Legislature(2025 - 2026)GRUENBERG 120

02/11/2025 01:30 PM House ENERGY

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01:41:21 PM Start
01:42:47 PM Presentation(s): Regulatory Commission of Alaska
02:55:26 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+ Presentation: Regulatory Commission of Alaska TELECONFERENCED
by John M. Espindola, Chair
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                       February 11, 2025                                                                                        
                           1:41 p.m.                                                                                            
                                                                                                                                
                             DRAFT                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Ky Holland, Co-Chair                                                                                             
Representative Donna Mears, Co-Chair                                                                                            
Representative Cathy Tilton                                                                                                     
Representative George Rauscher                                                                                                  
Representative Mia Costello                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Bryce Edgmon                                                                                                     
Representative Chuck Kopp                                                                                                       
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION(S): REGULATORY COMMISSION OF ALASKA                                                                                
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JOHN ESPINDOLA, Chair                                                                                                           
Regulatory Commission of Alaska                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Co-presented a PowerPoint regarding the                                                                  
Regulatory Commission of Alaska and answered committee                                                                          
questions.                                                                                                                      
                                                                                                                                
JOHN SPRINGSTEEN, Commissioner                                                                                                  
Regulatory Commission of Alaska                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Co-presented a PowerPoint regarding the                                                                  
Regulatory Commission of Alaska and answered committee                                                                          
questions.                                                                                                                      
                                                                                                                                
JULIE VOGLER, Utility Master Analyst                                                                                            
Regulatory Commission of Alaska                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Co-presented  a  PowerPoint regarding  the                                                             
Regulatory   Commission   of   Alaska  and   answered   committee                                                               
questions.                                                                                                                      
                                                                                                                                
RICHARD GAZAWAY, Administrative Law Judge                                                                                       
Regulatory Commission of Alaska                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Answered  committee  questions during  the                                                             
presentation.                                                                                                                   
                                                                                                                                
BECKI ALVEY, Advisory Section Manager                                                                                           
Regulatory Commission of Alaska                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Commented on two upcoming projects.                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:41:21 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  DONNA  MEARS  called the  House  Special  Committee  on                                                             
Energy meeting  to order at  1:41 p.m.   Representatives Holland,                                                               
Mears, Tilton,  Rauscher, and Costello  were present at  the call                                                               
to order.                                                                                                                       
                                                                                                                                
^PRESENTATION(S): Regulatory Commission of Alaska                                                                               
        PRESENTATION(S): Regulatory Commission of Alaska                                                                    
                                                                                                                              
1::47 PM                                                                                                                      
                                                                                                                                
CO-CHAIR Mears  announced that the  only order of  business would                                                               
be a presentation by the Regulatory Commission of Alaska.                                                                       
                                                                                                                                
1:43:05 PM                                                                                                                    
                                                                                                                                
JOHN  ESPINDOLA, Chair,  Regulatory Commission  of Alaska  (RCA),                                                               
co-presented the  PowerPoint regarding the  Regulatory Commission                                                               
of Alaska.   He  stated that  RCA is a  quasi-judicial body.   He                                                               
pointed  out its  authority on  slide  2, which  read as  follows                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     • AS 42.04 (Regulatory Commission of Alaska)                                                                               
     • AS 42.05 (Alaska Public Utilities Regulatory Act)                                                                        
     • AS 42.06 (Pipeline Act)                                                                                                  
     • AS 42.08 (In-State Pipeline Contract Carrier)                                                                            
     • AS 42.45 (Rural & Statewide Energy Programs)                                                                             
                                                                                                                                
1:44:16 PM                                                                                                                    
                                                                                                                                
JOHN SPRINGSTEEN, Commissioner,  Regulatory Commission of Alaska,                                                               
co-presented the RCA  PowerPoint.  He proceeded with  slide 3 and                                                               
noted that  the discussion would  be centered on natural  gas and                                                               
liquified natural gas  (LNG).  He stated  that RCA's jurisdiction                                                               
and framework would  be defined versus the  jurisdiction of other                                                               
key agencies,  such as the  Federal Energy  Regulatory Commission                                                               
(FERC),  the  Department  of Natural  Resources  (DNR),  and  the                                                               
Alaska Oil  and Gas  Conservation Commission  (AOGCC).   He noted                                                               
that  independent power  producers  and state-owned  transmission                                                               
would be  outside the scope  of RCA.   He continued that  RCA has                                                               
regulatory authority  inside the state over  public utilities and                                                               
pipelines.   This authority has  expanded to include  natural gas                                                               
storage and  LNG storage.   On slide 4, titled  "RCA Jurisdiction                                                               
for  Electric Utilities,"  he illustrated  some  of the  specific                                                               
areas of focus for RCA.                                                                                                         
                                                                                                                                
