTION NARRATIVE
10:15:15 AM
CHAIR GEORGE RAUSCHER called the House Special Committee on
Energy meeting to order at 10:15 a.m. Representatives Schrage,
McKay, Wright, and Rauscher were present at the call to order.
Representatives Carrick, Patkotak, and Prax arrived as the
meeting was in progress.
^PRESENTATION: RENEWABLE ENERGY ALASKA PROJECT
PRESENTATION: RENEWABLE ENERGY ALASKA PROJECT
10:16:26 AM
CHAIR RAUSCHER announced that the only order of business would
be a presentation titled "Renewable Energy Alaska Project."
10:17:03 AM
CHRIS ROSE, Founder and CEO, Renewable Energy Alaska Project,
(REAP), gave a PowerPoint presentation, titled "Renewable Energy
Alaska Project" [hard copy included in the committee packet].
Showing slide 2 and slide 3, he stated that REAP is a nonprofit
coalition of businesses, NGOs, electric utilities, and clean
energy developers across the state of Alaska. He said that REAP
has existed for 20 years, and its mission is to increase
renewable energy development and energy efficiency in Alaska.
The project has several programs, including promoting energy
literacy, partnerships with federal agencies to bring technical
assistance to rural Alaska, and working to create clean energy
careers across the state. He said that REAP played an important
role in the creation of the Renewable Energy Grant Fund, as well
as establishing a "green bank" to provide loans to Alaskans for
the purpose of weatherizing their homes. He said that more
people are needed in Alaska who can provide maintenance for
these projects.
10:25:11 AM
CHAIR RAUSCHER asked whether a journeyman electrician has to
work on each of these projects.
MR. ROSE affirmed that is correct.
MR. ROSE continued to slide 4 and gave a brief overview of the
presentation, focusing on how electricity rates in Alaska are
rising faster than those in the Lower 48. He pointed out that
the cost of natural gas is rising, and Hilcorp may not renew its
contracts with Cook Inlet. He said that importing natural gas
would be an expensive option and rising natural gas prices on
the Railbelt would prevent rural Alaskans from benefiting from
the power cost equalization (PCE) program.
10:30:42 AM
MR. ROSE, in response to a committee question concerning access
to solar panels, answered that the federal government has
extended tax credits for solar panel installation by 10 years.
He added that the credit is up to 30 percent, and it is possible
for solar panel users to sell excess power back to the
utilities. In response to a follow-up question, he said that
building solar panels is one of the biggest businesses in the
world.
MR. ROSE, in response to a committee question concerning Hilcorp
not renewing its contracts, expressed the hope that other
companies would have the ability to produce natural gas at a
greater volume and an affordable price. In response to a
follow-up question, he said that renewable energy would be
competitive even without tax credits. In response to questions
concerning whether Golden Valley Electric Association buys fuel
to power its plants, he stated battery technology would give
Golden Valley a greater chance to integrate power. He explained
Golden Valley's battery cost is paid by "everyone." He added
that it is ultimately less expensive than buying more fuel. In
response to a follow-up question, he said that federal grants
are being sought for upgrades to the Bradley Lake Hydroelectric
Project.
10:46:09 AM
MR. ROSE continued to slide 5 through slide 7 and gave a brief
comparison of electric rates and natural gas prices. He said
that the Matanuska Electric Association (MEA) serves his area,
and rates have increased by 50 percent. The average increase in
cost in the Lower 48 in the last 10 years has been 2 cents per
kilowatt-hour (kWh) compared to the 7-cent increase per kWh on
the Railbelt. He said that costs for Cook Inlet natural gas
have increased from $1.50 to $7.50 in the last 10 years, an
increase of more than 3 times compared to the Henry Hub natural
gas market. He expressed the understanding that starting in
2027 the amount of natural gas being produced from Cook Inlet is
expected to fall below the demand.
10:50:46 AM
MR. ROSE, in response to a committee question, stated that there
is a discrepancy between supply and demand. He pointed out that
there is gas; however, it needs to be developed. In response to
a follow-up question, he reemphasized that it is ultimately a
matter of developing natural gas.
REPRESENTATIVE CARRICK suggested that even with the proof of
natural gas, it might not be developed in the next two to five
years.
REPRESENTATIVE MCKAY expressed the opinion that proven
undeveloped natural gas means that there is already some
infrastructure in place, but additional wells would be needed.
REPRESENTATIVE PRAX expressed the opinion that evidence of
natural gas means that development is likely, and he compared it
to the development of oil on the North Slope.
REPRESENTATIVE SCHRAGE expressed the opinion that the natural
gas available will only become more difficult and expensive to
produce.
MR. ROSE noted that the current contracts for natural gas begin
to expire next year, meaning that further price increases are
likely to begin occurring in the near future.
10:59:27 AM
MR. ROSE continued to slide 8 through slide 10 and gave an
overview of liquefied natural gas (LNG) prices around the world.
