Legislature(2023 - 2024)BARNES 124
04/13/2023 10:15 AM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| HB154 | |
| Presentation: Railbelt Energy Security- Wind Power Projects in Active Development | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 154 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
April 13, 2023
10:05 a.m.
MEMBERS PRESENT
Representative George Rauscher, Chair
Representative Stanley Wright
Representative Mike Prax
Representative Calvin Schrage
Representative Ashley Carrick
Representative Tom McKay
MEMBERS ABSENT
Representative Josiah Patkotak
COMMITTEE CALENDAR
HOUSE BILL NO. 154
"An Act relating to subsidiary corporations of the Alaska
Housing Finance Corporation; and establishing the Alaska energy
independence fund."
- HEARD & HELD
PRESENTATION: RAILBELT ENERGY SECURITY- WIND POWER PROJECTS IN
ACTIVE DEVELOPMENT
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 154
SHORT TITLE: AK HOUSING FINANCE CORP: SUSTAIN ENERGY
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
04/05/23 (H) READ THE FIRST TIME - REFERRALS
04/05/23 (H) ENE, FIN
04/13/23 (H) ENE AT 10:15 AM BARNES 124
WITNESS REGISTER
BRYAN BUTCHER, Chief Executive Officer and Executive Director
Alaska Housing Finance Corporation
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: On behalf of the prime sponsor, House Rules
by request of the governor, co-presented a PowerPoint
presentation, titled "House Bill 154: Alaska's Energy
Independence Fund."
CURTIS THAYER, Executive Director
Alaska Energy Authority
Department of Commerce, Community, and Economic Development
Anchorage, Alaska
POSITION STATEMENT: On behalf of the prime sponsor, House Rules
by request of the governor, co-presented a PowerPoint
presentation titled "House Bill 154: Alaska's Energy
Independence Fund."
AKIS GIALOPSOS, Deputy Executive Director
Alaska Housing Finance Corporation
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: On behalf of the prime sponsor, House Rules
by request of the governor, co-presented a PowerPoint
presentation titled "House Bill 154: Alaska's Energy
Independence Fund" and gave a sectional analysis on the proposed
committee substitute for HB 154.
ANDREW MCDONNELL, Vice President
Alaska Renewables, LLC
Fairbanks, Alaska
POSITION STATEMENT: Co-presented a PowerPoint presentation,
titled "Alaska Renewables."
MATTHEW PERKINS, Chief Executive Officer
Alaska Renewables, LLC
Fairbanks, Alaska
POSITION STATEMENT: Co-presented a PowerPoint presentation,
titled "Alaska Renewables."
ACTION NARRATIVE
10:15:11 AM
CHAIR GEORGE RAUSCHER called the House Special Committee on
Energy meeting to order at 10:15 a.m. Representatives Prax,
Wright, McKay, Schrage, Carrick, and Rauscher were present at
the call to order.
HB 154-AK HOUSING FINANCE CORP: SUSTAIN ENERGY
10:17:44 AM
CHAIR RAUSCHER announced that the first order of business would
be HB 154, "An Act relating to subsidiary corporations of the
Alaska Housing Finance Corporation; and establishing the Alaska
energy independence fund."
10:19:00 AM
BRYAN BUTCHER, Chief Executive Officer and Executive Director,
Alaska Housing Finance Corporation, Department of Revenue, on
behalf of the prime sponsor, House Rules by request of the
governor, co-presented a PowerPoint presentation, titled "House
Bill 154: Alaska's Energy Independence Fund" [hard copy included
in the committee packet]. Moving from slide 2 to slide 4, he
gave a brief overview of the presentation and the presenters.
He said that the presenters would discuss the role and policy
objectives of the Alaska Housing Finance Corporation (AHFC) and
the Alaska Energy Authority (AEA). He stated that both
organizations seek to establish the Alaska Energy Independence
Fund (AEIF) to help Alaskans become more energy resilient.
