Legislature(2007 - 2008)HOUSE FINANCE 519
07/28/2008 01:00 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Alaska Housing Finance Corporation – Energy-efficiency Programs | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
July 28, 2008
1:15 p.m.
CALL TO ORDER
Vice-Chair Bill Stoltze called the House Finance Committee
meeting to order at 1:15:56 PM.
MEMBERS PRESENT
Representative Bill Stoltze, Vice-Chair
Representative Les Gara
Representative Mike Hawker
Representative Mike Kelly
Representative Bill Thomas Jr.
MEMBERS ABSENT
Representative Mike Chenault, Co-Chair
Representative Harry Crawford
Representative Kevin Meyer, Co-Chair
Representative Richard Foster
Representative Reggie Joule
Representative Mike Kelly
Representative Mary Nelson
ALSO PRESENT
Dan Fauske, CEO/Executive Director, Alaska Housing Finance
Corporation, Department of Revenue; Cary Bolling, Energy
Specialist, Research Information Center, Alaska Housing
Finance Corporation; Bryan Butcher, Legislative Liaison,
Alaska Housing Finance Corporation; John Anderson,
Weatherization Program, Alaska Housing Finance Corporation;
Sarah FisherGoad, Deputy Director of Operations, Alaska
Industrial Development and Export Authority and Alaska
Energy Authority, Department of Commerce, Community and
Economic Development.
PRESENT VIA TELECONFERENCE
Steve Haagenson, Executive Director, Alaska Energy
Authority.
SUMMARY
^PRESENTATION: Alaska Housing Finance Corporation - Energy-
Efficiency Programs
1:17:37 PM
DAN FAUSKE, CEO/EXECUTIVE DIRECTOR, ALASKA HOUSING FINANCE
CORPORATION, DEPARTMENT OF REVENUE, reported that the
program was proceeding well despite late funding. Staff
training is underway. The Alaska Housing Finance Corporation
(AHFC) has implemented the program since 1978 in conjunction
with the United States Department of Energy. The budget
includes $6 million in corporate receipts with $2 million in
federal receipts, for a total of $8 million. He stated that
the message to the fifteen housing authorities was that
"this program exceeds your ability under current status
without subcontracting and the formation of partnerships."
He elaborated that the slow housing market left some home
builders time to take on other projects. He explained that
the six day certification training is simple.
1:21:06 PM
CARY BOLLING, ENERGY SPECIALIST, RESEARCH INFORMATION
CENTER, ALASKA HOUSING FINANCE CORPORATION, commented that
when the $300 million was received, the plan was to work
with existing programs, including $200 million for
weatherization and $100 million for rebates. He realized
that additional training would be required. He gave a rough
breakdown of the weatherization allocations by region based
on heating degree days, number of units, population, and
fuel costs.
Mr. Bolling pointed out the complexity of the formula.
Consideration was taken for areas with longer winters and
colder days. The previous weatherization program had been in
existence for about thirty years. The five original agencies
covered over thirty thousand homes. The new weatherization
funding allowed AHFC to keep an income-based program while
raising the median income limit from 60 percent to 100
percent, which qualified many more people. The Department of
Housing and Urban Development (HUD) income limits for Alaska
vary by region. The limit for a three person family in
Anchorage is $70,800 per year; in the Juneau area the limit
is $78,300. The original five providers have been increasing
weatherization services because of the increased number of
people who qualify. Fifteen state designated housing
authorities were added as service providers, with statewide
training included.
Mr. Bolling added that the previous program weatherized
about 600 homes per year; the expectation is to weatherize
about 4000 homes next year and 7500 homes the following
year.
Mr. Bolling informed the committee that allocations for the
rebate program were $100 million. A formula is used to
divide the money. There are no requirements except year-
round owner occupancy, and any Alaskan resident can qualify.
The program has existed since the mid-1990s, although it has
been unfunded. Energy raters are a key part of the program
and must be in place before improvements can be implemented.
Currently AHFC has 83 energy raters trained, and more are
being trained statewide.
Mr. Bolling described the process for obtaining a home
energy rating. The resident must call an energy rater, who
analyzes the home and identifies the eligible improvements
using energy rating software. The corporation then
reimburses the homeowner up to $325. The homeowner receives
An improvement options report informs the homeowner about
the most cost effective methods of weatherizing, and the
number of points achieved per item on the list. The resident
can either perform the improvements themselves or hire a
contractor.