1:47:55 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  SPRINGSTEEN,   in  response  to  a   question  from                                                               
Representative  Costello,  agreed  that RCA  would  not  initiate                                                               
actions on behalf of consumers.   He explained that the utilities                                                               
would present their plans to RCA,  and it would either approve or                                                               
suspend the  plan.  If  suspended, the plan  would be moved  to a                                                               
docket.   He  noted that  LNG  import facilities  would be  under                                                               
FERC.  He  pointed out that RCA would be  involved with reviewing                                                               
contracts  between LNG  importers or  producers and  utilities in                                                               
the state.                                                                                                                      
                                                                                                                                
COMMISSIONER  SPRINGSTEEN, in  response  to a  question from  Co-                                                               
Chair  Holland concerning  RCA  jurisdiction,  deferred to  Julie                                                               
Vogler.                                                                                                                         
                                                                                                                                
JULIE VOGLER,  Utility Master  Analyst, Regulatory  Commission of                                                               
Alaska,  responded  that,  when approving  long-term  gas  supply                                                               
agreements prior to  2010, if RCA found an  unjustified rate that                                                               
was charged by  a utility, it would order a  corrected rate.  She                                                               
continued that since 2010, when  approving gas supply agreements,                                                               
RCA would rely on AS 42.05.141(d), which read as follows:                                                                       
                                                                                                                                
     (d) When considering whether the  approval of a rate or                                                                    
     a gas supply contract proposed  by a utility to provide                                                                    
     a reliable supply  of gas for a reasonable  price is in                                                                    
     the public interest, the commission shall                                                                                  
     (1)  recognize  the  public   benefits  of  allowing  a                                                                    
     utility to negotiate  different pricing mechanisms with                                                                    
     different gas  suppliers and to maintain  a diversified                                                                    
     portfolio of gas supply  contracts to protect customers                                                                    
     from the  risks of inadequate supply  or excessive cost                                                                    
     that may arise from a single pricing mechanism; and                                                                        
                                                                                                                                
     (2)  consider   whether  a   utility  could   meet  its                                                                    
     responsibility  to the  public in  a timely  manner and                                                                    
     without  undue risk  to the  public  if the  commission                                                                    
     fails  to  approve a  rate  or  a gas  supply  contract                                                                    
     proposed by the utility.                                                                                                   
                                                                                                                                
MS. VOGLER, in  response to a follow-up  question, clarified that                                                               
this  statute only  applies to  gas sales  supply agreements,  as                                                               
seen on  slide 4.   She explained  that when an  electric utility                                                               
enters into a power purchase  agreement, the utility would submit                                                               
a tariff filing  with RCA for approval.  The  filing would be the                                                               
power purchase  agreement, with cost  recovery through a  cost of                                                               
power adjustment.   She noted that this would be  for an electric                                                               
utility,  as  for   a  gas  utility,  it  would   be  a  gas-cost                                                               
adjustment.                                                                                                                     
                                                                                                                                
MR.  ESPINDOLA, in  response to  a follow-up  question, confirmed                                                               
Co-Chair Holland's  understanding that in a  gas supply agreement                                                               
RCA's  jurisdiction would  be limited,  accepting any  negotiated                                                               
agreement between a  producer and a utility; however,  in a power                                                               
purchase agreement, a tariff filing  with proposed rates would be                                                               
required.  He pointed out that  RCA would be able to analyze this                                                               
for fairness and request changes, if necessary.                                                                                 
                                                                                                                                
1:54:53 PM                                                                                                                    
                                                                                                                                
RICHARD GAZAWAY, Administrative  Law Judge, Regulatory Commission                                                               
of   Alaska,   responded   to  a   series   of   questions   from                                                               
Representative  Rauscher.   Concerning  net  metering versus  net                                                               
billing,  he  stated that  the  net  metering  program is  a  net                                                               
billing program.   He  explained that net  metering is  when bill                                                               
credits are  at the retail rate.   He explained that  for the net                                                               
billing program, customers can have  a reduction in their rate up                                                               
to the  level of consumption,  and then  the rate reverts  to the                                                               
power  purchase agreement  rate.   He continued  that essentially                                                               
utilities are open  to proposals up to a certain  limit, and this                                                               
limit  depends   on  its  interconnected  network,   but  usually                                                               
utilities  are  agnostic if  it  is  a  renewable resource.    He                                                               
pointed out  that examples  of resources  that qualify  are solar                                                               
and wind.                                                                                                                       
                                                                                                                                
1:57:36 PM                                                                                                                    
                                                                                                                                
MR.  ESPINDOLA  pointed  out  that before  the  meeting  RCA  had                                                               
received a  list of  questions from Co-Chair  Mears' office.   He                                                               
stated  that the  remainder  of the  slides  would address  these                                                               
questions.   He moved to slide  5, titled "What does  the RCA see                                                               
as its role in supporting  affordable energy production in Alaska                                                               
for the  Railbelt?"  He  stated that RCA has  statutory authority                                                               
to  regulate public  utilities and  pipeline carriers  unless the                                                               
entity is exempt  under AS 42.05.711.  He stated  that this would                                                               
protect ratepayers  while allowing  regulated entities  to charge                                                               
rates that allow  cost recovery and a reasonable  rate of return.                                                               
He  stated  that RCA  would  do  everything possible  within  its                                                               
jurisdiction to ensure just, fair, and reasonable rates.                                                                        
                                                                                                                                
