Legislature(2009 - 2010)BUTROVICH 205

03/26/2009 11:00 AM Senate ENERGY

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Scheduled But Not Heard
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               SENATE SPECIAL COMMITTEE ON ENERGY                                                                             
                         March 26, 2009                                                                                         
                           11:19 a.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Lesil McGuire, Chair                                                                                                    
Senator Bill Wielechowski                                                                                                       
MEMBERS ABSENT                                                                                                                
Senator Lyman Hoffman                                                                                                           
Senator Albert Kookesh                                                                                                          
Senator Bert Stedman                                                                                                            
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 150                                                                                                             
"An Act establishing an emerging energy technology fund."                                                                       
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 136                                                                                                             
"An Act relating  to noncompetitive leases of state  land and for                                                               
rights-of-way  for oil  or natural  gas pipelines  that originate                                                               
and  terminate  within  the  state  and  to  the  regulation  and                                                               
certification  of   those  pipelines;  relating   to  conditional                                                               
certification for certain new natural  gas pipelines; relating to                                                               
definitions   of  "common   carrier"  and   "firm  transportation                                                               
service" in the Pipeline Act."                                                                                                  
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 135                                                                                                             
"An  Act  clarifying  the  purpose  of  the  Alaska  Natural  Gas                                                               
Development  Authority; and  relating to  definitions of  certain                                                               
terms in AS 41.41."                                                                                                             
     SCHEDULED BUT NOT HEARD                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 150                                                                                                                  
SHORT TITLE: EMERGING ENERGY TECHNOLOGY FUND                                                                                    
SPONSOR(s): SENATOR(s) MCGUIRE                                                                                                  
03/13/09       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/13/09       (S)       ENE, RES, FIN                                                                                          
03/26/09       (S)       ENE AT 11:00 AM BUTROVICH 205                                                                          
BILL: SB 136                                                                                                                  
SHORT TITLE: IN-STATE PIPELINES: LEASES; CERTIFICATION                                                                          
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
03/02/09       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/02/09       (S)       ENE, RES, FIN                                                                                          
03/19/09       (S)       ENE AT 11:00 AM BUTROVICH 205                                                                          
03/19/09       (S)       Scheduled But Not Heard                                                                                
03/26/09       (S)       ENE AT 11:00 AM BUTROVICH 205                                                                          
WITNESS REGISTER                                                                                                              
TREVOR FULTON, Staff                                                                                                            
  to Senator McGuire                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT:  Introduced SB 150 on behalf of the sponsor.                                                              
LARRY PERSILY, Aide                                                                                                             
  to the House Finance Committee                                                                                                
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT:  Provided prospective on the federal                                                                      
stimulus as it relates to SB 150.                                                                                               
BILL LEIGHTY                                                                                                                    
Alaska Applied Sciences, Inc.                                                                                                   
Juneau, AK                                                                                                                      
POSITION STATEMENT:  Testified in support of SB 150.                                                                          
CHRIS ROSE, Executive Director                                                                                                  
Renewable Energy Alaska Project (REAP),                                                                                         
POSITION STATEMENT:  Testified in support of SB 150.                                                                          
DENALI DANIELS                                                                                                                  
Denali Commission                                                                                                               
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Testified in support of SB 150.                                                                          
PAT PITNEY, Vice Chancellor                                                                                                     
University of Alaska Fairbanks                                                                                                  
Fairbanks, AK                                                                                                                   
POSITION STATEMENT:  Stated support for SB 150 on behalf of Gwen                                                              
Holdmann with the Alaska Center for Energy and Power.                                                                           
GREG BROWN                                                                                                                      
Juneau, AK                                                                                                                      
POSITION STATEMENT:  Testified in support of SB 150.                                                                          
KIRK HARDCASTLE                                                                                                                 
Taku River Reds                                                                                                                 
Juneau, AK                                                                                                                      
