Legislature(2021 - 2022)BARNES 124
05/06/2022 09:00 AM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB190 | |
| HB301 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 301 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 190 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
May 6, 2022
9:01 a.m.
MEMBERS PRESENT
Representative Zack Fields, Co-Chair
Representative Ivy Spohnholz, Co-Chair
Representative Calvin Schrage
Representative Liz Snyder (via teleconference)
Representative David Nelson
Representative James Kaufman (via teleconference)
Representative Ken McCarty (via teleconference)
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 190(FIN)
"An Act extending the termination date of the Regulatory
Commission of Alaska; relating to Regulatory Commission of
Alaska regulations regarding refuse utilities; relating to the
powers and duties of the legislative audit division; and
providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 301
"An Act relating to the establishment of a renewable portfolio
standard for regulated electric utilities; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 190
SHORT TITLE: REGULATORY COMMISSION AK/REFUSE UTILITIES
SPONSOR(s): SENATOR(s) MYERS
02/15/22 (S) READ THE FIRST TIME - REFERRALS
02/15/22 (S) L&C, FIN
02/28/22 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/28/22 (S) Heard & Held
02/28/22 (S) MINUTE(L&C)
03/14/22 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/14/22 (S) Moved CSSB 190(L&C) Out of Committee
03/14/22 (S) MINUTE(L&C)
03/15/22 (S) L&C RPT CS 5DP SAME TITLE
03/15/22 (S) DP: COSTELLO, GRAY-JACKSON, STEVENS,
MICCICHE, REVAK
03/21/22 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/21/22 (S) Heard & Held
03/21/22 (S) MINUTE(FIN)
03/23/22 (S) FIN AT 1:00 PM SENATE FINANCE 532
03/23/22 (S) Heard & Held
03/23/22 (S) MINUTE(FIN)
03/28/22 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/28/22 (S) -- MEETING CANCELED --
03/30/22 (S) FIN RPT CS 3NR 3DP NEW TITLE
03/30/22 (S) DP: BISHOP, HOFFMAN, WIELECHOWSKI
03/30/22 (S) NR: STEDMAN, WILSON, OLSON
03/30/22 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/30/22 (S) Moved CSSB 190(FIN) Out of Committee
03/30/22 (S) MINUTE(FIN)
04/08/22 (S) TRANSMITTED TO (H)
04/08/22 (S) VERSION: CSSB 190(FIN)
04/09/22 (H) READ THE FIRST TIME - REFERRALS
04/09/22 (H) L&C, FIN
04/25/22 (H) L&C AT 3:15 PM BARNES 124
04/25/22 (H) <Bill Hearing Postponed to 4/27/22>
04/27/22 (H) L&C AT 3:15 PM BARNES 124
04/27/22 (H) Heard & Held
04/27/22 (H) MINUTE(L&C)
04/29/22 (H) L&C AT 9:00 AM BARNES 124
04/29/22 (H) <Bill Hearing Canceled>
05/02/22 (H) FIN AT 1:30 PM ADAMS 519
05/02/22 (H) Scheduled but Not Heard
05/02/22 (H) L&C AT 3:15 PM BARNES 124
05/02/22 (H) Heard & Held
05/02/22 (H) MINUTE(L&C)
05/04/22 (H) L&C AT 3:15 PM BARNES 124
05/04/22 (H) Heard & Held
05/04/22 (H) MINUTE(L&C)
05/06/22 (H) L&C AT 9:00 AM BARNES 124
BILL: HB 301
SHORT TITLE: UTILITIES: RENEWABLE PORTFOLIO STANDARD
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/04/22 (H) READ THE FIRST TIME - REFERRALS
02/04/22 (H) ENE, L&C, FIN
03/08/22 (H) ENE AT 10:15 AM BARNES 124
03/08/22 (H) Heard & Held
03/08/22 (H) MINUTE(ENE)
03/10/22 (H) ENE AT 10:15 AM BARNES 124
03/10/22 (H) Heard & Held
03/10/22 (H) MINUTE(ENE)
03/15/22 (H) ENE AT 10:15 AM BARNES 124
03/15/22 (H) Heard & Held
03/15/22 (H) MINUTE(ENE)
03/17/22 (H) ENE AT 10:15 AM BARNES 124
03/17/22 (H) Heard & Held
03/17/22 (H) MINUTE(ENE)
03/22/22 (H) ENE AT 10:15 AM BARNES 124
03/22/22 (H) -- MEETING CANCELED --
03/24/22 (H) ENE AT 10:15 AM BARNES 124
03/24/22 (H) -- MEETING CANCELED --
04/26/22 (H) ENE AT 10:15 AM BARNES 124
04/26/22 (H) Heard & Held
04/26/22 (H) MINUTE(ENE)
04/28/22 (H) ENE AT 10:15 AM BARNES 124
04/28/22 (H) Moved CSHB 301(ENE) Out of Committee
04/28/22 (H) MINUTE(ENE)
04/29/22 (H) ENE RPT CS(ENE) NEW TITLE 3DP 1NR 2AM
04/29/22 (H) DP: TUCK, FIELDS, SCHRAGE
04/29/22 (H) NR: CLAMAN
04/29/22 (H) AM: KAUFMAN, RAUSCHER
05/02/22 (H) L&C AT 3:15 PM BARNES 124
05/02/22 (H) Heard & Held
05/02/22 (H) MINUTE(L&C)
05/06/22 (H) L&C AT 9:00 AM BARNES 124
WITNESS REGISTER
ROBERT "BOB" PICKETT, Chair
Regulatory Commission of Alaska (RCA)
Wasilla, Alaska
POSITION STATEMENT: Answered questions during the hearing on
CSSB 190(FIN).