MR.  ESPINDOLA noted  that RCA  does not  play a  direct role  in                                                               
driving  energy  production;  however, Senate  Bill  123  [passed                                                               
during the Thirty-First Alaska  State Legislature] expanded RCA's                                                               
authority.  He  noted that this legislation  created the Electric                                                               
Reliability Organization  (ERO), which  serves the Railbelt.   He                                                               
stated that  ERO's responsibilities include preparing  a resource                                                               
plan  to  evaluate  the Railbelt  utilities  in  meeting  service                                                               
requirements, and  it precludes electric utilities  from building                                                               
large facilities  without first  obtaining preapproval  from RCA.                                                               
He continued  that RCA plays  a role in approving  power purchase                                                               
agreements  between regulated  electric entities  and independent                                                               
power  producers,  and  it  calculates  Power  Cost  Equalization                                                               
amounts.                                                                                                                        
                                                                                                                                
2:00:10 PM                                                                                                                    
                                                                                                                                
COMMISSIONER SPRINGSTEEN  moved to  slide 6  and slide  7, titled                                                               
"What is the RCA's responsibility  to managing Alaska's remaining                                                               
natural gas resources?"  He  reiterated that, as a quasi-judicial                                                               
body, RCA  does not have  a direct  role in managing  natural gas                                                               
resources;  however, it  plays an  indirect  role by  encouraging                                                               
energy  conservation   measures  and  approving   power  purchase                                                               
agreements.   In addition, the  RCA has oversight  authority over                                                               
natural gas  storage, and it  would approve gas  supply contracts                                                               
between producers and  regulated utilities.  He  pointed out that                                                               
the oversight of  the management of natural  resources would fall                                                               
within  the purview  of DNR  and AOGCC,  as both  entities employ                                                               
engineers with  the appropriate background  to deal  with natural                                                               
gas resources.                                                                                                                  
                                                                                                                                
2:01:23 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  HOLLAND expressed  the understanding  that DNR  manages                                                               
the remaining  natural gas  resources in the  state are  by using                                                               
royalty relief.  He questioned RCA's  view of royalty relief.  He                                                               
questioned  whether the  same shield  that  allows producers  and                                                               
buyers to develop their own contracts would protect this.                                                                       
                                                                                                                                
COMMISSIONER  SPRINGSTEEN  responded  that  this  is  a  docketed                                                               
matter at RCA,  and he is obliged  not to discuss it.   He stated                                                               
that  it  is public  knowledge  that  there  is a  best  interest                                                               
finding  for DNR  to provide  royalty relief.   He  expressed the                                                               
understanding  that producers  would provide  the best  rate with                                                               
royalty relief.                                                                                                                 
                                                                                                                                
MR.  ESPINDOLA, in  response to  a follow-up  question concerning                                                               
the RCA's  role in protecting  consumers, stated that RCA  has no                                                               
role in regard to royalty relief.                                                                                               
                                                                                                                                
COMMISSIONER  SPRINGSTEEN, in  response to  a follow-up  question                                                               
concerning  whether royalty  relief would  benefit the  public or                                                               
the producer, pointed  out that he is one  of five commissioners,                                                               
and  all the  commissioners  would  need to  be  involved in  the                                                               
review of the negotiated agreement  between the involved parties.                                                               
He pointed  out these parties  are representing their  members in                                                               
the negotiations,  so they  would "press"  the matter  of royalty                                                               
relief to benefit their members.                                                                                                
                                                                                                                                
2:05:52 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  SPRINGSTEEN  continued  to  slide  7  and  directed                                                               
attention to the potential for  a pipeline to deliver natural gas                                                               
from  the North  Slope to  Southcentral Alaska.   He  stated that                                                               
RCA's role  in this would  be limited to determining  whether the                                                               
applicant  is  technically  fit,  willing, and  able  to  design,                                                               
operate, and maintain the pipeline.   He stated that RCA would do                                                               
all the  necessary reviews, as  it has done with  other pipelines                                                               
in the  state.  He stated  that the legislature has  directed the                                                               
Alaska   Gasline  Development   Corporation  to   access  whether                                                               
applicants have financial and managerial  fitness, and whether it                                                               
would provide  public convenience  and necessity;  therefore, RCA                                                               
would not have a role in these assessments.                                                                                     
                                                                                                                                