10:21:35 AM
MR. BUTCHER continued to slide 5 and slide 6, stating that the
AEIF would spur energy innovation and be consistent with the
governor's energy objectives put forth when he created the
Office of Energy Innovation and the Alaska Energy Security Task
Force. He stated that AEIF would draw federal and private
capital to invest in energy independence for Alaskan homes and
businesses. Creating the AEIF would give Alaska an opportunity
to apply for a grant with the U.S. Environmental Protection
Agency's Greenhouse Gas Reduction Fund, which has a pool of $27
billion. This opportunity stacks with limited time energy tax
credits.
10:25:22 AM
MR. BUTCHER continued to slide 7 and slide 8, stating that the
main policy objective of AEIF is to increase Alaskan energy
independence and reduce energy costs for Alaskans. He advised
that the creation of the fund would make Alaska competitive for
a once in a generation opportunity for this federal funding. He
stated that AHFC has a long history of managing programs,
focusing on energy challenges facing homeowners and communities.
10:28:57 AM
MR. BUTCHER moved from slide 9 to slide 12, stating that AHFC
offers interest rate reductions when financing new or existing
energy efficient homes, or when borrowers make energy
improvements to an existing home. He advised that it offers
loans which will improve the value of a home. He offered that
AHFC has financed 338 renovation loans for just under $100
million since fiscal year 2020. He said that AHFC manages the
federal and state weatherization programs in Alaska, which are
meant to provide upgrades for homes to be more energy efficient
by protecting them from certain weather conditions. It also
manages the statistical database for energy audits. He
reiterated that AHFC has a history of working with Alaskans to
meet their energy needs, and it works with other agencies and
organizations.
10:34:39 AM
CURTIS THAYER, Executive Director, Alaska Energy Authority,
Department of Commerce, Community, and Economic Development, on
behalf of the prime sponsor, House Rules by request of the
governor, co-presented a PowerPoint presentation titled "House
Bill 154: Alaska's Energy Independence Fund." He began on slide
13 and slide 14, giving a brief overview of AEA's work in the
state. He pointed out that AEA works to reduce the cost of
energy in the state by addressing the resiliency, reliability,
and redundancy of Alaska's energy portfolio. He stated that AEA
owns different sources of energy around the state, using both
renewable energy and fossil fuels. He stated that AEA manages
the Power Cost Equalization fund. This fund subsidizes and
reduces energy costs for rural Alaskans. He added that AEA
provides loans and grants to local utilities, governments, and
independent power producers (IPPs) to construct and upgrade
energy and power generation facilities. He said that AEA
continues to work with local and regional partners to develop
and plan for cost effective energy infrastructure. He displayed
a map showing the different projects and services managed by
AEA.
10:39:06 AM
AKIS GIALOPSOS, Deputy Executive Director, Alaska Housing
Finance Corporation, Department of Revenue, on behalf of the
prime sponsor, House Rules by request of the governor, concluded
the PowerPoint presentation titled "House Bill 154: Alaska's
Energy Independence Fund." He began on slide 15 and slide 16,
stating that HB 154 would empower AHFC and AEA to work together
on developing sustainable energy development tools. This would
include the establishment of nonprofit subsidiary corporations
and AEIF, which would be managed by AHFC's nonprofit subsidiary
corporation. The fund would gain capital through the general
fund and federal receipt authority. He displayed a list of the
steps to be followed, if HB 154 were passed.
10:45:12 AM
MR. BUTCHER, in response to a question from Representative
Schrage, stated that AEIF would have its own board.
10:46:09 AM
MR. GIALOPSOS commented that the proposed committee substitute
would not make substantial changes and would conform the
proposed legislation to the legislative drafting manual. He
presented the sectional analysis of the proposed committee
substitute (CS) for HB 154 [copy included in the committee
packet], which read as follows [original punctuation provided]:
Section 1: Adds a new subsection (AS 18.56.010(h))
acknowledging the public benefit of a subsidiary
corporation in Alaska Housing Finance Corporation
(AHFC) to assist in financing sustainable energy
development.
Section 2: Amends existing AHFC statutes (AS
18.56.086(a)) to authorize creation of a subsidiary
corporation for the purpose of sustainable energy
development.