Mr. Bolling presented a sample energy certificate. The
certificate lists improvements for a home. He pointed out
the importance of the improvement description as well as the
gained rating points. The resident can view the certificate
and determine how many points they needed to reach the next
rating level. There are ten levels.
1:27:06 PM
Mr. Bolling reviewed an example of a three-star rating level
(Copy on File). He explained the progression of steps. A
three-step improvement translated to a rebate of up to
$7000, although only the actual cost of the work will be
rebated. Once the work is completed, the rater is called
back to the home to verify the work and give a new rating.
The follow-up appointment is less expensive. The homeowner
can apply for the rebate. The rebate amount is based on the
improved efficiency. The maximum rebate amount is $10,000.
If a person does not possess the money up front, AHFC has a
program called the Second Mortgage for Energy Conservation
including a loan of up to $30,000 to help finance the
improvements. The interest rate on this loan is fixed with a
fifteen-year term.
Mr. Fauske pointed out that the weatherization is non-
taxable and provided by the government to remedy a situation
affecting all residents in Alaska. The Internal Revenue
Service does tax the rebate. He opined that despite the tax,
the program provided an intelligent option based on the
savings that can be generated.
1:30:50 PM
Representative Gara asked if the rebate side included the
hiring of a rater. Mr. Fauske responded that the main
difference is income restrictions. On the weatherization
side there is an income restriction because of federal
guidelines. With the rebate, the homeowner is communicating
directly with the rater.
Representative Gara observed that the entire $100 million
program is taxable. He wanted to know more about the
weatherization and rebate programs. He had the impression
that people qualifying for the rebate only received a
portion of the cost in rebate money and he wondered if the
state pays the entire amount of the first $10,000.
Mr. Fauske clarified that the minimum rebate with invoices
is $4,000 and the maximum is $10,000. The qualification
includes improvements to the home and the increased star
rating achieved. He cited an example of a resident spending
$12,000; the improvements achieved three steps for a rebate
of $7000 and the remaining $5000 would be the homeowner's
responsibility.
Representative Gara asked about the likelihood that a
resident might say that the state will pay $10,000 for the
first $10,000 worth of expenses and continue to perform the
needed upgrades that cost the resident $10,000 and then
receive the full rebate from the state.
1:33:21 PM
JOHN ANDERSON, WEATHERIZATION PROGRAM, ALASKA HOUSING
FINANCE CORPORATION, answered that the rebate received is
based on receipts. The program is not a dollar per dollar
program. The step and point systems that are used are based
on ten different steps used to achieve the five levels of
rebate. He cited an example of a boiler replacement. The
cost is typically eight to ten thousand dollars depending on
location. The particular improvement would achieve one step
and earn a rebate of $4000.
BRYAN BUTCHER, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
CORPORATION, described a potential situation where a
homeowner would pay $10,000 for improvements and have the
entire $10,000 rebated. In most cases taking an improvement
up the five necessary steps would exceed $10,000. He
reported a lack of information due to the infancy of the
program concerning the amount of money Alaskan residents
involved in this program receive. He agreed to report back
to the legislature once more data has been gathered.
1:36:06 PM
Representative Gara agreed with encouraging residents to
weatherize their homes. He proposed a rule that homeowners
qualify for up to fifty percent of their expenses,
encouraging residents to spend twice as much in order to
receive the entire potential rebate. Mr. Butcher replied
that AHFC had considered that approach. He opined that
within a few months time, the information about how the
program works will have been gathered, including the percent
of rebate residents are achieving.
Mr. Fauske stressed eliminating the idea of spending $2000
and getting $8000 in return.
1:37:08 PM
Representative Thomas hypothesized that he was going to
replace his boiler. He asked if the boiler would be rated.
He wondered if the boiler merchants would be angry if a
certain boiler was favored over another. He questioned
whether or not this might cause trouble for the state.
Mr. Bolling explained that the most efficient appliance or
boiler is always favored despite the cost. The energy rating
software looks at the annual fuel utilization efficiency.
This includes a number verified by a third party. Research
done by AHFC shows a number of systems or boilers that meet
the required efficiency. The target is not a specific brand.
1:40:04 PM
Mr. Bolling informed that the rebate program has completed
887 ratings, 500 applications have been processed, and 200
are in progress. Nine million dollars has been committed.
The program receives between 50 and 100 applications per day
in addition to three to five inquiries per day about the
program.