COMMISSIONER  SPRINGSTEEN  continued  to  slide 8  and  slide  9,                                                               
titled "In  the face of Cook  Inlet gas shortages, what  is being                                                               
done  to  ensure  utilities  are  meeting  their  obligations  to                                                               
consumers?"    He stated  that  RCA  calls public  meetings  with                                                               
utilities  to   ensure  utilities  are  meeting   obligations  to                                                               
consumers.  He stated that  these meetings would also address any                                                               
plans  the utilities  may  have in  the event  of  a natural  gas                                                               
shortage.    He  added  that RCA  has  called  for  presentations                                                               
regarding  natural  gas supplies,  as  well  as presentations  on                                                               
alternative energies.                                                                                                           
                                                                                                                                
COMMISSIONER  SPRINGSTEEN noted  that Hilcorp  announced in  2022                                                               
that it would  be unable to meet future natural  gas demands from                                                               
Cook Inlet.  In reaction to  this, he said the Railbelt utilities                                                               
set up a working group to  address a path forward, and RCA called                                                               
for meetings to  address Cook Inlet natural gas  storage, as seen                                                               
on the slides.  He  discussed ENSTAR's presentation in June 2023,                                                               
which related  that demand forecast  could not be met  beyond the                                                               
mid-2030s.   He  stated that  since  January 2024,  RCA has  been                                                               
requesting   updates  from   the   Railbelt   utilities  on   the                                                               
possibility  of  forced outages.    In  addition to  natural  gas                                                               
supply updates,  RCA has called for  presentations on alternative                                                               
energies,  such  as advanced  nuclear  energy,  coal with  carbon                                                               
capture, and renewable  energy.  He noted that  more updates from                                                               
the utilities have been requested.                                                                                              
                                                                                                                                
2:09:59 PM                                                                                                                    
                                                                                                                                
MS. VOGLER co-presented the RCA  PowerPoint and moved to slide 10                                                               
to address Railbelt  utility projects that have  been approved by                                                               
RCA.    Projects  include  a  2023  storage  expansion  agreement                                                               
between ENSTAR  Natural Gas  Company and  Cook Inlet  Natural Gas                                                               
Storage (CINGSA).   She stated that this  expansion was completed                                                               
in 2024.   She noted that in 2024, RCA  conditionally approved an                                                               
application filed  by the Alaska  Pipeline Company to  expand its                                                               
service  area  to  connect  to  a future  LNG  terminal  at  Port                                                               
MacKinzie.   She continued  that in 2024  RCA approved  a special                                                               
contract so ENSTAR could provide gas to Homer Electric.                                                                         
                                                                                                                                
2:12:18 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  HOLLAND,   concerning  the   Cook  Inlet   natural  gas                                                               
shortage,  questioned RCA's  authority  to  require utilities  to                                                               
take   specific   action,   as   opposed   to   just   requesting                                                               
presentations on the topic.                                                                                                     
                                                                                                                                
MR. ESPINDOLA deferred to Mr. Gazaway.                                                                                          
                                                                                                                                
2:13:19 PM                                                                                                                    
                                                                                                                                
MR.  GAZAWAY expressed  doubt  that he  could  provide a  precise                                                               
answer.  He  stated that the RCA can "generally  ? make utilities                                                               
do what  they can  to provide reasonably  reliable service."   He                                                               
explained  that when  it comes  to mandating  how electricity  is                                                               
generated, there  are requirements about using  renewable energy,                                                               
but the composition of the  generation portfolio has never been a                                                               
requirement by RCA.                                                                                                             
                                                                                                                                
CO-CHAIR  HOLLAND,   concerning  affordable   energy  production,                                                               
questioned  RCA's   understanding  of  affordable  energy.     He                                                               
questioned  any definition,  assessment,  or analysis  concerning                                                               
this.                                                                                                                           
                                                                                                                                
MR. ESPINDOLA responded  that on the upcoming slide  15 "just and                                                               
reasonable" would  be addressed, which would  frame this question                                                               
and its response.                                                                                                               
                                                                                                                                
2:14:59 PM                                                                                                                    
                                                                                                                                
MR. ESPINDOLA moved  to slide 11, titled "What is  the RCA's role                                                               
in  relation to  the RTO  and RRC?"   He  mentioned the  Railbelt                                                               
Transmission Organization (RTO).   He paraphrased from the slide,                                                               
which read as follows [original punctuation provided]:                                                                          
                                                                                                                                
         • The RCA's role with the Railbelt Reliability                                                                         
     Council:                                                                                                                   
       Certificate the RRC (Docket E-22-001)                                                                                    
       Review Tariff Filings (3 AAC 46.320-.430)                                                                                
       Review Integrated Resource Plans (AS 42.05.780(b))                                                                       
        Review RRC Surcharge Filings (3 AAC 46.160 and 4                                                                        
     AAC 46.320-.430)                                                                                                           
       Review Rule Filings (AS 42.05.762)                                                                                       
      Holds an Ex-officio Seat (AS 42.05.762(4)(A))                                                                             
        • The RCA's role with the Railbelt Transmission                                                                         
     Organization:                                                                                                              
       Certificate the RTO (AS 44.83.700(d)) (Docket U-24-                                                                      
     042)                                                                                                                       
        Review Transmission Cost Recovery Mechanism (AS                                                                         
     44.83.710)                                                                                                                 
           Review Open Access Transmission Tariff (AS                                                                           
     44.83.710)                                                                                                                 
                                                                                                                                