He showed a chart including the Henry Hub price, as well as
prices in Japan, the Japan-Korea market, and Europe. He
explained that the Henry Hub price is a spot-market price that
is currently the lowest. He said that Alaska would likely have
to buy LNG on the Asian market and pay the same prices as those
markets. The price of Japan's spot LNG has been volatile and
has reached as high as $35 per thousand cubic feet (Mcf). He
said that the Chugach Electric Association is looking at
scenarios involving gas with prices as high as $12 or $18 per
Mcf.
MR. ROSE, in response to a committee question concerning an
Alaska LNG project, commented that demand in Japan, one of the
most likely investors, is decreasing, and Alaska would be
unlikely to receive a "hometown discount" based on the price of
other fuels in the state.
11:09:12 AM
MR. ROSE continued to slide 11 and slide 12 and showed the
potential impact of LNG import prices on individual households.
He said that those relying on PCE are being affected the most
because of the increases in PCE's floor. He expressed REAP's
belief that moving to renewable energy and saving natural gas
for heating is the best path forward to avoid reliance on
volatile LNG imports.
MR. ROSE moved to slide 13, showing a chart comparing the cost
of solar and wind power generation. He said that wind and solar
power are cheaper than natural gas, and he suggested that these
prices are decreasing.
MR. ROSE, in response to a committee question, compared
renewable energy projects in Alaska with those in the Lower 48
and said that a wind project is approximately 1.7 times more
expensive in Alaska. He added that even with that additional
cost, the cost of wind power still ends up being a lower cost
than natural gas. He pointed out that the price of wind power
produced on Fire Island has decreased since the project was
first built. In response to a follow-up question, he said that
parts for an offshore turbine would travel by ship.
11:21:58 AM
MR. ROSE moved to slide 14 and showed a chart with the
percentage of solar power generation in the country. He said
that in California, a state with a population of 37 million, 25
percent of its energy is generated by solar.
MR. ROSE continued to slide 15 and slide 16 and gave an overview
of net capacity additions by their source. He said that in the
last 10 years, more fossil fuel plants have been closed than
opened, and 80 percent of new power plants in the Lower 48 are
either wind or solar plants. He showed a chart detailing the
percentages of capacity generation by source.
MR. ROSE, in response to a committee question concerning whether
the numbers would change if each wind turbine was considered its
own plant, answered that a project's capacity is measured by the
megawatt hours (MWh) it can produce, even if it does not always
produce this amount. He added that fossil fuel and geothermal
plants have the ability to operate at times in which other
renewable energy sources cannot.
MR. ROSE, in response to a committee question, answered that the
capacity on the chart is nameplate capacity.
11:31:17 AM
MR. ROSE continued to slide 17 through slide 19 and gave a brief
overview of avoided cost. He explained that "avoided cost" is a
term that describes the cost avoided when a utility company buys
generated fuel from a third party. He said that MEA's recent
wind power project has an avoided cost that already makes it
cheaper than natural gas. He stated that the Regulatory
Commission of Alaska (RCA) requires a five-year projection of
costs relating to utilities, including the avoided cost. He
showed a chart detailing avoided cost scenarios with potential
LNG spot prices. He added that using renewable energy projects
would allow the private sector to be involved in lowering energy
prices. The investors of these projects, not the utilities,
take all risk of a project not working.
11:38:10 AM
MR. ROSE moved to slide 20 and slide 21 and continued his
discussion of avoided cost. He showed a line graph with the
same information as the previous bar graph. He stated that the
avoided cost rises even if natural gas prices increase only to
$12 Mcf. He pointed out the target of reaching a renewable
portfolio standard (RPS) of 80 percent by the year 2040, and
utilities would face a fine for every MWh not produced with
renewable energy over the allotted amount. He explained that
the estimated capital cost to reach 80 percent renewable energy
would be $3.2 billion; however, he allowed that the estimate was
made before it was known that federal tax credits for renewable
energy would be continued.
11:44:00 AM
MR. ROSE, in response to a committee question, answered that the
analysis is based on a recent wind project built in Alaska. In
response to a follow-up question, he expressed the possibility
that tax credits for natural gas may have the potential to help
with natural gas prices; however, this does not remove the
volatility of these prices. He noted that prices for renewable
generation remain stable.
MR. ROSE, in response to a committee question, answered that the
cost of battery storage is not included in the analysis because
the Railbelt utilities have plans to build batteries regardless
of the direction taken for power generation.
MR. ROSE, in response to a committee question, expressed the
opinion that it is generally correct that more transmission
lines would mean less needed battery storage. He added that
some battery storage would still be necessary, as batteries have
other purposes, such as offering power during gaps in
generation. In response to a follow-up question, he said that
the status quo would result in the incurrence of additional
costs due to LNG imports.
11:57:09 AM
MR. ROSE continued to slide 22 and slide 23, listing the
benefits of having RPS, as follows: diversifies Alaska's
generation portfolio and protects ratepayers from cost
volatility; saves Cook Inlet natural gas for heating; utilizes
local resources; creates jobs; and increases Alaska's energy
independence. He advised that Alaska should see where it is
going and act accordingly.
12:00:02 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 12:00 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| House Energy 3-16-23.pdf |
HENE 3/16/2023 10:15:00 AM |
REAP |