Legislature(2025 - 2026)GRUENBERG 120
03/13/2025 01:00 PM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s) Potential Renewable Energy Projects | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
March 13, 2025
1:03 p.m.
DRAFT
MEMBERS PRESENT
Representative Ky Holland, Co-Chair
Representative Donna Mears, Co-Chair
Representative Bryce Edgmon
Representative Chuck Kopp
Representative Cathy Tilton
Representative George Rauscher
Representative Mia Costello
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION(S) POTENTIAL RENEWABLE ENERGY PROJECTS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ROBERT SIEDMAN, Chief Executive Officer
Southeast Alaska Power Agency
Ketchikan, Alaska
POSITION STATEMENT: Co-presented the Potential Renewable Energy
Project presentation.
JOHN BAALKE, Village Administrator
Pedro Bay Village Council
Pedro Bay, Alaska
POSITION STATEMENT: Co-presented the Potential Renewable Energy
Project presentation.
BILL STAMM, President, CEO
Alaska Village Electric Cooperative
Anchorage, Alaska
POSITION STATEMENT: Co-presented the Potential Renewable Energy
Project presentation.
ACTION NARRATIVE
1:03:24 PM
CO-CHAIR DONNA MEARS called the House Special Committee on
Energy meeting to order at 1:03 p.m. Representatives Costello,
Edgmon, Rauscher, Kopp, Holland, and Mears were present at the
call to order. Representative Tilton arrived as the meeting was
in progress.
^PRESENTATION(S) Potential Renewable Energy Projects
PRESENTATION(S) Potential Renewable Energy Projects
1:04:16 PM
CO-CHAIR MEARS announced that the only order of business would
be the Potential Renewable Energy Project presentation.
1:05:04 PM
ROBERT SIEDMAN, Chief Executive Officer, Southeast Alaska Power
Agency (SEAPA), gave a PowerPoint presentation, titled
"Southeast Alaska Grid Resiliency Project (SEAGR)" [hard copy
included in the committee packet]. He began on slides 2 and 3
by sharing facts about SEAPA and photos of Tyee and Swan Lake
where its two hydro plants are located. Slide 4 featured an
energy trend analysis with a year in the life of SEAPA's
megawatt-hour outputs in 2022. Slide 5 showed a capacity trend
analysis with a year in the life of SEAPA's PEAK megawatt
outputs in 2022. Side 6 addressed load growth, which has been
driven by heat pump conversions, and is forecasted to grow 2.52
percent year over year. Slide 7 explained that the increase in
load growth in Southeast Alaska comes down to the cost of energy
and conversions from diesel heat to electric. Slide 8
highlighted a trend analysis for diesel heat in Petersburg,
Wrangell and Ketchikan. In 2022, the three communities combined
burned about 2.7 million gallons of diesel to heat residential
homes at a cost of $18 million to residents. He noted that
converting to heat pumps would save these residents over $11.5
million per year. The $38 million EPA heat pump grant will
accelerate the load growth.
1:15:05 PM
MR. SIEDMAN, in response to a question from Co-Chair Holland,
said raising rates to fund the Renewable Energy Fund (REF) as a
cost savings would punish folks who have not converted from
diesel and the population would probably continue to decline due
to increasing base energy costs. He resumed the presentation on
slide 9 and explained that if all oil-based heating systems were
to be converted to heats pumps, it would equate to 36gWh, which
is right about where the spill occurred in 2022. Slide 10
detailed the new generator at Tyee in Skeleton Bay, which would
increase Tyee capacity by 50 percent, increase SEAPA total
capacity by 25 percent, and increase total contingency and
resiliency. He added that it's the cheapest alternative to
building new hydro. Slides 12-14 took a "30,000-foot view" of
the proposed project with corresponding images. Slide 15 shared
the permitting progress, which read as follows [original
punctuation provided]:
Nov 2024: SEAPA was designated as FERC's non-federal
representative for consultation with stakeholders such
as SHPO, USFS, USFWS, NOAA and others.
Dec 2024: Stakeholder consultation resulted in 100%
support of the project, recognizing no environment
impact.
Jan 2025: With written endorsements from stakeholders,
SEAPA received a waiver of second stage consultation
from FERC.
Feb 2025: Final Application submitted, in expedited
review at FERC
Anticipate approval from FERC in Q3, 2025
MR. SIEDMAN continued to Slide 16, which outlined the
design/procurement progress, which read as follows [original
punctuation provided]:
Nov 2024: 100% procurement design specification
complete
Feb 2025: 90% construction specifications and drawings
complete
Mar 2025: Bids due for Generator, Transformer and
Ancillary Equipment
Jun 2025: Anticipate final construction design to
integrate successful bid and solicit RFPs for
Construction
MR. SIEDMAN shared SEAPA's financial outlook on slide 18. In
response to a series of committee questions, he said SEAPA has
received no funds from investment tax credits (ITCs). The
"SEAPA CASH," as referenced on slide 18, he said would most
likely come from SEAPA reserves from capital investments,
whereas the ITCs would replenish the reserves. He said based on
the uncertainty surrounding federal funding and the REF, he
would be recommending to the board that the project be placed on
paused, delaying it about a year, as once the procurement
contract is awarded and signed, payments are due. Whether or
not the ratepayers shoulder more of the burden would be up to
the board of directors. He added that the alternative is that
the communities burn diesel, which is ten times the cost of
hydroelectric. He estimated that there's a total of around
6,000 ratepayers between Ketchikan, Wrangel, and Petersburg, of
which there are a few large commercial users, such as the
fisheries, for example.