MR. ESPINDOLA  stated that  after the passage  of House  Bill 307                                                               
[passed during  the Thirty-Third  Alaska State  Legislature], RCA                                                               
opened   Docket  U-24-026   to   investigate   the  process   for                                                               
certification of a regional transmission  organization.  In 2024,                                                               
RCA  issued an  order  for RTO  to file  an  application for  the                                                               
required  certificate,  which is  now  pending  before RCA.    He                                                               
stated that  a decision on this  would be made before  June 2025.                                                               
After  this  process  is  complete,   RTO  would  then  submit  a                                                               
transmission  cost   recovery  mechanism   and  an   open  access                                                               
transmission tariff for review by RCA.                                                                                          
                                                                                                                                
2:17:14 PM                                                                                                                    
                                                                                                                                
COMMISSIONER SPRINGSTEEN moved  to slide 12, titled  "What is the                                                               
RCA's responsibility  to managing Alaska's remaining  natural gas                                                               
resources and future development?"   He noted that the first part                                                               
of the  question was  addressed [on slide  7], and  he reiterated                                                               
that  RCA is  a quasi-judicial  body with  the role  of providing                                                               
oversite  of  tariffs  and  rates   of  public  utilities,  state                                                               
pipelines,  and some  natural gas  storage.   He stated  that the                                                               
oversight of  the state's natural  resources would be  under DNR,                                                               
while  oil  and natural  gas  extraction  would be  under  AOGCC.                                                               
Concerning future  development, he stated that  RCA would promote                                                               
energy  conservation with  the review  and approval  authority on                                                               
certain projects.   He stated  that this would help  displace the                                                               
use of  natural gas.   He directed  attention to Ms.  Vogler, who                                                               
would expand on this topic with the next slide.                                                                                 
                                                                                                                                
2:18:01 PM                                                                                                                    
                                                                                                                                
MS.  VOGLER stated  that, other  than  promoting alternatives  to                                                               
utility consumption,  RCA has limited  control to  reduce natural                                                               
gas  usage.    In  managing the  state's  remaining  natural  gas                                                               
resources,  she pointed  out that  in  2010 RCA  had adopted  net                                                               
metering  regulations,  while in  2024  it  opened a  regulations                                                               
docket to consider  limiting the aggregate limit  of net metering                                                               
facilities.  She stated that in  2022 RCA had approved a charging                                                               
rate  for  electric  vehicles   (EVs),  which  eliminated  demand                                                               
charges, as  this reduced  demand on the  system.   She continued                                                               
that  RCA  has approved  cost  recovery  for contracts  of  power                                                               
purchases with  independent power  producers (IPPs).   She listed                                                               
examples of these agreements.                                                                                                   
                                                                                                                                
MS. VOGLER  pointed out that  RCA has pending dockets  related to                                                               
renewable  energy generation,  including a  petition by  Solstice                                                               
Energy for  a solar farm, with  a request from Homer  Electric to                                                               
purchase  this  power.   She  stated  that  RCA has  received  an                                                               
application   from  Juneau   Hydropower,  Inc.   to  expand   its                                                               
territory.   She stated that  because of Senate Bill  152 [passed                                                               
during the Thirty-Third Alaska State  Legislature] RCA has opened                                                               
a regulations docket concerning community energy facilities.                                                                    
                                                                                                                                
2:20:41 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  MEARS,  concerning   cases  that  promote  conservation                                                               
efforts, questioned  whether RCA would  open dockets in  order to                                                               
promote conservation.   She questioned whether a  rate case would                                                               
be  a challenge  to  utilities to  come  forward on  conservation                                                               
efforts.                                                                                                                        
                                                                                                                                
MS.  VOGLER  explained that  a  rate  case  refers to  a  nonfuel                                                               
component of electric  rates.  Concerning net  metering and other                                                               
aspects, she  stated that RCA  would open the regulations  on its                                                               
own, such as  it did with EV  charging.  She stated  that RCA had                                                               
done this because of a  request from stakeholders.  She explained                                                               
that power  purchase agreements  would be  filed by  the electric                                                               
utilities.   She noted  that the dockets  pending before  RCA for                                                               
review were pursued by the utility.                                                                                             
                                                                                                                                
CO-CHAIR MEARS expressed  the understanding that RCA  can look at                                                               
more than just the cost of service to promote conservation.                                                                     
                                                                                                                                
MR.  ESPINDOLA expressed  agreement with  Co-Chair Mears,  and he                                                               
provided an example.                                                                                                            
                                                                                                                                
2:23:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAUSCHER expressed  the  opinion  that the  state                                                               
does  not have  a gas  shortage; rather,  it has  an availability                                                               
problem.                                                                                                                        
                                                                                                                                