STUART GOERING, Senior Assistant Attorney General
Commercial, Fair Business and Child Support Section
Civil Division (Anchorage)
Department of Law
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on
CSSB 190(FIN).
SENATOR ROBERT MYERS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, answered questions during
the hearing on CSSB 190(FIN.
RYAN JOHNSTON, Staff
Representative Calvin Schrage
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During the hearing on HB 301, explained
Amendment 2 on behalf of Representative Schrage, sponsor of the
amendment.
JULIE ESTEY, Director
External Affairs & Strategic Initiatives
Matanuska Electric Association
Palmer, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
301.
CHRIS ROSE, Executive Director
Renewable Energy Alaska Project (REAP)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
301.
ACTION NARRATIVE
9:01:45 AM
CO-CHAIR ZACK FIELDS called the House Labor and Commerce
Standing Committee meeting to order at 9:01 a.m.
Representatives Snyder (via teleconference), Nelson, Schrage,
Spohnholz, and Fields were present at the call to order.
Representatives Kaufman (via teleconference) and McCarty (via
teleconference) arrived as the meeting was in progress.
SB 190-REGULATORY COMMISSION AK/REFUSE UTILITIES
9:02:01 AM
CO-CHAIR FIELDS announced that the first order of business would
be CS FOR SENATE BILL NO. 190(FIN), "An Act extending the
termination date of the Regulatory Commission of Alaska;
relating to Regulatory Commission of Alaska regulations
regarding refuse utilities; relating to the powers and duties of
the legislative audit division; and providing for an effective
date."
CO-CHAIR FIELDS reminded members that on 5/4/22 the committee
rescinded action on Amendment 1 to CSSB 190(FIN).
9:02:09 AM
CO-CHAIR FIELDS moved to adopt Amendment 1 to CSSB 190(FIN),
labeled 32-LS1525\W.2, Radford/Ambrose, 4/28/22, which read:
Page 1, line 3, following "division;":
Insert "relating to the privatization of refuse
utilities;"
Page 2, following line 8:
Insert a new bill section to read:
"* Sec. 3. AS 42.05.641 is amended by adding a new
subsection to read:
(b) A municipality that seeks to privatize a
municipal refuse utility that is subject to the
provisions of this chapter shall submit a proposal to
the commission for review. The commission may approve
the proposal if the commission finds that
privatization will not result in higher rates for
consumers and that privatization is in the public
interest. A privatization proposal must include
(1) a business plan that lists the
prospective vendors;
(2) the projected cost of private operation
compared to continued municipal operation for a ten-
year period;
(3) disclosure of any potential conflicts
of interest on the part of municipal officials; and
(4) proposed methods
(A) for periodically evaluating the
utility's performance to avoid diminished service
quality, interruption, or stoppage of work by the
contractor;
(B) to encourage competition and
productivity;
(C) for monitoring a contract in order to
detect any contractor defaults, monitor penalties, and
prepare for contract renewals or renegotiations and
inflation; and
(D) to address municipal employee
displacement."
Renumber the following bill sections accordingly.
9:02:15 AM
REPRESENTATIVE NELSON objected to Amendment 1.
9:02:23 AM
The committee took a brief at-ease.
9:02:36 AM
CO-CHAIR FIELDS related that a memorandum from Legislative Legal
Services [dated 5/4/22 by Anna Ambrose, Legislative Counsel]
states that no legal problems are seen with Amendment 1. So, he
continued, there is disagreement between the executive and
legislative branches. He said he also spoke to Mr. Robert
Pickett, chairman of the Regulatory Commission of Alaska (RCA).
9:02:52 AM
REPRESENTATIVE NELSON asked whether Co-Chair Fields had talked
with the RCA.
CO-CHAIR FIELDS replied that he spoke with Mr. Pickett and there
is disagreement between Department of Law lawyers about whether
the RCA should be required to do the legwork of looking at a
potential privatization impact on consumers. He invited Mr.
Pickett to address that conversation.
9:03:30 AM
ROBERT "BOB" PICKETT, Chairman, Regulatory Commission of Alaska
(RCA), deferred to Mr. Stuart Goering to address the high-level
points of concern about the lack of definitions, particularly
for privatization.
9:04:13 AM
STUART GOERING, Senior Assistant Attorney General, Commercial,
Fair Business and Child Support Section, Civil Division
(Anchorage), Department of Law, responded that the information
which he sent to Co-Chair Fields does not address any policy
matters or whether the underlying concept of Amendment 1 is a
good or bad idea. He said his concern, and that of the
Department of Law, is that Amendment 1 as currently written
contains several ambiguities, and ambiguities create issues with
both implementation and enforcement. He offered [for the
department] to work with Co-Chair Fields to identify exactly the
problem the co-chair is trying to resolve.
MR. GOERING continued his response. He said the primary issue
centers around the meaning of "privatize". He stated that if
privatization means that the municipality is selling its
certificate of refuse utility to a private entity, then existing
law already requires that that transaction be approved in
advance by the RCA as a certificate transfer, and therefore it's
not clear whether this would add a great deal to that existing
process. If privatize refers to a municipality choosing to use
contractors to perform some of its utility function, he said,
then that's an internal management matter and currently no
municipal refuse utilities are economically regulated so they
are exempt from any RCA oversight over their internal
management. Under current law the RCA has no ability to say
anything about that, he continued, and under the amount of
information that is currently available to the RCA that would be
something completely new. So, Mr. Goering advised, it needs to
be clear what privatize means because if it means selling the
utility outright, then that requires a certificate transfer; if
it does not, then it would mean it is a change in the RCA's
oversight of an exempt utility's management function. He
requested Co-Chair Fields to describe what is meant by
privatized in this context.