Section 3: Amends AHFC's statutes (AS 18.56.090(e))
to, in cooperation with the Alaska Energy Authority,
create or work with public, quasi-public or nonprofit
organizations that provide financial assistance for
sustainable energy projects.
10:49:19 AM
Section 4: Adds a new section to AHFC's statutes (AS
18.56.870) establishing the Alaska Energy Independence
Fund (the Fund) and its operations.
(a) Creates the Fund within AHFC and describes
what moneys and assets would go into the Fund.
(b) Outlines how the money within the Fund can be
used, including for issuing loans and financing
sustainable energy development projects, and for
paying the costs of administering the Fund and
enforcing the terms of its loans
(c) Names AHFC as the fiduciary of the Fund, and
allows deviation from the prudent investor rule
to promote sustainable energy development in the
state. Allows AHFC to disburse money from the
Fund according to established laws governing the
procedure. Requires AHFC to adhere to annual
reporting according to Generally Accepted
Accounting Principles (GAAP) (d) Requires AHFC to
establish the financial terms of loans made from
the Fund, and requires consideration of costs to
the Fund and AHFC in the process.
10:54:43 AM
REPRESENTATIVE PRAX asked how the public purpose was determined.
MR. GIALOPSOS answered that creating a subsidiary corporation
would give AHFC the ability to determine which energy projects
would serve the public purpose.
MR. BUTCHER added AHFC would give an annual report to the
legislature.
REPRESENTATIVE PRAX asked how one project would be compared to
another.
MR. BUTCHER answered that certain funding would be awarded for
specific purposes by the federal government.
10:58:27 AM
REPRESENTATIVE SCHRAGE asked why the prudent investor rule
should be removed.
MR. BUTCHER answered that it would provide flexibility to pursue
certain projects that may not always be considered prudent, even
if there was a federal incentive attached.
11:00:48 AM
MR. GIALOPSOS continued with the sectional analysis of the
proposed CS for HB 154, which read as follows [original
punctuation provided]:
(e) Allows AHFC to require deeds of trust on
buildings subject to loans from the Fund as well
as its real estate.
(f) Allows AHFC to contract with the Alaska
Energy Authority for technical expertise when
evaluating sustainable energy development loans.
(g) Restricts AHFC to loan guarantees without
legislative approval to an amount less than $20
million.
(h) Requires AHFC to consider the State of Alaska
energy policy when managing the Fund, and
prioritizing sustainable energy development on
energy efficiency and renewable energy for
residential, commercial, and community buildings.
(i) Requires AHFC to administer the Fund
according to regulations adopted for the Fund's
management.
(j) Explicitly states nothing in Section 4
creates a dedicated fund.
Section 5: Amends the general provisions' portion of
AHFC's statutes (AS 18.56.900) by adding a definition
of sustainable energy development.
Section 6: Provides an immediate effective date.
11:06:22 AM
REPRESENTATIVE CARRICK asked if the federal funding for these
types of projects can be expected in the long term.
MR. BUTCHER answered that establishing a green bank would open
the door to private sector investment. In response to a follow-
up question, he said that just under half of the states in the
U.S. have some type of green bank, most of which started with
public dollars.
11:09:33 AM
REPRESENTATIVE PRAX asked whether the subsidiary corporations
are expected to continue after the end of federal funding.
MR. BUTCHER answered that it would be determined by necessity.
11:11:20 AM
REPRESENTATIVE SCHRAGE asked what type of projects would be
considered by the fund.
MR. BUTCHER answered that one example is the building of energy
efficient housing units.
MR. THAYER added that the size of projects would be limited by
megawatts (MWs), but the fund would increase opportunities for
renewable energy projects. He added that there have been no
defaults on loans given to renewable energy projects.
11:15:12 AM
REPRESENTATIVE SCHRAGE questioned whether the projects which
could use the fund are ordered or on a general list.
MR. GIALOPSOS answered that it is a general list.
11:18:42 AM
REPRESENTATIVE CARRICK asked what types of entities the fund
would work with.
MR. BUTCHER answered that it depends on the size of the
projects. Nonprofit organizations and homeowners would both be
part of the equation.