REPRESENTATIVE COSTELLO  questioned an "open  action transmission                                                               
tariff."                                                                                                                        
                                                                                                                                
MR. ESPINDOLA responded that this  is geared to independent power                                                               
producers to  plug into  the Railbelt  system through  the tariff                                                               
process.  He deferred to Mr. Gazaway.                                                                                           
                                                                                                                                
MR.  GAZAWAY explained  that this  is a  nondiscriminatory tariff                                                               
that  allows people  to access  the transmission  network on  the                                                               
same  terms,  conditions,   and  rules,  as  set   forth  by  the                                                               
transmission organization as a tariff.                                                                                          
                                                                                                                                
CO-CHAIR HOLLAND  expressed the  understanding that  Docket U-24-                                                               
003 would  increase the cap to  20 percent for net  metering.  He                                                               
expressed  the understanding  that  [SB 32]  would also  increase                                                               
this  cap.   He questioned  whether the  docket and  the proposed                                                               
legislation would accomplish the same result.                                                                                   
                                                                                                                                
MR. ESPINDOLA expressed the understanding  that SB 32 would allow                                                               
utilities that are  managed by a co-op board to  operate under 15                                                               
megawatts  without RCA  approval.   In  response  to a  follow-up                                                               
question   concerning  the   difference   between  the   proposed                                                               
legislation and the docket, he deferred to Mr. Gazaway.                                                                         
                                                                                                                                
MR. GAZAWAY  responded that these  are two different things.   He                                                               
explained  that   the  metered   cap  would   concern  generation                                                               
installed  by customers,  and the  cap would  be the  amount that                                                               
could be  absorbed by the  system.   Concerning SB 32,  he stated                                                               
that this is tied into  Eligible Renewable Energy Resource rules,                                                               
which have large-project preapproval requirements.                                                                              
                                                                                                                                
CO-CHAIR HOLLAND  pointed out the  growing number of  rate cases,                                                               
IPP purchase  power agreements, and  the diversity  of utilities.                                                               
He questioned whether RCA currently  has the tools needed to work                                                               
on the cases.                                                                                                                   
                                                                                                                                
MR.  ESPINDOLA stated  that this  question would  be answered  on                                                               
slide 14.                                                                                                                       
                                                                                                                                
REPRESENTATIVE RAUSCHER,  concerning the same issue,  pointed out                                                               
that SB 32 could create concerns.                                                                                               
                                                                                                                                
2:28:48 PM                                                                                                                    
                                                                                                                                
MR. ESPINDOLA moved  to slide 14, titled  "What statutory changes                                                               
might ensure  that the RCA takes  a more holistic approach?"   He                                                               
maintained that  this topic should  be addressed at  the upcoming                                                               
public meeting,  as his colleagues  would be present.   He stated                                                               
that statute  requires that the  chair of RCA be  responsible for                                                               
directing  the administrative  functions of  the commission  when                                                               
carrying out its  policies, noting that this should be  done in a                                                               
public  setting.   He  expressed his  intention  to address  this                                                               
topic  with  all RCA  commissioners  during  the public  meeting,                                                               
which is scheduled  for the following morning.   He expressed the                                                               
understanding that it would be  inappropriate for him to speak to                                                               
this topic without  the other members of  the commission present.                                                               
He  stated that  RCA would  respond to  the committee  in writing                                                               
after the meeting tomorrow.                                                                                                     
                                                                                                                                
CO-CHAIR HOLLAND  requested clarification of RCA's  policy versus                                                               
statute, as the committee should understand this.                                                                               
                                                                                                                                
MR.  ESPINDOLA   responded  that  RCA  is   considered  a  policy                                                               
implementer,  not  a   policy  creator.    He   stated  that  the                                                               
legislature  and   the  executive  branch  are   responsible  for                                                               
creating the policies.                                                                                                          
                                                                                                                                
CO-CHAIR HOLLAND  expressed confusion,  as questions  on policies                                                               
are being deferred to the  public meeting, but the legislature is                                                               
responsible for creating policy.   He questioned how to bring the                                                               
context back to the legislature  for discussion, and he described                                                               
this as "a circular challenge."                                                                                                 
                                                                                                                                
MR.  ESPINDOLA   stated  that  if  there   were  specific  policy                                                               
positions  the  legislature  would  like  RCA  to  consider,  the                                                               
questions would need to be  discussed in an open, public setting,                                                               
with all the commissioners there.                                                                                               
                                                                                                                                
REPRESENTATIVE  RAUSCHER  expressed  the understanding  that  any                                                               
question would need to be fully vetted by all the commissioners.                                                                
                                                                                                                                