He spoke about training. He explained that training exists
for weatherization service providers, existing and new
energy raters, and contractors. He described the effort to
inform the general public about the training programs. For
weatherization providers, 144 hours of training has been
completed. The expectation is to double the training efforts
in the next month. He calculated that 100 energy raters are
needed. The program began with 40 existing raters who all
received new training. An additional 43 raters were hired.
He explained the prerequisites for becoming a rater
including two years of construction experience. The current
focus is on communities without raters.
1:42:29 PM
Mr. Fauske stated that small communities in rural Alaska
will have an established rater travel to rate homes. He
disclosed the memorandum of agreement with North Star
Fairbanks Borough who contributed financing toward
expediting the service.
1:44:46 PM
Representative Gara expressed concerns about doubling the
number of raters but not keeping up with applications. He
stated that his constituents have been complaining about the
length of time it takes to have their homes rated. He
suggested doubling the number of raters in order to control
the situation.
Mr. Fauske explained that the scheduled training will run
through October. He expressed concern that while the program
is "ramping up" various regional allocations may run out of
money.
1:47:22 PM
Representative Gara noted difficulty in receiving ratings
and suggested that funding might not be available.
Mr. Butcher anticipated that money would remain available
through the end of the calendar year. He agreed that without
additional funds, the need for public announcements would
prove necessary. He informed that the number of raters in
Anchorage and Fairbanks will triple with in the next week.
Mr. Bolling estimated that the weatherization money would
exist until 2010. The rebate program included fewer funds
and is progressing more quickly because of the direct
relationship between the resident and the raters.
1:51:47 PM
Representative Thomas clarified that the funds were
allocated by region.
Mr. Bolling informed that AHFC was very careful to inform
regions that weatherization money exists. He explained that
the programs would not encompass every need.
Representative Thomas asked about the replaced boilers. He
wanted to know what became of them. He supposed that a
person might sell the old furnace for profit.
Mr. Bolling explained that under the rebate program, the
responsibility rests with the homeowner to dispose of the
old boiler. With the weatherization program, AHFC takes
responsibility for disposing of the inefficient boiler. He
stated that the majority of the time, the inefficiency of
the boiler negates any resale value.
1:53:23 PM
Representative Kelly clarified that the old boiler might be
placed in another home only to be subsidized again. He
proposed a mechanism insuring that the inefficient boiler is
not reused.
He asked about a quality inspection with regard to the new
appliance.
1:58:04 PM
Mr. Anderson shared updates to the program including a
quality control manual for AHFC. He maintained that the post
rating will enable the tools to determine whether or not the
work was done properly. Regarding the weatherization
program, an administrator performs a five to ten percent
oversight. He revealed the application for national
contractor certification. He reported that the hope is that
certification classes can begin as early as November or
December.
Representative Kelly informed that the five star program
began 25 years ago. He asked for a comparison of the five
star programs. Mr. Fauske answered that a manual estimation
would be possible for past ratings.
2:01:46 PM
Mr. Bolling continued his training review. He stressed the
importance of contractor training. He informed that there
were 18 scheduled training sessions through October. Also
provided are Home Choice classes for program orientation. He
listed the partners as Alaska Building Science Network,
Alaska Works, Alaska Craftsman Home, Northern Building
Science, UAS, Wisdom and Assoc., Cold Climate Housing
Research Center, and the Opportunity Council. The Building
Performance Center provides the accreditation.
He explained that the program began operation under
emergency regulations. This included a public comment period
and public hearing, with final regulations adopted on July
17, 2008.
He displayed slides from the weatherization program (Copy on
File.) The initial presentation was done by Jim Lee,
director of the Interior Weatherization Agency in Fairbanks.
The presentation was given before the inception of the
program, for the board of directors. He continued with an
"example home" that had an estimated heating cost of $7,092
per year (2200 gallons of heating oil plus electric.) A
savings of $2000 per year was seen simply by insulating the
foundation. He explained that a priority list is created
with each home. Examples of possible priorities are
insulation, furnace upgrade, and reduction of blower doors.
He continued to cite examples of homes with various
weatherization needs and the possible priorities.
2:06:02 PM
Mr. Bolling explained the blower test. He elaborated that
the test includes opening an exterior door of the house and
installing a temporary door, which has a fan and computer at
the base. This blower door simulates a 20 mile an hour wind
blowing on the house. This simulates air being pulled out of
the house. The process adds up all the cracks and leaks in
the house and establishes the hole that would exist if you
were to combine all of the empty space.