9:07:04 AM
CO-CHAIR FIELDS stated that it would cover either. He said that
in the first case where RCA already has some authority, it would
outline exactly the review of the financials to make sure
consumers are protected. In the latter case of a contracted-out
arrangement, he said it would be doing that same review for
consumers. He reiterated that Legislative Legal Services did
not see legal issues with the amendment, and he therefore
surmises it is a disagreement among lawyers.
MR. GOERING responded that the only specific comment [in the
Legislative Legal Services memorandum] was related to the
constitutionality of the amendment. He said he doesn't disagree
that on the whole there are no constitutional issues, but one
potential constitutional issue is with the amendment's provision
relating to higher rates. In the outright sale of a utility, he
explained, the purchasing private entity that is receiving the
certificate is constitutionally entitled to receive statutory
rates and those rates may be higher than the rates that the
municipality was charging. Although the transfer of a municipal
refuse utility hasn't been seen, he continued, there have
historically been several transfers of municipal utilities of
other types. One was the recent sale of municipal light and
power to Chugach Electric Association (CEA) by the Municipality
of Anchorage, another was the sale of the water and sewer
utilities in Fairbanks to a private entity that has operated
them for about 20 years now. Pretty much across the board, Mr.
Goering stated, the rates do go up when the private entity gets
ownership because the rates that were being charged by the
municipality were either obsolete or deliberately subsidized to
keep rates low. So, he said, the private entity must raise
rates to be able to get a compensatory rate and be able to
operate the utility on financially sound footing. The
constitutional issue comes in, he asserted, with the requirement
that the privatization proposal cannot result in higher rates
than if the municipality had continued to operate. Legislative
Legal Services did not address this, he posited, perhaps because
the agency was not aware of the consequences of that, given the
short amount of time the agency had. That's where the actual
constitutional issue lies, he added, not in the overall concept.
Mr. Goering stated that several things could be done to remove
the ambiguities in the amendment so that if it the amendment
eventually becomes law it will be clearly implemented and
clearly enforceable and doesn't run afoul of the aforementioned
constitutional issue.
9:10:40 AM
CO-CHAIR FIELDS stated he is hesitant to hold up the bill any
longer and doesn't think the amendment is unclear but requested
Mr. Goering's specific recommendations for changing Amendment 1.
MR. GOERING responded that AS 42.05 has no definition of
privatized, so the first place to start is to define that term
so it's clear that it does cover both the situations discussed.
Second, he said, "subject to the provisions of this chapter"
[page 1, line 8, Amendment 1] is ambiguous because all the
municipal refuse utilities currently are exempt from regulation,
so they are subject only to very, very narrow provisions of the
chapter; this would apply to those utilities so it would be
better to make that clearer. There are a couple different
formulations, he continued, statutes that apply by their terms
in AS 42.05 notwithstanding an exemption from AS 42.05 either in
whole or in part, but he recommends that some of that language
at least be considered for inclusion so that it's clear that
this does apply to an exempt municipal refuse utility. Third,
Mr. Goering advised, would be to clarify that the goal of
avoiding higher rates is not intended to override normal rate
making principles which provide that a certificated private
business can have approved rates that compensate the business
for its capital investment.
CO-CHAIR FIELDS, regarding Mr. Goering's third recommendation,
maintained that the RCA is capable of looking at a municipal
cost structure versus a private cost structure for proposed
rates and determining which one is higher. The RCA can back out
the subsidies, he said, and do an apples-to-apples comparison.
9:13:01 AM
REPRESENTATIVE NELSON asked whether it is realistic that the RCA
would have the power to utilize Amendment 1 if it were to pass.
MR. GOERING answered that from his perspective, if ambiguities
were removed it would make it more possible for the RCA to do.
He noted that exempt utilities do not pay regulatory cost
charges, a mechanism that funds the RCA, and as a result the RCA
would be essentially without the resources to do the work as far
as an exempt utility is concerned. An appropriation of funds
specifically for that purpose might be required, he said, but
that would be a fiscal matter better directed to Mr. Pickett.
MR. PICKETT responded that it would depend on the nature and
size of the municipal utility being talked about. For larger
ones it would be possible to tease out the imputed subsidies, he
stated, for some of the smaller ones with the lack of accounting
systems and other things it could be nearly impossible. So, he
continued, it would span the gamut depending on who is making
application for this privatization.
9:14:57 AM
REPRESENTATIVE KAUFMAN, given the testimony against Amendment 1,
asked whether the intent of the amendment is to make it
exceedingly difficult or impossible to privatize.
CO-CHAIR FIELDS replied that the intent is to run a model on
which is likely to have a better cost impact on consumers and
make it available to local government officials and consumers as
they decide whether to move forward. He concurred with Mr.
Pickett that sometimes there will be perfectly clear information
and sometimes ambiguity. But, he said, it's better to have some
information than no information when making such a decision.
The modeling would not take all that long, he asserted, and the
RCA does complex modeling all the time.
REPRESENTATIVE KAUFMAN posited that if there were ambiguity it
would mean that [the RCA] would not be able to proceed.
CO-CHAIR FIELDS answered that [the RCA] could advise consumers
and local policymakers based on the information that is had as
to an estimate of what the rates would be under either of the
two options of governance. He said it is normal in modeling to
acknowledge what degree of uncertainty exists based on the
underlying data.
REPRESENTATIVE KAUFMAN asked whether the intent is that they
could still proceed if there is ambiguity.
CO-CHAIR FIELDS replied yes, absolutely, the local policymakers
will have a little more information and can make a judgement
based on the information presented by the RCA.