CO-CHAIR  MEARS expressed  the understanding  that this  would be                                                               
the  beginning  of the  discussions  between  RCA, the  executive                                                               
branch,  and the  legislature.   She noted  that this  discussion                                                               
involves "eleventh-hour"  issues with the Cook  Inlet gas supply.                                                               
She  maintained that  the  gaps  in the  gas  supply  need to  be                                                               
identified  and filled.    She expressed  the  opinion that  this                                                               
needs  to be  fully discussed,  as opposed  to a  decision coming                                                               
unilaterally from  the legislative branch.   She stated  that RCA                                                               
seems to be "looking at what's in  front of you, and we do need                                                                 
to be looking further ahead."   She expressed her appreciation to                                                               
the presenters.                                                                                                                 
                                                                                                                                
CO-CHAIR HOLLAND  expressed the understanding that  the following                                                               
question  would  be addressed  at  RCA's  public meeting  in  the                                                               
morning.   The question  concerned the rules  and tools  that RCA                                                               
has for  the integration of  gas storage, utility  functions, and                                                               
the delivery  of gas.   He commented that  in the middle  of this                                                               
integration process, there would be  a new utility structure.  He                                                               
questioned a  holistic approach  that could  continue reliability                                                               
and affordability.                                                                                                              
                                                                                                                                
MR.  ESPINDOLA  responded  that  this question  is  the  type  of                                                               
feedback  and  information  RCA  is  looking  for  to  start  the                                                               
conversations.                                                                                                                  
                                                                                                                                
2:35:42 PM                                                                                                                    
                                                                                                                                
MR. ESPINDOLA moved to slide  15, titled "What statutory supports                                                               
does the  RCA have  to execute  its duties?"   In the  context of                                                               
just and  reasonable, he directed  attention to AS  42.05.141 and                                                               
AS  42.06.140.   He stated  that  in order  to determine  whether                                                               
rates are  just and  reasonable, RCA  would review  the utility's                                                               
proposed  annual   revenue  required  earnings,   which  includes                                                               
administrative  cost,   depreciation,  and   a  fair   return  on                                                               
investments.                                                                                                                    
                                                                                                                                
CO-CHAIR  HOLLAND, concerning  allowed  expenses, questioned  the                                                               
definition of "prudent nature."   He questioned whether utilities                                                               
would  be  subject  to  taking   action  to  reduce  the  allowed                                                               
expenses, because expenses could be passed to the consumer.                                                                     
                                                                                                                                
MS. VOGLER  responded that when  a utility files a  revenue study                                                               
to RCA,  it is required to  submit schedules to support  that the                                                               
cost  of  services provided  would  be  "used  and useful."    In                                                               
response to  a follow-up question  concerning any  cost reduction                                                               
efforts RCA could take, she  stated that this is possible because                                                               
utilities  could be  investing in  assets that  could reduce  the                                                               
cost  of power.   She  pointed out  that RCA  would look  at this                                                               
because these items would be included  in the rate base, of which                                                               
the utility could earn a return.                                                                                                
                                                                                                                                
2:38:40 PM                                                                                                                    
                                                                                                                                
COMMISSIONER SPRINGSTEEN moved to slide  16, titled "What are the                                                               
various processes  each natural gas project,  recently announced,                                                               
needs to  go through  at the RCA?"   He noted  that the  two last                                                               
questions of the  presentation reflect recent events.   He stated                                                               
that this slide  regards LNG import facilities,  which fall under                                                               
FERC.  He noted that  FERC would provide oversight throughout the                                                               
operation of  these facilities; therefore, they  would be outside                                                               
of RCA's  jurisdiction.   He added  that when  utilities contract                                                               
with  LNG  importers,  these  contracts  would  be  reviewed  for                                                               
approval by RCA.                                                                                                                
                                                                                                                                
CO-CHAIR HOLLAND questioned whether  FERC's oversight would be in                                                               
the best interest of the utilities in the state.                                                                                
                                                                                                                                
COMMISSIONER SPRINGSTEEN responded that,  per statute, this would                                                               
be under the purview of the legislature.                                                                                        
                                                                                                                                
CO-CHAIR MEARS commented that  FERC has responsibility concerning                                                               
planning   and  permitting,   and   it  also   has  a   fiduciary                                                               
responsibility.   She  expressed  the understanding  that in  LNG                                                               
storage projects FERC  would only be concerned  with the planning                                                               
and permitting side.  She pointed  out that there are some things                                                               
without regulatory control, such as this fiduciary element.                                                                     
                                                                                                                                
2:41:52 PM                                                                                                                    
                                                                                                                                
MR. ESPINDOLA moved  to slide 17, titled "What role  does the RCA                                                               
have  in   assessing  multiple   projects  which   may  duplicate                                                               
infrastructure and costs to customers?"   When two or more public                                                               
utilities are  competing for identical  service, he said  RCA has                                                               
statutory  guidance  under AS  42.05.221.    He deferred  to  Mr.                                                               
Gazaway.                                                                                                                        
                                                                                                                                