POSITION STATEMENT:  Testified in support of SB 150.                                                                          
DOUGLAS JOHNSON                                                                                                                 
Ocean Renewable Power                                                                                                           
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Testified in support of SB 150.                                                                          
KATE TROLL, Executive Director                                                                                                  
Alaska Conservation Alliance and Board Member of Alaska                                                                         
Renewable Energy                                                                                                                
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Testified in support of SB 150.                                                                          
BRENDON BABB, representing himself                                                                                              
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Stated support for SB 150.                                                                               
WAYNE WEIHING                                                                                                                   
Ketchikan, AK                                                                                                                   
POSITION STATEMENT:  Testified that SB 150 provides opportunity                                                               
for Alaska's future.                                                                                                            
JOE BALASH, Special Assistant to the Governor                                                                                   
  Energy and Natural Resource Issues                                                                                            
Alaska Capitol Building                                                                                                         
Juneau, AK                                                                                                                      
POSITION STATEMENT:  Presented SB 136 on behalf of the                                                                        
LARRY OSTROVSKY, Civil Division                                                                                                 
Oil, Gas & Mining Section                                                                                                       
Department of Law                                                                                                               
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Provided information related to SB 136.                                                                  
ROBERT STOLLER, Assistant District Attorney                                                                                     
Civil Division                                                                                                                  
Commercial/Fair Business Section                                                                                                
Department of Law                                                                                                               
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Provided information related to SB 136.                                                                  
ACTION NARRATIVE                                                                                                              
11:19:52 AM                                                                                                                   
CHAIR LESIL MCGUIRE called the Senate Special Committee on                                                                    
Energy meeting to order at 11:19 a.m. Present at the call to                                                                    
order were Senators Wielechowski and McGuire.                                                                                   
             SB 150-EMERGING ENERGY TECHNOLOGY FUND                                                                         
CHAIR MCGUIRE announced the consideration of SB 150.                                                                            
11:20:49 AM                                                                                                                   
TREVOR FULTON, Staff to Senator McGuire, introduced SB 150 and                                                                  
read the following into the record:                                                                                             
     Alaska has great potential to  become a world leader in                                                                    
     researching and developing  new energy technologies. We                                                                    
     have  a  unique   combination  of  remote  communities,                                                                    
     abundant energy resources -  both renewable and fossil-                                                                    
     based  -   and  a  stable  and   attractive  investment                                                                    
     environment.  SB 150  would  complete  that picture  by                                                                    
     creating a  mechanism for the  funding of  new research                                                                    
     and development (R&D) energy technology projects.                                                                          
     SB 150 establishes the  emerging energy technology fund                                                                    
     (EETF), which  would distribute  R&D funding  through a                                                                    
     competitive  grant program  aimed  at funding  projects                                                                    
     designed to research and  test new energy technologies.                                                                    
     The  fund would  be administered  by the  Alaska Center                                                                    
     for Energy  and Power (ACEP).  ACEP is a  University of                                                                    
     Alaska agency whose mission is  to meet state, industry                                                                    
     and  federal  demand  for applied  energy  research  in                                                                    
     order  to lower  the cost  of energy  throughout Alaska                                                                    
     and develop  economic opportunities for the  state, its                                                                    
     residents and its industries.                                                                                              
     The timing  for the creation  a state energy  fund like                                                                    
     the one created  by SB 150 is more  critical than ever.                                                                    
     The federal  government has committed over  $13 billion                                                                    
     to  renewable energy  research and  development through                                                                    
     the   American  Reinvestment   and  Recovery   Act  and                                                                    
     President   Obama   has   vowed  to   make   renewable,                                                                    
     alternative  and  clean  energy technology  a  top  and                                                                    
     continued  priority for  his administration.  In recent                                                                    
     years the Department of Energy  has offered millions in                                                                    
     federal  grants  that  typically   require  a  mere  20                                                                    