9:17:12 AM
REPRESENTATIVE MCCARTY offered his understanding that there is
already in statute some things in this amendment, yet some
ambiguity of the amendment and the delay to get that ambiguity
cleaned up may mean there is not time to get the bill through
the session. He suggested that pieces of the ambiguity could be
worked through next session and maybe the bill should be moved
this session to resolve those issues of the intent of the bill.
CO-CHAIR FIELDS responded that Mr. Goering said the RCA does
have some review under a sale but does not have review under
contracting out the services. In either the case, he continued,
the additional clarity around the modeling of cost impacts on
consumers has some value, so he is inclined to do the amendment
and move the bill. He said he is happy to do clarification
later if needed.
9:18:39 AM
REPRESENTATIVE NELSON requested the prime sponsor's opinion on
Amendment 1.
9:18:53 AM
SENATOR ROBERT MYERS, Alaska State Legislature, prime sponsor of
the bill, answered that the more discussion he has had with the
RCA, along with the memorandum from the Department of Law, the
more concerned he is about Amendment 1. The ambiguity portions
are part of it, he said, the Department of Law has pointed out
that as written one portion of the amendment may be effectively
unenforceable. There are some significant problems here, he
submitted, this is a significant policy change. This is about
potentially effectively having the RCA start to regulate
municipal utilities in some ways, he said, which the RCA doesn't
do currently. There is the issue of figuring out what defines
creating a higher rate, he continued. For example, regarding
subsidy, if a consumer's utility rate goes up but their property
tax rate goes down, overall does that result in a lower charge
to the consumer? Senator Myers stated that this is enough of a
significant policy change that he prefers to see it in a
separate bill to be debated on its own merits rather than
attaching it to what started out as a simple board extension.
9:20:31 AM
CO-CHAIR FIELDS asked Co-Chair Spohnholz whether she prefers to
clarify the amendment and take it up again next week, which he
would be happy to do.
CO-CHAIR SPOHNHOLZ replied that she would like to go slow to
ensure it is being done right. She offered her appreciation for
the intent of consumer protection and said it is important to
think about the impact to individual ratepayers when considering
privatization of utilities. Sometimes promises about lower
rates and increased services from privatization don't pan out,
she continued, and the RCA is expert in this kind of work. She
said she would feel comfortable advancing Amendment 1 as an
important part of consumer protections if there is clarification
of the ambiguities.
9:21:44 AM
CO-CHAIR FIELDS emphasized that there is no intent to have the
RCA regulate municipal refuse utilities in the way the RCA
regulates electric generating cooperatives and companies. He
said it is simply to have a consumer protection review at a time
of proposed governance change that would result in privatization
of either ownership or contracted services. It is a new policy,
he allowed, but it is limited in scope. He stated that the
committee would work on the definition of privatization and
bring the amendment back next week. He apologized to the bill
sponsor for the delay.
9:22:26 AM
CO-CHAIR FIELDS announced that CSSB 190(FIN) was held over.
HB 301-UTILITIES: RENEWABLE PORTFOLIO STANDARD
9:22:35 AM
CO-CHAIR FIELDS announced that the final order of business would
be HOUSE BILL NO. 301, "An Act relating to the establishment of
a renewable portfolio standard for regulated electric utilities;
and providing for an effective date." [Before the committee was
CSHB 301(ENE).]
9:22:58 AM
REPRESENTATIVE SCHRAGE moved to adopt Amendment 1 to CSHB
301(ENE), labeled 32-GH2546\W.1, Klein, 5/3/22, which read:
Page 7, line 23:
Delete "alternative"
Insert "clean"
9:23:02 AM
CO-CHAIR FIELDS objected for purposes of discussion.
9:23:04 AM
REPRESENTATIVE SCHRAGE explained Amendment 1 would change the
term "alternative" to "clean". Responding to Co-Chair Fields,
he confirmed that Amendment 1 is a technical cleanup because the
term "alternative" was missed when the draft came over from the
House Special Committee on Energy.
9:23:22 AM
REPRESENTATIVE NELSON inquired about the definition of "clean".
REPRESENTATIVE SCHRAGE responded that "clean" is defined under
the definition section [within Section 6 of CSHB 301(ENE)] where
all the sources of energy generation are listed.
CO-CHAIR FIELDS added that the House Special Committee on Energy
believed that "clean" was a better term and this straggling term
of "alternative" was missed in the cleanup of the bill. He
further noted that under the amendment by Representative Tuck in
that committee, the term "clean" included nuclear as well as
traditional energy generation.
9:24:14 AM
CO-CHAIR FIELDS removed his objection. There being no further
objection, Amendment 1 to CSHB 301(ENE) was adopted.
9:24:22 AM
REPRESENTATIVE SCHRAGE moved to adopt Amendment 2 to CSHB
301(ENE), labeled 32-GH2546\W.2, Klein, 5/3/22, which read:
Page 8, line 28:
Delete "clean"
Insert "renewable"
Page 8, line 30:
Delete the first occurrence of "clean"
Insert "renewable"
Page 8, line 31:
Delete the first occurrence of "clean"
Insert "renewable"
Page 9, line 1:
Delete the first occurrence of "clean"
Insert "renewable"
9:24:25 AM
CO-CHAIR FIELDS objected for purposes of discussion.
9:24:26 AM
REPRESENTATIVE SCHRAGE explained that Amendment 2 is further
cleanup in that it deletes "clean" and inserts "renewable" in
[four] occurrences. He requested Mr. Ryan Johnston to explain
Amendment 2 in more detail.