1:33:22 PM
MR. SIEDMAN concluded with the importance of the REF on slide
19. In response to a series of committee questions, he
explained that the Pacific Ocean is the largest solar panel in
the world, and it dumps its energy in Southeast Alaska, so there
are a significant amount of projects that could be built.
Currently, hydroelectric projects have been built solely on
ratepayers paying debt service or partially funded by the state.
However, as AI server farms are built and hydrogen technologies
advance, building new hydro wouldn't have to solely be for
residential homes or industrial services. He added that the
technology sectors would be great anchor tenants. Because the
cost of energy in Alaska is so high, there is a lack of
investment in energy intensive projects, but with the right
partnerships, a dedicated portion of projects could go towards
paying the debt service and another portion towards lowering the
rates for Alaskans. He spoke to "disruptive technologies," and
highlighted the coefficient performance (COP) of heat pumps in
colder climates. In addition, there is a potential that boilers
could be swapped out for heat pump boilers in the near future
without changes to registers, like air ducting.
1:46:31 PM
JOHN BAALKE, Village Administrator, Pedro Bay Village Council,
gave a PowerPoint presentation, titled "Knutson Creek Hydro
Project" [hard copy included in the committee packet]. He
offered an overview of the presentation on slide 2 and listed
the Pedro Bay Village priorities on slide 3, which are to
protect subsistence resources, build sustainability, improve
economic and energy security, and encourage families to live in
Pedro Bay. Slide 4 detailed the local energy profile, which is
reliant on diesel fire generation, and current logistic
challenges and vulnerabilities. Slide 4 read as follows
[original punctuation provided]:
EXISTING DIESEL-FIRED GENERATION
LOGISTIC CHALLENGES AIR OR SEA?
• State gravel airstrip
• Sea via Bristol Bay / Kvichak River / Lake Iliamna
• Sea via Cook Inlet / Williamsport Road / Lake
Iliamna
Low volumes / Few carriers / Primitive infrastructure
/ Transshipments
EXPENSIVE!
Fuel often flown-in from Kenai Peninsula
VULNERABILITIES
• Fuel supply insecurity (can we even get fuel
delivered?)
• High price and price volatility for fuel (economic
uncertainty for homes/businesses)
• Risk of spills (environmental, cultural, and
economic risks)
MR. BAALKE continued to Slide 5 featured a graph of the local
energy profile, noting that the rate for electricity without
Power Cost Equalization (PCE) is $0.91 per kWh. The PCE brings
it down to a reasonable range, but there is a use limit for
residents, and it doesn't apply to commercial operators. Slide
6 compared local energy solutions, such as solar/wind and hydro.
Hydrogen was selected due to its proven track record in rural
Alaska, its high diesel displacement and its long life, despite
the drawbacks of a long development timeline and high capital
cost. Slide 7 gave an overview of the Knutson Hydro project as
follows [original punctuation provided]:
LOCAL CLEAN AND SUSTAINABLE ENERGY SOLUTION
Run-of-River Hydro Operation (no storage)
Divert up to 11.5 cubic feet per second
~6,400 foot long ~24-inch diameter pipeline
205 feet of elevation drop (pressure head)
125 kW Powerhouse
~9,700 feet of underground power and communications
~12,500 feet of total roads / trails
MEETS ~96% ANNUAL UTILITY DEMAND
SUPPORTS ELECTRIC HEAT / LOAD GROWTH
MR. BAALKE addressed the Knutson Hydro performance on slide 8
and the project layout on slide 9. He detailed the challenges
on slide 10, which read as follows [original punctuation
provided]:
SLOW PERMITTING (Mostly behind us now)
Fisheries studies over 7 years (just 10s of Sockeye
se project area)
7 year hydrology study (sparse Alaska hydrology
info)
FERC non jurisdictional (14 months just to affirm
that!)
On going Monitoring Requirements (O&M costs borne by
ratepayers)
CAPITAL FUNDING
$7.982M Capital Cost
AEA Round 16 REF Application (match for federal
funding)
Pursuing Federal Grants (DOE Tribal Energy, DOE
Energy for Rural Areas)
PTC / ITC other? (depends on what still exists when
we build)
MR. BAALKE concluded on slide 11 with the path ahead, which read
as follows [original punctuation provided]:
UPCOMING MILESTONES
Secure Capital Funding
Construction
Operation
RESULTS
Better economy through local jobs + lower /
stabilized electric rates
Boost to village's sustainability and security
Protects and enhances local resources
Completed project is self-sustaining
THE TAKEAWAY
Is it all worth it? Every community with an old hydro
says YES!