MR. GAZAWAY stated  that if the competition is not  in the public                                                               
interest, RCA may  eliminate the competition.  He  noted that the                                                               
issue was more prevalent in the  1970s, when a framework had been                                                               
created.   This  framework  looks at  RCA's jurisdiction,  public                                                               
need, the  ability of applicants,  and the internal  strengths of                                                               
the  utilities.   He added  that  the external  strengths of  the                                                               
utilities would also be reviewed,  which is the interface between                                                               
the  utility and  the public.    He noted  that other  extraneous                                                               
elements would be examined, if needed.                                                                                          
                                                                                                                                
CO-CHAIR  HOLLAND   questioned  RCA's  approach   to  overlapping                                                               
related projects,  such as  two LNG  import facilities  with some                                                               
duplication.  He referenced a  scenario where production capacity                                                               
was overbuilt.   He questioned how  this could be avoided  in the                                                               
future.                                                                                                                         
                                                                                                                                
MR.  GAZAWAY pointed  out the  complexity  of the  question.   He                                                               
stated that  when the framework  was created, utilities  were not                                                               
coming to  RCA for large  project preapprovals, as they  were not                                                               
required  to  do this.    He  noted  that  there are  times  when                                                               
duplicate  facilities  are  preferred,  as  natural  gas  storage                                                               
operations are looking for multiple options for more capacity.                                                                  
                                                                                                                                
CO-CHAIR MEARS  noted that  there is  one docketed  project where                                                               
each project  might address  a different need.   She  stated that                                                               
public information  would need  to come  out to  understand this.                                                               
She   expressed  concern   that   there   could  be   duplicative                                                               
infrastructure.                                                                                                                 
                                                                                                                                
2:48:59 PM                                                                                                                    
                                                                                                                                
BECKI ALVEY,  Advisory Section Manager, Regulatory  Commission of                                                               
Alaska, stated  that in  respect to the  announcement of  the two                                                               
projects  related  to Harvest  Alaska  and  ENSTAR, RCA  has  not                                                               
received a filing from Harvest Alaska.   If a filing is made, she                                                               
said RCA  would evaluate this.   In regard to ENSTAR,  in January                                                               
2025  it filed  a proposal  to evaluate  future gas  supplies and                                                               
future gas project  costs through its gas cost  adjustment.  This                                                               
adjustment is  a mechanism that  allows gas utilities  to recover                                                               
gas costs.   She stated  that RCA  has suspended this  filing for                                                               
further investigation into jurisdiction and cost recovery.                                                                      
                                                                                                                                
CO-CHAIR  MEARS  clarified that  this  is  docketed until  August                                                               
2025.                                                                                                                           
                                                                                                                                
MR.  ESPINDOLA  responded that  this  "timeline  is quick."    He                                                               
stated  that there  will be  a public  comment hearing  soon, and                                                               
this would be  to discuss the questions in the  docket.  He noted                                                               
that the filing was suspended, and a docket was opened.                                                                         
                                                                                                                                
REPRESENTATIVE COSTELLO  pointed out the importance  of the issue                                                               
and the impact  to Alaskans.  She questioned  whether this docket                                                               
could be expedited.                                                                                                             
                                                                                                                                
MR. ESPINDOLA responded  that this would be expedited,  as he has                                                               
taken personal control of the matter.                                                                                           
                                                                                                                                
2:51:50 PM                                                                                                                    
                                                                                                                                
MR.  ESPINDOLA expressed  the importance  of  RCA fulfilling  its                                                               
statutory mandates of protecting the  public interest.  He stated                                                               
that RCA strives to ensure  that public utilities are solvent and                                                               
able  to  provide  safe  and  adequate  services  with  just  and                                                               
reasonable  rates that  ensure suitable  returns and  conditions.                                                               
He  stated  that  RCA  conducts   public  hearings,  creating  an                                                               
accurate  record  of evidence,  and  provides  access for  public                                                               
input.  This allows  RCA to work towards its goal  in an open and                                                               
transparent manner, which ensures accountability and trust.                                                                     
                                                                                                                                
2:52:39 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 2:52 p.m. to 2:53 p.m.                                                                       
                                                                                                                                
2:53:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  MEARS noted  the amount  of information  covered during                                                               
the meeting, adding  that there would be more  information in the                                                               
future with  the opening of  dockets.  She noted  RCA's important                                                               
meeting  tomorrow.    She expressed  appreciation  that  RCA  has                                                               
multiple   commissioners,   and   the   clarity   used   in   the                                                               
presentation,  as "not  everybody is  clear on  what hat  they're                                                               
wearing when they speak."  She thanked the presenters.                                                                          
                                                                                                                                
CO-CHAIR MEARS made closing comments.                                                                                           
                                                                                                                                
2:55:26 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Special Committee on Energy meeting was adjourned at 2:55 p.m.                                                                  

Document Name Date/Time Subjects
RCA Presentation for HENE 2.11.25_v2.pdf HENE 2/11/2025 1:30:00 PM
Regulatory Commission of Alaska