He elaborated that a smoke pencil can also be used to find
leaky areas, but many raters are experienced and can easily
feel leaks. He noted that the typical house in the United
States has an air leakage rate of about four air changes per
hour. That means that the air in the house is heated and
replaced four times in an hour. He explained that older
homes often have even greater air leakages.
2:08:38 PM
Representative Kelly asked about AHFC's goal in regard to
air changes. Mr. Bolling answered that they are aiming for
maximum efficiency. He pointed out that the entire home must
be viewed as a system versus analyzing certain areas or
aspects alone. He elucidated that this was one of the newer
breakthroughs in weatherization building science. He
expressed the importance of "building tight, but ventilating
right."
Representative Kelly asked if one air exchange per hour
would constitute a "tight house." Mr. Bolling replied that
yes that would be a very unique rating. Representative Kelly
inquired about the boiler data. He was concerned that
maintenance of the boiler was not taken into consideration
when evaluating efficiency. He asked if boilers were first
tuned and then evaluated, or were they given an "as found"
evaluation.
2:10:38 PM
Mr. Bolling believed that the weatherization program
performed a combustion efficiency test. This would test the
efficiency of the heating system as found. He explained that
a data base of old furnaces existed to help determine the
potential efficiency.
Mr. Anderson added that any boiler over 20 years old is
automatically replaced.
2:11:58 PM
Representative Crawford asked about crawl space ventilation
and the diametric opposition of this practice to that of
insulating the crawlspace. He wondered about the use of
polycarbonate storm windows, which apparently tripled the
efficiency.
Mr. Bolling explained that AHFC uses engineering data to
determine the R value of windows. The information is put
into the energy rating software, which acquires knowledge of
the return on the investment for a potential improvement.
Additionally the area surrounding the window is also
evaluated.
Mr. Bolling spoke to the question regarding the crawl space.
He elucidated that the idea behind crawl spaces was that
moist air could exit the crawl space during the summer when
in actuality, this practice increases moisture in the
crawlspace. He informed about the current recommendation,
which is in building code and includes sealing the
crawlspace while providing mechanical ventilation when
necessary.
2:15:19 PM
Co-Chair Meyer expressed concern about the difficulty of
obtaining a rating. He himself made an attempt to call and
place himself on the list following calls from frustrated
constituents. He recalled phoning every Anchorage rater and
receiving a recording encouraging him "not to call back
until October."
Mr. Fauske stressed that raters are instructed to be cordial
and to recognize constituent frustration. He stated that the
raters have been asked to refrain from telling people to
call their legislators. He admitted to receiving many calls
of the same nature. He anticipated some improvement due to
public service announcements asking people to have patience.
He appreciated that the program instilled hope in people who
were in need of help.
Mr. Fauske pointed out that this program also supplies jobs.
His conservative estimate was that 1500-2000 new jobs were
the result of this program. He stated that this was also a
plus in the colder communities because these jobs help
families get through the tougher months. He encouraged local
hiring practices. He appreciated any comments, help, or
criticism because the program is a "work in progress."
2:19:38 PM
Mr. Butcher observed that the training only became available
rd
last month on June 3. There were six raters in Matsu when
the money became available and now there are 17 in South
Central. Training for raters is ongoing. There is clear
communication regarding the raters who are booked versus
those who are newly trained.
2:20:17 PM
Representative Hawker expressed gratitude for the program.
He stated that the feedback from his constituents was that
the service was courteous and responsive. He understood that
the situation was not easy, yet the implementation was good
in his opinion.
Representative Buch reported a recent complaint from a
constituent regarding capacity. The constituent was under
the impression that the program was already at capacity. He
echoed the thankful sentiments and understood the
complexity. He encouraged better efforts at public
relations. He admitted that the legislators operate mostly
through complaints. He hoped instead to help accomplish the
goal for the residents of the state.
Mr. Fauske explained that raters are independent
contractors, as opposed to employees of the corporation. He
stated that this sometimes leads to difficulty in sending a
common message to the public. He asked for more information
regarding the comment about the program operating at
capacity.
Representative Stoltze expressed gratitude to Mr. Butcher
for assembling a primer that in his opinion staved off many
questions. He opined that the distribution of the
information helped considerably in his area.