     percent cost share at the  state level. Every dollar of                                                                    
     state funding  invested in the  EETF could  generate up                                                                    
     to an additional four dollars in federal funding.                                                                          
     Alaska  has   the  available  natural   resources,  the                                                                    
     financial means  and the political  spirit to  become a                                                                    
     national   and  global   leader   in  researching   and                                                                    
     developing new energy technologies.  SB 150 creates the                                                                    
     funding  mechanism that  will help  us to  achieve that                                                                    
11:23:24 AM                                                                                                                   
CHAIR MCGUIRE said  she has been asked if the  spirit of the bill                                                               
came from the former Alaska  Science and Technology Fund. In part                                                               
it did, but  the idea here is to focus  on alternative energy and                                                               
establish a structure  so the fund is  managed appropriately. She                                                               
asked Mr.  Fulton to discuss  what the committee  substitute (CS)                                                               
MR. FULTON explained that the CS  makes two changes. The first is                                                               
to add a  five-member advisory committee that will  carry out the                                                               
business   of   soliciting,   reviewing   and   selecting   grant                                                               
applications. This  creates another  level of  separation between                                                               
the  agency  that   would  administer  the  fund   and  the  fund                                                               
recipients.  University members  would  not be  appointed to  the                                                               
board. He noted  that there had been concern  with the university                                                               
serving as  the oversight agency  because they likely would  be a                                                               
grant applicant or partner with  others to apply for funding. The                                                               
language  that  was used  is  loosely  modeled on  the  Renewable                                                               
Energy Fund  language and  is a common  model for  grant programs                                                               
managed at  universities nationwide.  It allows  a wide  range of                                                               
stakeholder voices  in the selection  process. The  second change                                                               
expands  the  definition  of   "eligible  applicant"  to  include                                                               
nonprofits as well as public and private sector entities.                                                                       
CHAIR MCGUIRE  asked him to  talk about the  educational criteria                                                               
for becoming a board member.                                                                                                    
MR. FULTON  explained that the  sponsor wanted to make  sure that                                                               
the board  members have the appropriate  scientific expertise and                                                               
background. The bill  requires that each member  of the committee                                                               
have a  degree in science or  engineering and at least  two years                                                               
experience working in Alaska.                                                                                                   
11:27:53 AM                                                                                                                   
SENATOR WIELECHOWSKI  asked if a private  company like ExxonMobil                                                               
could apply for and receive a grant under the bill.                                                                             
MR. FULTON  said he  doesn't see  any reason  why a  company like                                                               
that would be excluded.                                                                                                         
SENATOR WIELECHOWSKI  asked if  the bill  specifies the  means by                                                               
which the board will evaluate the proposals.                                                                                    
MR.  FULTON  replied  it  would  be  at  the  discretion  of  the                                                               
administering body, which  would be the Alaska  Center for Energy                                                               
and Power (ACEP).                                                                                                               
CHAIR  MCGUIRE said  the  idea is  for the  board  to decide  how                                                               
criteria would  be weighted. Chris  Rose is available  online and                                                               
can talk  about some of the  standards and there is  a handout in                                                               
the packet from ACEP, she said.                                                                                                 
11:30:05 AM                                                                                                                   
LARRY  PERSILY, Aide  to the  House Finance  Committee, said  his                                                               
experience in following  energy issues leads him  to believe that                                                               
alternative energy  and emerging  technologies will be  the issue                                                               
du  jour for  several years.  There  is a  significant amount  of                                                               
money in  the stimulus bill  and there will be  significant funds                                                               
in  federal budgets  for  years to  come  for energy  technology,                                                               
alternative energies and new research  that will help the country                                                               
reduce its reliance on fossil fuels.  The state would not want to                                                               
lose out  on a research grant  for lack of a  qualified applicant                                                               
or a mechanism  to do it. The question for  the Legislature is if                                                               
there is  a way to  improve the state's  odds of getting  some of                                                               
those grants.                                                                                                                   
11:32:13 AM                                                                                                                   
SENATOR WIELECHOWSKI asked  if the state having  a fund available                                                               
improves the odds of getting funds.                                                                                             
MR. PERSILY  said it's not  so much  having the fund  itself, but                                                               
having enough  people with the  skills, knowledge,  and expertise                                                               