9:24:47 AM
RYAN JOHNSTON, Staff, Representative Calvin Schrage, Alaska
State Legislature, on behalf of Representative Schrage, sponsor
of Amendment 2, explained that in the House Special Committee on
Energy an amendment by Representative Tuck changed
"alternative", but then a conceptual amendment changed back to
"clean". When that was done on the fly, he continued, "it left
'clean' in every area, but it has 'clean' and 'clean energy' in
those places, so we don't need four cleans, so changing it back
to 'renewable'." Also, he noted, that section of the bill does
not fall within the new clean energy statute, it falls within
the existing Alaska Energy Authority (AEA) statute, and because
AEA is still using its definitions of renewable and clean, it
makes the most sense to continue using "renewable" and "clean"
for the Alaska Energy authority.
9:25:49 AM
REPRESENTATIVE MCCARTY asked whether removing "clean" would also
remove alternative ways of producing energy or securing the
intent that polluting types of things not be made.
CO-CHAIR FIELDS responded no.
REPRESENTATIVE MCCARTY, regarding the use of renewable language
only, inquired about the utility systems that are producing
energy through, say, natural gas and scrubbing to not pollute
the environment.
CO-CHAIR FIELDS replied that Amendment 2 is a technical cleanup
because there are underlying AEA statutes that address renewable
energy, and that is all Amendment 2 cleans up. Under the bill,
he said, the clean energy standard is inclusive of nuclear and
what most people would consider renewable, including hydropower,
wind, tidal, and solar. Natural gas is not considered clean
energy because of its greenhouse impact, he explained.
MR. JOHNSTON drew attention to page 8 of the bill, [lines 28-
29], which state, "identifying progress developing clean and
clean energy resources". In Amendment 2, he clarified, only
[the first "clean"] would be replaced so that those lines would
state, "identifying progress developing renewable and clean
energy resources".
9:28:32 AM
REPRESENTATIVE KAUFMAN suggested that a conceptual amendment may
be needed because in the language on line 28 removing "clean"
there is an "and".
MR. JOHNSTON answered that the amendment would delete "clean"
and insert "renewable" so the language [on lines 28-29] would
read, "developing renewable and clean energy".
9:29:13 AM
REPRESENTATIVE MCCARTY asked whether the ability to scrub is
acknowledged.
CO-CHAIR FIELDS replied that that will be addressed in the next
amendment.
9:30:00 AM
CO-CHAIR FIELDS removed his objection to Amendment 2. There
being no further objection, Amendment 2 was adopted.
9:30:11 AM
CO-CHAIR FIELDS explained that he will be offering Amendment 3,
which is an idea that came out of discussion in the House
Special Committee on Energy where Representative Kaufman
suggested that there should be a process to potentially change
what falls within the definition of clean energy resources. He
said he thinks one pending technological change that could play
out is carbon capturing sequestration, whether from gas or from
coal. Under Amendment 3, he said, AEA would report back to the
legislature and the legislature would have the authority to
change the definition of clean energy resources; AEA is being
asked to advise the legislature on it because AEA is the expert.
9:31:19 AM
CO-CHAIR FIELDS moved to adopt Amendment [3] to CSHB 301(ENE),
labeled 32-GH2546\W.3, Klein, 5/4/22, which read:
Page 7, following line 20:
Insert a new section to read:
"Sec. 42.05.925. Additional renewable energy
resources. Not less than once every five years, the
commission shall request a report from the Alaska
Energy Authority reviewing clean energy technologies,
and determine whether an available technology is an
approved renewable energy resource for purposes of
complying with the clean energy standard."
Page 7, line 21:
Delete "Sec. 42.05.925"
Insert "Sec. 42.05.930"
Delete "AS 42.05.900 - 42.05.925"
Insert "AS 42.05.900 - 42.05.930"
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Delete "or"
Page 8, line 5, following "nuclear;":
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(F) a resource that the commission approves under
AS 42.05.925;"
9:31:41 AM
REPRESENTATIVE KAUFMAN objected to Amendment 3.
9:31:52 AM
REPRESENTATIVE MCCARTY thanked the maker of the amendment. He
said it needs to be recognized that technology evolves in many
different realms, even in operations that are using natural gas,
a classic example being the growing of vegetables in the Chena
Hot Springs hot house.
9:32:46 AM
REPRESENTATIVE KAUFMAN removed his objection to Amendment 3 and
thanked Co-Chair Fields for the concept in the amendment. There
being no further objection, Amendment 3 was adopted.
CO-CHAIR FIELDS thanked Representative Kaufman for the idea for
Amendment 3.
9:33:03 AM
CO-CHAIR FIELDS moved to adopt Amendment 4 to CSHB 301(ENE),
labeled 32-GH2546\W.4, Dunmire/Klein, 5/3/22, which read:
Page 3, line 27:
Delete "2030"
Insert "2027"
Page 8, line 11:
Delete "each 10-year period"
Insert "the period before December 31, 2027, the
period between December 31, 2027, and December 31,
2040, or the period between December 31, 2040 and
December 31, 2050, as"
9:33:06 AM
CO-CHAIR SPOHNHOLZ objected for purposes of explanation.
9:33:08 AM
CO-CHAIR FIELDS explained Amendment 4 would move up by three
years the first deadline for the Clean Energy Standard. One
reason for that, he related, was the discussion by stakeholders
around potential ramp down of Cook Inlet gas production, which
motivated him to ramp up renewable energy generation and to more
quickly diversify Alaska's energy sources to provide consumers
with protection and options. Another factor in proposing to
move 2030 to 2027, he stated, is that under the bill the energy
generation doesn't have to be installed and operating by the
target date. A two-year time horizon goes beyond the target
date so a project could be approved in 2027 and deployed in
2029, he continued, and given that it made sense to move the
date to 2027. Many projects deployed under this bill will be
operational in 2029, he added.