2:2-4:34 PM
Representative Gara questioned what legislators should tell
their constituents. Mr. Fauske noted that AHFC had not
created a public announcement proposing a corporate policy
communicating to residents that they may be on a list for a
while. He stressed that it was unsound to tell people that
the program is out of money. He continued to anticipate the
availability of weatherization money through 2010, but the
rebate program was different. He stated that AHFC would take
responsibility for notifying the public when the money is
gone. He hoped that a solution would arrive before that
happens.
He encouraged constituent communication stating that this
meeting had occurred and that a better message and
scheduling apparatus were in progress.
2:27:12 PM
Mr. Butcher acknowledged that some raters had encouraged
constituents to lobby their legislators. He maintained that
AHFC contacted these raters informing them not to
communicate this as it might cause fear in the constituents.
He explained that he communicated to the contractors that if
there is a lack of money, they will be the first to know. He
stressed that it is not in the best interest of AHFC to
advertise a program that is without funding. He stated that
the rebate money may indeed be used by the end of the
calendar year.
He thought that the best message for constituents was to
have patience and not refrain from placing their names on
the list due to long wait times.
Representative Gara asked about the popularity of the
program in regard to the legislators. He wanted to see some
long term energy solutions come out of special session. He
opined that weatherizing homes this year versus next is best
because it saves everyone money. He requested an estimate to
bring the rebate program in operation through June.
Mr. Fauske estimated that the program will go through $100
million each year, based on demand and the speed of the
ratings. He supposed that $50 million would last until June
2009. He estimated that by January of this year the entire
$100 million will have been spent.
2:32:25 PM
Co-Chair Meyer clarified that $50 million are needed to get
through June 2009.
Representative Gara encouraged more discussion and possibly
agreement to fund the $50 million to prevent the program
from running out of money in January.
2:34:51 PM
Mr. Fauske pointed out that properties without certain
energy standards are not financed. In reference to
retrofitting homes, much can be done with today's
technology.
2:37:53 PM
Representative Thomas questioned if his furnace would
qualify and how the process would work. He was concerned
that the extra time it took to have the rating done would
mean that winter will come and it might be too late to see
any of the anticipated efficiency.
Mr. Anderson explained that while the wait is inconvenient,
it is important to have the before and after view and
opinion for both the public and the legislature.
Representative Thomas asked if the furnace could be ordered
prior to the rating if there was clear cause to replace it.
He explained that with the new furnace, he could save $300
per month.
Mr. Anderson explained that the first step is to call the
energy rater and have the rating done as opposed to
completing the online application.
2:40:48 PM
Mr. Anderson informed that the program was established to
run year round. Replacing boilers in the winter is
difficult, yet possible. He observed that a new energy rater
exists in Haines.
Representative Kelly spoke to the complexity of the task
given to AHFC. He opined that it is difficult to make all of
the residents happy. He indicated that it was better to
truthfully inform people that there might be a long wait,
than to mislead them into believing that the process was
smooth and easy.
Representative Thomas opined that it might be better to take
a second mortgage than to wait for the rater's availability.
2:46:04 PM
In response to the comment by Representative Thomas, Mr.
Fauske observed that the home energy loan program has been
available for a long time.
Vice-Chair Stoltze asked if a faith based organization might
be allowed to perform some of the necessary tasks as long as
the rating was done.
Mr. Fauske answered yes; the volunteer work was not
different than the sweat equity of owners performing their
own tasks.
2:47:56 PM
Representative Kelly noted that there may be an opportunity
for individuals that are not trained raters to make a "first
pass."
Mr. Anderson stated that this was possible as long as the
"as is" rating and the "post rating" supports the data, then
those receipts will be accepted as part of the rebate.
The presentation from AHFC was concluded.
2:51:50 PM
Representative Hawker spoke about prior testimony regarding
the bulk fuel revolving loan fund. The prospect was raised
that the amount of equity in that fund is not adequate to
deal with inflated prices. He questioned if the amount of
equity needed to be increased.
SARAH FISHERGOAD, DEPUTY DIRECTOR OF OPERATIONS, ALASKA
INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY AND ALASKA
ENERGY AUTHORITY, DEPARTMENT OF COMMERCE, COMMUNITY AND
ECONOMIC DEVELOPMENT, provided information to the committee.