to look for opportunities.                                                                                                      
SENATOR   WIELECHOWSKI   asked   if  he   envisions   this   fund                                                               
establishing  a position  for  someone  to go  out  and look  for                                                               
alternative energy or emerging technology grants.                                                                               
MR.  PERSILY replied  he hasn't  thought  to that  detail. He  is                                                               
looking  at whether  there  are federal  dollars  or programs  in                                                               
years to come  that the state has  a chance at and  would want to                                                               
make  a considered  effort to  go after.  It could  be funding  a                                                               
position or staff  or board members who serve  for honorarium. It                                                               
might not  be an employee, but  you need to have  somebody who is                                                               
paying attention, he said.                                                                                                      
11:34:15 AM                                                                                                                   
CHAIR  MCGUIRE said  the  idea  was to  put  the  fund under  the                                                               
authority  and management  of the  Alaska Center  for Energy  and                                                               
Power because  it has an  administrative construct in  place, but                                                               
it will be interesting to see  how the board evolves. Her hope is                                                               
that  this will  draw  attention from  venture capital  companies                                                               
that might be looking for incentives  to locate in Alaska. It was                                                               
purposefully not  funded; it's a shell  and an idea. In  her view                                                               
it was  shortsighted to  remove the  statutory language  from the                                                               
Science and Technology Fund.                                                                                                    
11:36:01 AM                                                                                                                   
CHRIS ROSE,  Executive Director, Renewable Energy  Alaska Project                                                               
(REAP), said REAP is a coalition  of more than 60 urban and rural                                                               
electric  utilities,  businesses, conservation  groups,  consumer                                                               
groups,  and  Alaska Native  organizations  with  an interest  in                                                               
developing  Alaska's   renewable  energy  resources.   State  and                                                               
federal  agencies  contribute  in   an  advisory  capacity.  REAP                                                               
supports  SB 150  and  feels it  is a  niche  in Alaska's  energy                                                               
portfolio and policy that is much needed.                                                                                       
Currently the  renewable energy  grant fund  uses state  money to                                                               
fund commercial  and mature technology  projects, but there  is a                                                               
huge  need  to  do  research and  development  and  demonstration                                                               
projects because Alaska has some  of the highest utility rates in                                                               
the nation.  At the same  time the  state has many  renewable and                                                               
fossil resources  that could be  developed, but  the technologies                                                               
for  development aren't  yet commercial.  For example,  tidal and                                                               
wave power  hold tremendous opportunity for  coastal villages and                                                               
communities statewide,  but the technology isn't  yet mainstream.                                                               
Battery  storage  is  another   huge  opportunity.  Alaska  could                                                               
develop the  technology for use in  the state and for  export. In                                                               
fact,  a lot  of the  technologies  that could  be developed  for                                                               
Alaskans  could  be technology  and  expertise  that is  exported                                                               
around  the  world. An  advantage  to  demonstrating projects  in                                                               
Alaska is  that it also saves  money for the people  in the state                                                               
who  are  using that  technology.  For  example,  a 45  cent  per                                                               
kilowatt hour tidal  project wouldn't be much help  to anybody in                                                               
the Lower 48, but  it would be very helpful to  a village that is                                                               
using diesel power to generate electricity.                                                                                     
MR.  ROSE  said there  is  also  a  huge opportunity  to  attract                                                               
federal money  as more comes  available for R&D in  renewable and                                                               
alternative energy. A  program such as the one created  by SB 150                                                               
is necessary  to get in  line and  apply for funding.  The Alaska                                                               
Center  for Energy  and Power  is well  suited and  positioned to                                                               
administer this program and the  proposed advisory committee is a                                                               
way to  insulate the  university from  any potential  conflict of                                                               
interest.  This simply  creates the  shell to  attract state  and                                                               
federal money to help Alaska and Alaskans, he said.                                                                             
11:40:40 AM                                                                                                                   
CHAIR  MCGUIRE thanked  Mr. Rose  for  his help  in getting  this                                                               
concept off the ground.                                                                                                         
DENALI DANIELS,  representing the  Denali Commission,  noted that                                                               
yesterday she  sent a letter that  was signed by the  federal co-                                                               
chair.   She  explained   that  the   Denali  Commission   is  an                                                               
independent  federal   agency  with  seven   commissioners.  Each                                                               
program area operates under the  advisory committee structure and                                                               
each  committee  makes   recommendations  about  policy,  project                                                               