9:34:20 AM
REPRESENTATIVE NELSON asked whether the AEA has been contacted
as to whether moving down three years is a realistic goal.
CO-CHAIR FIELDS replied that he hasn't talked to AEA but has
shared this with the utilities. He said Amendment 3 was also
based on suggestion from previous testifiers. He noted that the
bill as introduced by the Dunleavy Administration had 2025 as
the first target, so 2027 meets in the middle. He invited Ms.
Julie Estey to speak to the dates.
9:35:13 AM
JULIE ESTEY, Director, External Affairs & Strategic Initiatives,
Matanuska Electric Association (MEA), responded that the
utilities have been consistent in wanting this first deadline to
offer some additional flexibility from the initial governor's
bill in recognition of regular project timelines that could
cause further delays. She said [the utilities] would prefer
that it remain 2030 in recognition of project timelines. In
working with renewable energy developers and developing
projects, she continued, [the utilities must go through]
permitting and land acquisition, and one current power producer
is running into increased costs of solar panels and financing
due to the global unrest. In consideration of the realities of
making this happen, [the utilities] would prefer that it remain
at 2030.
9:36:32 AM
CO-CHAIR SPOHNHOLZ drew attention to subsection (d) on page 4 of
the bill, beginning on line 20, which states "if the capacity
will begin providing the clean electrical energy to the load-
serving entity not later than (1) two years after the end of the
compliance period". She said she interprets that to mean that
amending the year to 2027 for the first goal would result in not
having anything online [until] 2029. She asked whether Mr.
Chris Rose has the same reading or any concerns about the
[proposed date change].
9:37:33 AM
CHRIS ROSE, Executive Director, Renewable Energy Alaska Project
(REAP), answered that that is the way he would read it. The
original bill had 2025, he said, and he has concerns with moving
it to 2030. The Railbelt utilities are currently at about 20
percent, he stated, so it would be moving from 20 percent to 25
percent by 2027. He further noted that the original bill's
requirement of 30 percent has been moved down to 25 percent, so
the amount of electricity that must be renewable by 2027 has
already been reduced by 5 percent. As pointed out by Co-Chair
Fields, he continued, moving to 2027 would require that the
projects be in service and delivering electricity by 2029, which
is seven years away. He said there are many small projects that
the utilities could be undertaking right now that would move
toward that, plus there is waiver language in the bill that
would allow the utilities to make a case to the RCA if they felt
there was something that really prevented them from getting to
the 25 percent by 2027. He said REAP supports Amendment 3 to
move it to 2027.
9:39:00 AM
CO-CHAIR SPOHNHOLZ requested Mr. Rose to talk about the waiver
language and how he thinks that that provides utilities the
flexibility they need.
MR. ROSE replied that there are multiple elements to the waiver
language that the utilities could bring to the RCA to say they
tried to do this but couldn't for these reasons. Some of those
reasons could be the ones that Ms. Estey brought up, such as
problems with supply chains or transmission. He said the new
electric reliability organization (ERO) will hopefully be
certificated by this fall and will begin doing its first
integrated resource plan sometime next year. That plan, he
specified, will develop lots of alternative portfolios that will
eventually be approved by the RCA. Wind and solar projects can
be built in two years or less, he advised. If the requirement
was to go this direction in 2025 there is four years, he said,
two years until 2027 and then an additional two years under the
provisions of the bill to get it built and the project done.
Emphasis on moving this direction needs to continue, he
stressed, particularly given the availability of Cook Inlet gas.
He said REAP supports this important amendment.
9:41:03 AM
REPRESENTATIVE KAUFMAN stated he finds merit in the arguments of
potential difficulty and that current supply chain issues will
only get worse, as will inflation. Given global and US issues
with respect to the economy, inflation, and stagnation, he said
he believes [the legislature] must tread carefully. He added
that he doesn't see anything wrong with the utilities leading
the target knowing that requirements are coming, but not having
to go through the processes described. He said he will
therefore object to Amendment 3 although he appreciates some of
the arguments for it.
REPRESENTATIVE MCCARTY concurred with Representative Kaufman.
He said while flying over the Port of Seattle he saw a
diminished number of cargo containers in the port, and he has
heard that China is reducing [its exports]. The goal is
admirable, he said, but the timeline is too quick, so he agrees
with keeping it at 2030, plus the goal is not being diminished.
9:43:12 AM
REPRESENTATIVE KAUFMAN requested Ms. Estey's thoughts on this
subject.
MS. ESTEY offered a correction. She specified that by [the
utilities'] current calculations the Railbelt is around 15.3
percent renewable, so it would be a jump of 10 percent, which is
significant. She stated that the high capital-intensive utility
industry has a long lead time for developing a project. While
she hears Mr. Rose's point about going to the RCA with the
reasons [the utilities] can't meet this goal, she said the
preference is to set goals that are achievable. In establishing
this big policy, she argued, one of the worst things that could
happen would be to set it up for the utilities not to make that
first goal. Setting it to 2030 gives a longer line of sight and
takes in the realities of permitting, interconnection, and
transmission which take substantial time. For example, she
continued, MEA has now been going through a transmission line
process for a couple years and is looking at potential legal
challenges, so there are just significant realities. She
pointed out that under the bill's provisions the RCA will have
two years after the bill's passage to promulgate regulations,
meaning the regulations wouldn't be out until 2024 if the bill
is passed in 2022. As to the integrated resource plan, she
noted that it will be a year at best before all the pieces are
in place to start the integrated resource planning and then
another year or two after that. [The utilities] want the
timelines to be realistic and achievable, Ms. Estey stated. The
utilities are not trying to push back, she stressed, the
utilities are saying this isn't realistic.