She felt that there were sufficient funds to cover the
current applications with the allowance to borrow money from
the power project fund. There have not been many
applications for the full $500 thousand. She noted that the
Alaska Village Electric Cooperative's (AVEC) request was
close to $20 million. She did not know of an existing
program that would provide a loan of that size. In the past,
the larger utilities had a private line of credit. She
anticipated a possible cash flow issue, although so far that
had not been the case.
She continued that the bulk fuel revolving loan fund has
been a source of credit for short term loans for the annual
purchase of fuel to entities without a private line of
credit. She explained that they were meeting the need of a
niche. She elaborated that the Bridge Loan Program was run
through the Department of Commerce, as opposed to the Alaska
Energy Authority.
Representative Hawker revealed that Ms. Fisher-Goad's
testimony was in direct conflict with the testimony of AVEC.
He remembered that AVEC had stated that the equity for the
Bulk Fuel Revolving Loan Fund was $35 million short.
Ms. Goad further explained that AVEC needs a $20 million
line of credit. She stated that the Bulk Fuel Revolving Loan
Fund was not capable of addressing a $20 million line of
credit. She admitted hearing from AVEC regarding the line of
credit issue, but even a capitalization of the Bulk Fuel
Revolving Loan Fund would not address their need.
2:56:52 PM
Representative Hawker wished for clarification from AVEC.
Representative Crawford noted that the use of a pellet stove
can cut a fuel bill in half. He asked if AEA had looked at
the possibility of converting to this type of heating
method, which used fuel that has been produced locally as
opposed to diesel.
3:00:04 PM
Steve Haagenson, Executive Director, Alaska Energy
Authority, testified via teleconference. He explained that
pellet stoves were indeed a focus of research for the AEA.
He stated that the benefit of pellets was that they reduce
the use of heating oil.
Representative Crawford requested the potential savings that
the switch to pellet stoves might provide, as well as a
timeframe for the implementation of such a program.
Representative Kelly responded to the issue with AVEC. He
stated that there is a $500 thousand per community limit and
a $1.5 million ceiling for any particular utility. He
mentioned meeting with Meera Kohler and stating that she did
understand that a change in the current program would be
necessary to meet the needs of AVEC. He understood that
AVEC's problem was with the cap.
Ms. Sarah Fisher-Goad agreed that the cap was the issue for
AVEC although it had been raised to $1.8 million. She
supposed that AVEC's need would be a "one time" situation
due to the rising cost of fuel.
3:03:41 PM
Representative Kelly observed that the current program was
not meant to address AVEC. He supposed that if AVEC's
problem was accommodated, it would not happen with the
existing program. He understood that AVEC was concerned
about the interest rate for the current price of the fuel.
He proposed that the committee devise a method of aiding
AVEC with a special program. He thought it a simple problem
to fix if AVEC cannot find alternative financing for their
fuel.
Representative Hawker addressed AVEC's need for financial
funding. He stated that fuel inventories make great
collateral. He asked for information concerning AVEC's
lending institution and constraints. He did not believe that
there would be time in the next few days to address these
questions.
3:06:57 PM
Co-Chair Meyer spoke to alternative energy in the Rail Belt.
He understood that a study was in progress with input and
feedback collected. He requested updates on studies for the
Susitna Damn, the wind farm at fire island, and the Healy
Clean Burning Coal plant in Fairbanks.
Mr. Haagenson responded that money had been appropriated for
Susitna. Another study identified the amount of need in the
Railbelt called the integrated resource plan. He stated that
Fire Island was also appropriated $25 million, which was
managed by AEA. The money cannot be spent until there are
power sales agreements in place with utilities to purchase
that power. Regarding Healy Clean Coal, he admitted that he
was limited in his ability to discuss them. He expressed
these limits were due to Healy Clean Coal's litigation with
Golden Valley.
He explained that the issue with the railbelt was in
providing fuel that could be used in the existing
infrastructure. He elaborated that for Anchorage, this would
mean bringing gas or synthetic gas into a pipeline, enabling
Anchorage to continue to operate. Fairbanks requires a
liquid fuel solution.
Representative Meyer requested the cost per kWh for the
Healy Clean Burning Coal Plant. Mr. Haagenson was not aware
of an estimate for fuel cost. He clarified that Golden
Valley Electric Company would be purchasing the energy.
3:12:08 PM
Representative Gara reported questions about the Renewable
Energy Fund. The proposal was $50 million per year of
renewable energy grant funds made available for each of the
next five years. He understood the rules for reviewing the
applications have yet to be adopted. He requested the status
of the advisory committee.