selection and funding determinations.                                                                                           
The energy program is the  Denali Commission's legacy program. In                                                               
1998  the commission's  original  intent was  to bring  deficient                                                               
bulk fuel facilities  into EPA compliance. Today the  focus is on                                                               
bulk  fuel,  power  plant   upgrades  and  alternative  renewable                                                               
energy.  The  energy advisory  committee  has  been developing  a                                                               
strategy for  funding alternative renewable programs  and roughly                                                               
$10  million  is  currently  available.   Part  of  the  strategy                                                               
includes emerging  technologies. The commission  has historically                                                               
been involved  in pilot projects  including the  Chena geothermal                                                               
project, a hydrokinetic project in  Eagle, and the Alaska Village                                                               
Electric  Cooperative Inc.  (AVEC)  high  voltage direct  current                                                               
feasibility  project.   All  of   these  projects   have  created                                                               
efficiencies  and have  further developed  technologies. At  some                                                               
point they  can become eligible  for the renewable fund  that the                                                               
state funded this last year.                                                                                                    
11:43:45 AM                                                                                                                   
MS.  DANIELS   said  this  initiative  is   consistent  with  the                                                               
commission's vision  that emerging technology is  instrumental in                                                               
the  overall  continuum for  energy  development  in Alaska.  The                                                               
commission  has been  in active  dialog with  ACEP, REAP  and the                                                               
national renewable laboratory (NREL)  to develop a partnership to                                                               
fund emerging technologies. Hopefully  some stimulus funding will                                                               
be included.                                                                                                                    
The Denali  Commission held  its quarterly  meeting last  week in                                                               
Juneau and  they heard a  great deal of positive  testimony about                                                               
the commission's  efforts to support emerging  technology. SB 150                                                               
was mentioned frequently. From our  perspective, it's our role to                                                               
help to  leverage resources  and we  hope to have  a seat  at the                                                               
table as SB 150 moves forward, she said.                                                                                        
11:45:55 AM                                                                                                                   
CHAIR MCGUIRE  said the  Denali Commission will  be added  to the                                                               
list of resources.                                                                                                              
PAT  PITNEY, Vice  Chancellor,  University  of Alaska  Fairbanks,                                                               
said she is  with the UAF administration, but she  is speaking on                                                               
behalf of Gwen Holdmann who is  with the Alaska Center for Energy                                                               
and Power. She  is attending an energy conference  in London. Ms.                                                               
Pitney described the fund as an  essential piece for the state to                                                               
focus  research on  things that  will  be of  benefit in  Alaska.                                                               
Energy  funds are  available  and will  be  used nationwide,  but                                                               
Alaska will be  better off to the degree that  it can apply those                                                               
funds to problems in Alaska.                                                                                                    
MS. PITNEY said  it makes no difference to the  university if the                                                               
fund is managed by ACEP, AEA,  or the Denali Commission. There is                                                               
a level of expertise with the  Alaska Center for Energy and Power                                                               
that makes it a reasonable  choice for selection and the advisory                                                               
committee is essential. But what  this does is strengthen the tie                                                               
between  the  university  research  and the  application  of  the                                                               
technology  in society.  The  key  points are  that  the fund  is                                                               
essential  and although  the university  would do  a good  job as                                                               
manager, it isn't essential. "We  are 100 percent behind the idea                                                               
of the  fund and the essentialness  of the fund to  attract those                                                               
federal dollars to put towards Alaska's problems," she said.                                                                    
11:48:51 AM                                                                                                                   
BILL LEIGHTY said he is a 37  year resident of Juneau and a small                                                               
business  owner.  Alaska  Applied  Sciences  Inc.  owns  14  wind                                                               
machines in Palm  Springs that he maintains. He  also does energy                                                               
consulting. The  last 8 years he  has spent most of  his time pro                                                               
bono  as  a  director  of  the  Leighty  Foundation  co-authoring                                                               
research  papers  on  the problem  of  transmission  and  firming                                                               
storage for stranded renewable energy.  The foundation also funds                                                               
nonprofit organizations to do energy policy research.                                                                           
MR.  LEIGHTY  noted that  earlier  in  the  week he  emailed  all                                                               
legislators a paper  he will present on March 31  at the National                                                               
Hydrogen  Association  annual  meeting.   The  title  is  "Alaska                                                               
Village Survival:  Affordable Energy Independence  via Renewables                                                               
Firmed  via Hydrogen  Storage in  Liquid Anhydrous  Ammonia." The                                                               
essence  of   the  research  that's   promoted  is   that  energy                                                               