11:21:55 AM
REPRESENTATIVE MCKAY moved to adopt the proposed CS for HB 154,
labeled, 33-GH1074\B, Dunmire, 4/11/23, ("Version B") as a
working document. There being no objection, Version B was
before the committee.
[HB 154 was held over.]
11:22:24 AM
The committee took an at-ease from 11:22 a.m. to 11:24 a.m.
11:24:19 AM
^PRESENTATION: RAILBELT ENERGY SECURITY- WIND POWER PROJECTS IN
ACTIVE DEVELOPMENT
PRESENTATION: RAILBELT ENERGY SECURITY- WIND POWER PROJECTS IN
ACTIVE DEVELOPMENT
CHAIR RAUSCHER announced that the final order of business would
be a presentation on Railbelt energy security and wind power
projects.
11:24:55 AM
ANDREW MCDONNELL, Vice President, Alaska Renewables, LLC, co-
presented the PowerPoint presentation, titled "Alaska
Renewables" [hard copy included in the committee packet]. He
stated that during his time at the University of Alaska
Fairbanks, he researched the energy challenges facing Alaska.
The mission of Alaska Renewables is "working to harness the vast
potential of renewable energy to deliver a transformative,
clean, sustainable, reliable, and cost-reducing energy supply
for Alaska."
11:28:31 AM
MR. MCDONNEL pointed out slide 2 and slide 3, displaying a graph
showing the decline of natural gas being produced in Cook Inlet,
including state, federal, and private lands. He advised that
the demand for natural gas from Cook Inlet has the potential to
outpace supply as soon as 2027.
MR. MCDONNEL moved to slide 4 and stated that adding 400 MWs of
wind generation could displace 8 billion cubic feet (bcf) of
natural gas demand annually, which amounts to 33 percent of
demand. He expressed the opinion that this could be done as
soon as 2028, and it would protect consumers from rising costs
and allow natural gas to be used for heating. He displayed a
graph showing what Railbelt energy sources could look like from
2023 until 2028.
11:32:08 AM
REPRESENTATIVE PRAX asked whether Alaska Renewables is privately
owned.
MR. MCDONNELL answered yes. In response to a follow-up
question, he said that Alaska Renewables is working on a
portfolio of renewable energy projects in Alaska, including two
large-scale wind farms. In response to a follow-up question, he
stated that the project cost estimates are not available at this
time, but Alaska Renewables expects the projects to be self-
sustaining.
11:36:12 AM
MATTHEW PERKINS, Chief Executive Officer, Alaska Renewables,
LLC, co-presented the PowerPoint presentation, titled "Alaska
Renewables." He stated that the current cost of energy in
Southcentral Alaska is between $60 and $80 per MW, and between
$120 and $140 per MW in Alaska's interior. He added that the
projects would provide stabilization for the rates.
11:38:10 AM
MR. MCDONNEL continued to slide 5 and slide 6, stating that wind
energy has a low cost of generation, matches peak energy loads
in Alaska, and has technology and reliability which has been
proven. He expressed the opinion that wind generation would
increase the energy security of the state and would not be
difficult to finance. He displayed a graphic showing the
improvement of wind generation technology from 2011 to the
expectations in 2025. He expressed the opinion that the new
technology would increase capacity 1.7 times, the tip height 1.3
times, the rotor diameter 1.5 times, and the area swept by 2.3
times. In total, he said, the energy produced would increase
from 2.05 MWs to 3.4 MWs.
11:43:17 AM
MR. MCDONNEL moved from slide 7 to slide 9, stating that the
capacity of wind generated power has increased from 29 percent
in 2011 to 41 percent in 2019. He showed a graph detailing the
decreasing cost of wind generated power, including the lowered
cost of turbines. He gave the fundamentals of wind energy
development, including financing, construction, market
assessment, land agreements, and operations. He expressed the
expectation that Alaska Renewables would begin project
construction in 2025, to be completed in 2026. He said that
Alaska Renewables is committed to working on power purchased
agreements to bring its power across the state.