Mr. Haagenson responded that HB 152 contained two portions.
One portion for this year and another for next. He stated
that a request for proposal (RFP) would be available from
AEA by the end of August. He stated that a committee would
be advisory to the RFP. The next step is for AEA to evaluate
the projects.
3:15:46 PM
Representative Gara noted that additional staff would be
needed to properly evaluate projects. He requested comment
regarding staffing.
Mr. Haagenson stated that the AEA had begun evaluating
staff. He stated that following the RFP, the evaluation can
occur quite quickly. He stated that there also existed the
option of seeking supplemental budget if required.
Representative Gara asked if Mr. Haagenson had the ability
to hire people without an appropriation from the
legislature. He questioned whether more money from the
legislature was necessary to hire additional staff. Mr.
Haagenson responded that he did believe that there was
adequate funding for staff.
Representative Gara replied that he had received comments
stating that the "folks within AEA do not believe that
evaluations can be conducted without additional staff." Mr.
Haagenson understood that those comments were being cycled.
His goal was to streamline the process. He felt that there
were options and opportunities to make this happen.
3:19:01 PM
Representative Gara stressed his concern that too much time
was taken to evaluate $5 million worth of projects. He
worried that the first $50 million would not be reviewed
effectively. He supposed that some of the projects could
have been evaluated with the time given.
Mr. Haagenson repeated that the delay is for the RFP which
includes necessary information for rapid evaluation. He
disagreed with sacrificing quality, but he explained that he
was working hard on the "front end." He expressed his intent
to provide good quality results in a timely manner. His
concern was that adequate staff was present to actively
manage awarded grants.
Representative Nelson referenced a letter that she passed
out from the city of Napaskiak. She explained that the
village was advocating for prepaid power meters. She asked
for AEA's position on the investment of public funds for
communities that are struggling. The community stated that
the prepaid meters contribute to energy conservation and to
the sustainability of electric utilities.
Mr. Haagenson stated that he had read the letter, but a
decision of support had not been made. He supposed that
eligibility would exist. He was aware of several utilities
in Alaska using the system successfully.
3:24:01 PM
Representative Nelson requested an immediate forthcoming
opinion because the committee would soon present a Committee
Substitute (CS). She wished for support to be expressed
immediately. Mr. Haagenson stated that he would attempt to
have a letter written and sent to Representative Nelson's
office.
Representative Stoltze referred to Mr. Haagenson as the
energy czar. He expressed concern about his city's inability
to address immediate concerns. He requested the interfacing
of Mr. Haagenson with the largest local government.
Mr. Haagenson expressed a commitment to work with any entity
in Alaska to "turn that around."
3:27:23 PM
Representative Thomas clarified that AEA would make the
recommendation to the Office of Management and Budget (OMB).
He opined that allowing OMB to manage would be
"micromanaging." He asked who had made the decision to allow
OMB to manage.
Mr. Haagenson explained that he was told that it would be
proper to have OMB manage. He did not think that the change
would present any delays.
Ms. Goad explained that it is standard to have OMB
coordinate meeting times. This would not include evaluations
of the lists.
3:31:39 PM
Representative Thomas asked if Mr. Haagenson had viewed the
Power Cost Equalization (PCE) bill reviewed in committee. He
asked for a view or opinion of the bill. He requested that
time be spent reviewing the bill versus "piecing it
together."
Mr. Haagenson denied having any opinion about the bill. He
stated that Ms. Fisher Goad was doing a great job in
providing the necessary data regarding the cost of the
different alternatives.
3:34:56 PM
Representative Crawford requested information regarding
conservation. He realized that many people would appreciate
the ability to carpool via a "park and ride" in the
confluence of the Parks and Glen Highway. This would allow
public transportation from Anchorage to enable drivers to
conserve. He also discussed expanding the share-a-ride
program. He stated that he was receiving calls from
constituents concerned about the loss of bus routes in
Anchorage. He was also curious about the process of
evaluating the larger Railbelt projects.
Mr. Haagenson responded that he was not sure about an
available bus service for the park and ride idea. He opined
that it would be a city function. With regards to evaluating
Railbelt methods, he stated that fuel costs, debt service
and the cost of delivery data will be made available. He
stated that the data will be available in the December time
frame.