9:46:10 AM
CO-CHAIR FIELDS stated he is tired of the utilities moving the
goalposts as he didn't hear any concerns yesterday when he told
Ms. Estey about this deadline. He said he previously heard
support from the utilities for compromising, and 2027 and 25
percent is a compromise. This is moving way slower on renewable
energy than almost any other set of utilities in the US has
moved, he asserted. Keeping it at 2030 is 10 years before
requiring a single kilowatt hour from renewable energy from
flowing into the grid which, he argued, is indefensible. The
governor put out a fairly aggressive target, he continued, and
he has worked in good faith to advance compromise.
9:47:11 AM
A roll call vote was taken. Representatives Schrage, Snyder,
Fields, and Spohnholz voted in favor of Amendment 4.
Representatives Kaufman, McCarty, and Nelson voted against it.
Therefore, Amendment 4 to CSHB 301(ENE) was adopted by the House
Labor and Commerce Standing Committee by a vote of 4-3.
9:47:59 AM
The committee took an at-ease from 9:47 a.m. to 9:48 p.m.
9:48:23 AM
CO-CHAIR FIELDS moved to adopt Amendment 5 to CSHB 301(ENE),
labeled 32-GH2546\W.5, Klein, 5/4/22, which read:
Page 7, line 25, following "is":
Insert "generated from capacity built on or after
July 1, 2022, that generates electrical energy"
9:48:26 AM
CO-CHAIR SPOHNHOLZ objected for purposes of explanation.
9:48:27 AM
CO-CHAIR FIELDS spoke to Amendment 5. He said the original bill
introduced by the administration had no renewable energy
credits. Renewable energy credits, he explained, provide
utilities with additional flexibility in terms of meeting the
goal because a rural community off the Railbelt could build
renewable energy generation where maybe the net savings to
consumers is greater and sell renewable energy credits to
Railbelt utilities. He related that in discussion in the House
Special Committee on Energy it wasn't clear when projects had to
be online to qualify for these renewable energy credits. Also
heard, he noted, was concern from utilities about requiring re-
litigation of the Bradley Lake Agreement, so in the interest of
not re-litigating the Bradley Lake Agreement and tariff issues,
Amendment 5 clarifies that renewable energy credits under this
bill would be for generation built on or after 7/1/2022. He
said this gives additional flexibility for utilities and gives
rural Alaska stake in the success of the bill.
9:49:39 AM
REPRESENTATIVE NELSON offered his understanding that the credits
would be available to any company that has developed energy from
7/1/22 onward.
CO-CHAIR FIELDS replied yes, Amendment 5 is for projects going
forward, it clarifies that this is new generation. It would be
pointless to write a renewable portfolio standard (RPS) that
would count all the existing hydropower in Southeast Alaska, he
explained. But, he said, if communities in Southeast Alaska or
Western Alaska want to build additional renewable capacity and
count that toward the RPS goal for the Railbelt under this bill,
then it is a win-win.
REPRESENTATIVE NELSON inquired about the kind of projects that
energy producers might have online soon and whether they could
utilize this credit almost immediately.
CO-CHAIR FIELDS answered that several projects listed in the AEA
portfolio are funded under the Renewable Energy Fund, what is
called a waterfall, so it is the prioritized projects. He
invited Mr. Rose to detail some of the potential near-term
projects in rural Alaska that could qualify for renewable energy
credits under Amendment 5.
9:51:03 AM
MR. ROSE responded that the Renewable Energy Fund Advisory
Committee recently approved $14.9 million for projects. He said
he doesn't have a list of those projects, but some were
construction projects, of which many were feasibility on cost
and studies. He related that more than $600 million worth of
projects have moved forward since the Renewable Energy Fund was
developed in 2008. About 85 construction projects have been
developed through that fund, he continued, through both state
appropriations and matching funds from federal and local
entities. Many communities are working on projects right now,
he stated, because the technology continues to evolve and
because the very high electric rates in rural Alaska are
probably going to be much higher given oil prices. So, he
added, here is incredible incentive for those communities to
reduce their dependence on imported diesel for generation. Mr.
Rose said REAP believes there is going to be continued movement
on renewable energy across rural Alaska. He said he cannot
speak to future potential increases in hydroelectric generation
in Southeast Alaska, but it is a possibility.
9:52:39 AM
REPRESENTATIVE NELSON asked whether the credits in Amendment 5
would fall on a project that is halfway built or would not be
producing electricity for a couple years for a rural community.
MR. ROSE replied that he doesn't have the language in front of
him, but he thinks that that is an important point. He
suggested it could be clarified that projects that were under
construction as of July 2022 could be eligible because it is
possible that some projects are currently underway.
CO-CHAIR FIELDS stated that his intent is new projects, not
projects that are 98 percent completed.
9:53:38 AM
REPRESENTATIVE KAUFMAN asked whether Co-Chair Fields believes
the language in Amendment 5 is clear relative to his intent.
CO-CHAIR FIELDS answered that he thinks it is but will check
with Legislative Legal Services and if it isn't sufficiently
clear it can be cleaned up with an amendment on the floor.
REPRESENTATIVE KAUFMAN noted that he is okay with that.
9:54:13 AM
CO-CHAIR SPOHNHOLZ removed her objection to Amendment 5. There
being no further objection, Amendment 5 was adopted.