2:06:50 PM
MR. BAALKE, in response to a series of committee questions,
confirmed that the REF funds the reconnaissance study, the
feasibility studies, design, and permitting. He reported that
[Pedro Bay Village Council] has generated 24,000 gallons of
diesel per year. He said all fuel is flown in by aircraft at up
to 2,000 gallons per flight when using a larger plane, like a C-
46. He noted that that they lost of one their large carriers
operated by Alaska Air Fuel to a crash in Fairbanks, which drove
up the cost of delivery. He recognized that at least one other
Service had brought fuel across Williamsport Pike Bay Road via
Cook Inlet, but there were issues with transferring fuel from
tanks to a truck at Williamsport, and then having to put the
truck on a barge and haul it down the lake. He noted potential
environmental concerns, highlighting a spill that occurred
several years ago.
2:20:21 PM
BILL STAMM, President, CEO, Alaska Village Electric Cooperative
(AVEC), gave a PowerPoint presentation, "Chevak Battery
EnergyStorage System Application to the Renewable Energy Fund"
[hard copy included in the committee packet]. He began on slide
3 with an introduction to AVEC, which read as follows [original
punctuation provided]:
Nonprofit 501(c)12 -Electric Cooperative
58 Rural Communities, 31,000+ Residents
46 Power Plants, 160 Diesel Generators
9.5M Gallons of Diesel in 2024 ($42.3M)
525 miles of Distribution Lines
13 Wind Sites, 33 Wind Turbines, Serving 22
Communities
$77.9M Annual Revenue
2024 Total Electricity Sold 125.6 MWh
MR. STAMM continued to slide 4, showing a pie chart of costs per
kilowatt-hour sold in 2023. Slide 5 illustrated AVEC's timeline
of renewable energy projects from 1999-2023. Slide 6 shared an
example of the Battery Energy Storage System (BESS) installed in
Shaktoolik in 2024. The BESS modules include batteries, battery
monitoring system, inverter, controls/communications, and HVAC.
Slide 7 introduced the Chevak BESS with a proposed 720 kW/864
kWh. Slide 8 further detailed Chevak BESS and system
improvements, which read as follows [original punctuation
provided]:
Nearly double wind production .notdef from 573 MWh to 1,050
MWh per year
Offsets an additional 29,785 gallons fuel, a savings
of about $138,202/year
Shift 2,000+ engine runtime hours to smaller engine,
improving PP efficiency
Diesels-off approximately 169 hours per year.
Modernizes the plant for renewable expansion
Provides operating reserve and grid stability
MR. STAMM continued to describe the Chevak project on slide 9,
which read as follows [original punctuation provided]:
Project Status: Preliminary design and cost estimates
completed with potential supplier and contractor input
Permitting: Limited permitting required, all
improvements would be installed on AVEC Power Plant
Site. Fire Marshall approval required. Similar
installations already approved.
Financing: Latest estimated cost for project
completion in 2027 is expected to increase 25% over
the estimate provided in the 2023 application. AVEC
will be seeking additional funding for completion.
Fuel savings anticipated to provide a 10-year payback
of project expense.
Timeline: Funding Approval, August 2025
Design and Procurement, Q4 2025- Q1 2026
Fabrication and Delivery, Q2 2026- Q4 2026
Installation and Commissioning, Q4 2026-Q2 2027
2:44:11 PM
MR. STAMM, in response to a series of committee questions,
explained that the cost savings would directly benefit consumers
in Chevak. The project would reduce their energy cost, as more
than half the cost is associated with fuel. In addition, it
would greatly benefit the PCE endowment, because they would no
longer be paying down the difference in cost. Furthermore, the
money invested by the state would return money to the PCE
program. He estimated that about 20 percent of AVEC's total
revenue is reimbursed by PCE. He stated that the primary
benefit of the Chevak project is the reduction in fuel cost;
however, there is also a reduction in operation and maintenance
cost for the diesel because those units would be run less. It
would also provide improved power quality because the battery
remains on the system the whole time and holds a much tighter
voltage stabilization.
2:58:06 PM
ADJOURNMENT
There being no further business before the committee, the House
Energy Special Committee meeting was adjourned at 2:58 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SEAPA House Energy Committee 2025.pdf |
HENE 3/13/2025 1:00:00 PM |
REF |
| 250310-PBVC Knutson Hydro for House Energy.pdf |
HENE 3/13/2025 1:00:00 PM |
REF |
| 20250313 House Energy REF.pdf |
HENE 3/13/2025 1:00:00 PM |
REF |