3:38:15 PM
Mr. Haagenson acknowledged that a solution must be found and
then deployed to address the needs of the Railbelt. He
stressed that the projects were long term and he was looking
for the best answer.
Co-Chair Meyer requested knowledge of any immediate projects
that the legislature might help with. He realized that the
gas pipeline was the long term solution for most of the
state, but certainly the other energy relief projects will
help for the short term.
Mr. Haagenson understood the pressure and realized that a
solution must come within a one to two year time frame. He
felt concern about the winter. He was interested in short
term solutions such as wood pellet stoves because benefits
would be apparent immediately.
3:40:11 PM
Representative Gara discussed prior testimony from AVEC. He
recalled that the Renewable Energy Fund could reach
economies of scale with larger power generation projects
connecting communities through tie-ins. He remembered that
AVEC had $50 million worth of projects. He expressed
pleasure regarding the $50 million in the renewable energy
fund, but he felt that addressing the projects earlier was
best.
Representative Gara stated that he did not see AEA
administering more than $50 million this year. He questioned
the potential of administering additional money for the
Renewable Energy Fund if it could be secured in the fourth,
fifth, and sixth year. He suggested an additional $100
million dollars each for three years, with appropriation
pending legislative approval.
Mr. Haagenson answered that he would like to "see how it
goes with the first $50 million before he volunteers for
more." He explained that the issue of staffing the program
was the first goal. Representative Gara stated that the
moment was historic in that the state had ample funds, which
might not exist in the same capacity in two or three years.
He stressed that this was an opportunity.
Mr. Haagenson asserted that the Alaska Energy Plan must also
be discussed. He believed that was another area in need of
additional funding.
3:44:35 PM
Representative Hawker asked about internal resources
available for management and allocation of the HB152 money.
He remembered Mr. Haagenson stating that he could receive
extra funds if needed through the OMB process. He asked
about the OMB process and how it might make funding
available to AEA. Mr. Haagenson deferred to Ms. Fisher-Goad.
Ms. Fisher-Goad responded that one aspect addressed with OMB
was the project management cost. She stated that as a state
corporation, AEA works with OMB to address staffing needs.
She explained that there are available positions that she is
attempting to fill. Many of these positions ensure that the
process can move forward.
Representative Hawker asked if she was planning to tap the
appropriation for HB152 through an RPL for the purposes of
administrative costs. She answered yes.
3:48:47 PM
Representative Kelly presented a situation of ramping from
$5 million to $50 million. He asked what the ratio on the
increase will be for state employees versus consultants. He
asked about how "deep the consultant pool was."
Mr. Haagenson preferred in-house expertise, unless the
quality would suffer. He stated that the consulting pool was
fairly large and could extend nationally. He expressed the
importance of quality work.
Representative Kelly asked about the ratio of in-house
versus consultants. Mr. Haagenson answered that he could not
easily identify that number. He stated that he would look
for the person with the expertise beginning in state first
and proceed to a national pool if needed. He wished to
achieve good quality in a timely manner.
3:53:04 PM
Representative Gara suggested that insufficient thought has
gone into staffing. He said that he had been asking about
staffing issues for weeks now. He indicated that the work
had not been done regarding the Renewable Energy Fund. He
asked if he was wrong to expect that some of the projects
might have been reviewed allowing construction to begin this
summer.
Mr. Haagenson disagreed that Representative Gara's statement
was accurate. He felt that Ms. Goad provided an accurate
answer regarding staffing and funding. Representative Gara
expressed concern because the money was not appropriated for
staff, but instead for grants.
Ms. Goad stated that the opportunity has not existed to
discuss AEA's internal processes regarding the manner in
which projects are performed. She stated that the building
of energy infrastructure projects in rural Alaska occurred
with Denali Commission Funds. She stated that many small
projects were deficient in required staffing and have thus
been managed by AEA. She stated that there are two different
project models in existence. There is the grant portion, and
also the portion that gets the project finished.
3:58:24 PM
Representative Gara misunderstood the method for charging a
project when it was undergoing evaluation. He did not
understand where the funding would come from.
Ms. Goad explained that the second RFP ensures that there is
funding available whether with contract or state employees.
She stated that HB152 has a five year $250 million promise.
She acknowledged that $50 million had been appropriated. The
legislature can either increase or decrease this money. She
reported that the goal was to have good processes in place
for the evaluation of projects and to provide managing
staff.
ADJOURNMENT
The meeting was adjourned at 4:02:15 PM.
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