independence for villages  requires annual-scale firming storage.                                                               
He  told the  committee that  last week  he testified  before the                                                               
Denali Commission  to suggest that  they place $5 million  of the                                                               
$10 million  that is available  for renewable energy in  this new                                                               
emerging energy technology fund should it become law.                                                                           
MR. LEIGHTY provided  an example of a project.  He explained that                                                               
pro  bono he  helped write  a  grant application  for AEL&P,  the                                                               
local electric utility,  under HB 152. [25   Legislature - An Act                                                               
establishing a  renewable energy  grant fund.] It  wasn't funded,                                                               
primarily because  it was too  much an (R&D) project  and perhaps                                                               
people didn't understand that it  had village application. But it                                                               
is a  good match for  SB 150 and it  is shovel-ready in  that the                                                               
application has  already been written,  he said. That  project is                                                               
referenced in  the research paper because  it emphasizes storage.                                                               
It's an R&D  project and demonstration project  that would happen                                                               
at AEL&P because you want to  do a research project close to good                                                               
support and  in a  major city  before it's  propagated out  to an                                                               
Alaska village. He noted that  he recently emailed some suggested                                                               
modifications to the bill.                                                                                                      
MR.  LEIGHTY agreed  with  Mr. Rose  that  Alaska has  particular                                                               
needs  and  opportunities. Some  of  those  opportunities can  be                                                               
pioneered  here  in  Alaska  and  may  have  U.S.  and  worldwide                                                               
application so it's important to pass  SB 150 to create the fund.                                                               
"I  recommend  that you  move  this  out  of committee  and  that                                                               
somewhere  in the  Legislature it  receive an  appropriation," he                                                               
CHAIR MCGUIRE  said she  looks forward to  reading his  paper and                                                               
he's invited to visit her office to discuss it.                                                                                 
11:52:08 AM                                                                                                                   
GREG BROWN, representing  himself, said he was  the president and                                                               
CEO  of  Schneider Electric  in  Canada  and Latin  America,  the                                                               
largest    electrical   distribution    and   control    products                                                               
manufacturer in the world. He is  also a former president and CEO                                                               
of the  company that makes  Zantrex inverters. Although  he's now                                                               
retired  and  living in  Juneau,  he  is  doing work  in  Ontario                                                               
Canada.  That   province  probably   has  the   most  progressive                                                               
alternative energy  program in the Northern  Hemisphere, he said.                                                               
Their Legislature set up the  renewable energy standard operating                                                               
program to  attract outside money to  develop alternative energy.                                                               
He is  working for Silicon Solar  Inc. to do a  30 megawatt solar                                                               
project there.  Another project he's  working on is  called plug-                                                               
and-play  and it  could  supply 100  kilowatts  to remote  Alaska                                                               
villages. Standard components are used  to hook up to wind power,                                                               
solar, tidal or  anything that generates power and  then it's run                                                               
through an inverter.                                                                                                            
MR. BROWN said  that about six months ago he  gave an alternative                                                               
energy presentation and in that  presentation his company offered                                                               
to give the University of Alaska  a cutting edge wind machine. In                                                               
return  they wanted  information. The  machine is  in route  from                                                               
Spain and will  likely end up in his garage  since the university                                                               
recently  told  him that  they  probably  won't be  accepting  it                                                               
because of  funding problems. This  is a concern because  this is                                                               
an opportunity to  work with a seasoned company to  use a cutting                                                               
edge product, he said.                                                                                                          
11:55:07 AM                                                                                                                   
MR.  BROWN said  he  is also  working on  a  biomass facility  on                                                               
Prince of  Wales Island  using pellets.  The raw  materials would                                                               
come  from  thinning  the  forest and  sawdust  from  the  mills.                                                               
They've  also experimented  with  using 5  percent cardboard  and                                                               
mixed paper.  This project  would employ  about 20  people, solve                                                               
recycling issues and provide heat. He  described SB 150 as a good                                                               
first step  in making Alaska a  technology state and a  leader in                                                               
the industry.                                                                                                                   
CHAIR  MCGUIRE  commented that  if  nothing  else this  bill  has                                                               
brought out some very interesting people.                                                                                       
11:57:01 AM                                                                                                                   
KIRK  HARDCASTLE,  Taku  River  Reds, said  he  is  a  commercial                                                               
fisherman  in Southeast  and he  has identified  fish waste  as a                                                               