11:48:20 AM
REPRESENTATIVE CARRICK asked whether Alaska Renewables would
sell power directly to consumers.
MR. MCDONNELL answered that because of the scale of the
projects, the energy being sold will be sold to the utility
companies.
11:51:04 AM
REPRESENTATIVE MCKAY asked how power would be provided during
times of lack of wind.
MR. MCDONNELL answered that Alaska Renewables is working with
the utilities to ensure there is reliability in the system. He
said that fossil fuels will still be available to fill in the
gaps.
11:54:10 AM
MR. MCDONNELL, in response to a series of questions from
Representative Prax, stated that the first projects would come
online in 2026. He responded that batteries for energy storage
are being worked on by the utilities. He answered that a risk
analysis had been done for the proposed projects.
11:58:19 AM
MR. MCDONNEL continued to slide 10 and slide 12, giving a brief
overview of what the Shovel Creek and Little Mount Susitna wind
projects would look like. He showed a map of where they would
be and their proximity to certain locales. He stated that the
former would have a capacity between 60 and 211 MWs and the
latter would have a capacity between 204 and 280 MWs.
12:00:45 PM
MR. MCDONNEL moved to slide 13 and displayed a more detailed map
of the Little Mount Susitna wind project. He pointed out that
the green area on the map is under review for a long-term lease.
He stated that planning on the best way to build the project has
been with engineers, the Department of Natural Resources, and
local communities. He stated that the goal is to finish the
project by 2026 and characterized it as being mid-stage in the
development process.
12:04:00 PM
MR. MCDONNEL continued to slide 14 and slide 15, stating that
the bigger the size of the project, the greater the cost
reduction will be because of economy of scale. He said that
large projects have been deployed in the Lower 48 but have not
yet been tried in Alaska. He displayed a graph with the data of
wind supply from the areas that would constitute the two wind
projects and said that there is some fluctuation in the capacity
of both projects. He added that the combination of multiple
projects reduces variability and increases efficiency.
12:08:27 PM
MR. MCDONNEL moved from slide 16 to slide 18, stating that
multiple large-scale wind projects would create energy
diversity, achieve economies of scale, and reduce the cost of
integrating renewable energy. He explained that creating large-
scale wind projects would add an additional 400 MWs generation,
which could displace as much as 8 bcf of natural gas demand
annually; this amounts to 33 percent of natural gas demand. He
said that these projects would protect consumers from the rising
cost of energy and provide energy security for Alaska, along
with creating jobs and investment opportunities for the private
sector.
12:11:07 PM
MR. PERKINS commented that there are back-up options for the
various energy projects which have been discussed. He advised
that Alaska Renewables is not hedging its bets on any one
project.
12:12:12 PM
REPRESENTATIVE SCHRAGE asked whether transmission line
bottlenecks would negatively impact the projects planned by
Alaska Renewables.
MR. MCDONNELL answered that it is a question being reviewed by
the engineers but added that its priority is to get the projects
built. Transmission limitations need to be addressed but would
not become a greater issue until more projects are built.
12:15:24 PM
REPRESENTATIVE PRAX asked about the relationship between its
projects and the proposed Susitna Dam.
MR. MCDONNELL answered that wind energy offers a competitive
economic position, although Alaska Renewables does not view
other projects as competitive to its own. He stated that other
forms of energy generation will still be necessary, including
natural gas. He said that hydroelectric and wind power pair
well.
12:19:46 PM
REPRESENTATIVE MCKAY asked whether an environmental impact
statement from the Environmental Protection Agency would be
necessary for the projects.
MR. MCDONNELL answered yes. He added that Alaska Renewables is
currently undergoing the permitting process.
12:22:12 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 12:22 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB154 AHFC-AEA Presentation to H.ENE 04.13.23.pdf |
HENE 4/13/2023 10:15:00 AM |
HB 154 |
| AlaskaRenewables-House Energy Committee.pdf |
HENE 4/13/2023 10:15:00 AM |
Alaska Renewables |
| HB0154B.pdf |
HENE 4/13/2023 10:15:00 AM |
HB 154 |