9:54:24 AM
CO-CHAIR FIELDS moved to adopt Amendment 6 to CSHB 301(ENE),
labeled 32-GH2546\W.6, Klein, 5/6/22, which read:
Page 4, line 17:
Delete "fine"
Insert "penalty"
Page 6, line 5:
Delete "fine"
Insert "penalty"
Page 6, line 7:
Delete "fine"
Insert "penalty"
Page 6, line 8, following "standard":
Insert "that must be invested by the load-serving
entity in clean energy generation"
Page 6, line 9:
Delete "fine"
Insert "penalty"
Page 7, line 2:
Delete "fine"
Insert "penalty"
Page 7, line 5:
Delete "fine"
Insert "penalty"
Page 7, line 9:
Delete "fine paid"
Insert "penalty incurred"
Page 7, line 12:
Delete "payment of the fine"
Insert "imposition of the penalty"
Page 7, following line 15:
Insert a new subsection to read:
"(f) To satisfy a penalty imposed under this section,
a load-serving entity shall invest an amount equal to
the penalty in clean energy generation for the benefit
of the entity's customers."
9:54:25 AM
CO-CHAIR SPOHNHOLZ objected for purposes of explanation.
9:54:26 AM
CO-CHAIR FIELDS explained that Amendment 6 is a suggestion from
the utilities that fines under the bill would be collected from
ratepayers because most utilities are cooperatives so there is
no other source of money. Additionally, he said, Amendment 6
cleans up the fine structure so that rather than having the fine
flow through the utility, then to the RCA, and back to the
utility, the fines would be changed to a penalty year. The
amendment, he continued, clarifies that any penalties under the
bill would be collected by the utility and reinvested in clean
energy generation to help meet the bill's intent. Amendment 6
does not change the amount of the fine, he related. He further
pointed out that the RCA's updated fiscal note is lower, in part
in recognition of Amendment 6 where the RCA will not be
collecting money. He stated that if there are any fines
implemented in this bill, consumers will be curious as to why
they are being fined, what the fine is going toward, and as a
consumer he would want to see that his cooperative, if fined,
would be reinvesting his dollars into renewable energy
generation. It is not a fine for the sake of a fine, he
stressed, it is a fine or penalty for the sake of meeting the
goals in this bill.
9:56:04 AM
REPRESENTATIVE NELSON, regarding the last section of Amendment
6, asked whether the amendment sponsor would be open to having
the fine rebated back to the customer originally.
CO-CHAIR FIELDS replied that he thinks if that were done there
would be no meaningful penalty for utilities failing to meet the
requirements of the bill.
CO-CHAIR SPOHNHOLZ interjected to indicate it might actually be
an incentive.
CO-CHAIR FIELDS continued his response with "unless we want to
have a personal penalty for the board members," but said he
doesn't want "to go there." He said he would prefer a fair
structure of having reasonable contents that will meet the goals
of the bill that don't personally penalize the people who work
for the utilities.
9:57:01 AM
CO-CHAIR SPOHNHOLZ removed her objection to Amendment 6. There
being no further objection, Amendment 6 was adopted.
9:57:10 AM
CO-CHAIR FIELDS moved to adopt Amendment 7 to CSHB 301(ENE),
labeled 32-GH2546\W.7, Klein, 5/4/22, which read:
Page 2, line 1, following the first occurrence of
"energy":
Insert "generated from capacity constructed on or
after July 1, 2022,"
9:57:11 AM
CO-CHAIR SPOHNHOLZ objected for purposes of explanation.
9:57:12 AM
CO-CHAIR FIELDS noted that Amendment 7 accompanies Amendment 5.
He said a request from the utilities was to have a consistent
tariff up and down the Railbelt for dispatch of renewable energy
but that it be structured in a way that doesn't re-litigate the
Bradley Lake Agreement. The virtue of a flat tariff throughout
the Railbelt, he explained, is that even if renewable energy
generation is deployed in, say, Seward, that energy should be
able to be dispatched up to Chugach Electric Association, or
Matanuska Electric Association, or Golden Valley Electric
Association without pancaking tariffs that disincentivize the
production and dispatch of such energy. He noted that in terms
of the structure of the drafting it took two amendments to do
that Amendment 5 and Amendment 7.
9:58:14 AM
CO-CHAIR SPOHNHOLZ removed her objection to Amendment 7. There
being no further objection, Amendment 7 was adopted.
9:58:23 AM
The committee took an at-ease from 9:58 a.m. to 10:22 a.m.
10:22:18 AM
CO-CHAIR FIELDS announced that CSHB 301(ENE) was held over.
10:22:36 AM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
10:22 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 301 Amendment #7 W.7 - Fields 5.5.22.pdf |
HL&C 5/6/2022 9:00:00 AM |
HB 301 |
| HB 301 Amendment #5 W.5 - Fields 5.5.22.pdf |
HL&C 5/6/2022 9:00:00 AM |
HB 301 |
| HB 301 Amendment #4 W.4 - Fields 5.5.22.pdf |
HL&C 5/6/2022 9:00:00 AM |
HB 301 |
| HB 301 Amendment #3 W.3 - Fields 5.5.22.pdf |
HL&C 5/6/2022 9:00:00 AM |
HB 301 |
| HB 301 Amendment #2 W.2 - Schrage 5.3.22.pdf |
HL&C 5/6/2022 9:00:00 AM |
HB 301 |
| HB 301 Amendment #1 W.1 - Schrage 5.3.22.pdf |
HL&C 5/6/2022 9:00:00 AM |
HB 301 |
| HB 301 Letter of Support 5.2.22.pdf |
HL&C 5/6/2022 9:00:00 AM |
HB 301 |
| SB 190 Amendment #1 - Fields 4.29.22.pdf |
HL&C 5/6/2022 9:00:00 AM |
SB 190 |
| SB 190 Amendment # 1 Legal Opinion - Legislative Legal 5.5.22.pdf |
HL&C 5/6/2022 9:00:00 AM |
SB 190 |
| HB 301 Fiscal Note RCA-RCA 5.6.22.pdf |
HL&C 5/6/2022 9:00:00 AM |
HB 301 |