tremendous renewable resource. In Juneau  alone between 12 and 15                                                               
million  pounds  of  fish  waste  goes  into  the  water.  He  is                                                               
currently working  with the  Alaska Energy  Authority (AEA)  on a                                                               
feasibility study to  recover up to 100,000  gallons of biodiesel                                                               
from fish  waste. Primarily it will  be used for heating,  but it                                                               
might have  power application as well.  He would like to  be able                                                               
to venture to find sources for the product.                                                                                     
MR. HARDCASTLE said when he  visited Finland he learned that some                                                               
older  communities that  were no  longer economically  viable had                                                               
started to venture into emerging  technologies. Right now Finland                                                               
is  one of  the  few nations  putting  positive investments  into                                                               
alternative  energies and  emerging energy  technologies. It  has                                                               
the only commercialized fish waste  to biodiesel production plant                                                               
in  existence. Most  places, like  Dutch Harbor,  use fish  waste                                                               
only as  an in-house  supplement. What  was more  impressive than                                                               
the  Finnish   technology  was  their  ability   to  redevelop  a                                                               
workforce.  They created  vocational  tech schools  and spun  the                                                               
graduates out  to business tech schools  and research technology.                                                               
Right now  they are  exporting emerging  technology ideas  to the                                                               
rest  of the  world. There  are a  lot of  analogies for  Alaska.                                                               
Finland leveraged  innovation and  Alaska can  do that  with this                                                               
bill.  Also,  SB  150  will help  his  small  alternative  energy                                                               
business cross the tipping point into the commercial realm.                                                                     
12:01:28 PM                                                                                                                   
DOUGLAS JOHNSON, Alaska Projects  Director, Ocean Renewable Power                                                               
Company LLC.  (ORPC), Anchorage, said  he is pleased to  speak in                                                               
support  of  SB 150  because  it's  just  what Alaska  needs.  He                                                               
explained  that ORPC  is  currently  developing two  hydrokinetic                                                               
projects in  Alaska: the  Cook Inlet Tidal  Power project,  and a                                                               
river project on  the Tanana and Nenana. ORPC was  started on the                                                               
east  coast   and  has  received   financial  support   from  the                                                               
technology funds established in  Massachusetts and Maine, both of                                                               
which  are similar  to the  fund created  by SB  150. This  is an                                                               
opportunity but  it will take  work to develop  that opportunity,                                                               
he said.                                                                                                                        
MR. JOHNSON said he has worked  with the Alaska Center for Energy                                                               
and  Power and  feels it  is a  credible and  professional agency                                                               
that will do a  good job administering the fund if  it is set up.                                                               
Alaska is one  of the few places  in the world that  has the full                                                               
sweet of renewables.  There is tremendous potential  here and the                                                               
biggest challenge is  transmission and storage. He  noted that as                                                               
a  company ORPC  is  up against  some  technology challenges  and                                                               
would  like to  work  cooperatively with  the  university in  R&D                                                               
efforts to  optimize their  technology and  be more  effective in                                                               
the work they are doing in Cook Inlet and Nenana.                                                                               
MR.  JOHNSON  said he  is  speaking  directly  to ocean  &  river                                                               
technologies,  but there  is  also  opportunity in  transmission,                                                               
storage,  biomass  to combine  heat  and  power, low  temperature                                                               
geothermal, and wind turbine optimization.  There's a lot of work                                                               
to do  but without  an emerging energy  technology fund,  it more                                                               
than  likely won't  happen, he  said.  It is  happening in  other                                                               
states and Alaska needs to get on the bandwagon.                                                                                
12:05:30 PM                                                                                                                   
KATE  TROLL,  Executive  Director, Alaska  Conservation  Alliance                                                               
(ACA), said she also serves on  the board of the Renewable Energy                                                               
Alaska Project.  She highlighted  that clean energy  is estimated                                                               
to be a $55 billion business and  is recognized as one of the few                                                               
bright  spots in  the world  economy. Because  Alaska has  world-                                                               
class resources it is incumbent upon  the state to be a leader in                                                               
renewable energy. She said she  is particularly excited about the                                                               
development  of  hybrid systems  for  distribution  of energy  in                                                               
rural  Alaska. The  220 villages  provide  a natural  laboratory.                                                               
This is  something the world  will need  with the over  2 billion                                                               
people in the developing world  looking for levels of energy. The                                                               
projects are  exciting and it's  exciting that they will  in turn                                                               
create jobs in rural Alaska where they are very much needed.                                                                    
MS. TROLL  stressed the importance  of leveraging  federal funds.                                                               
Mr. Persily  spoke of  federal funds that  may be  available from                                                               
the  federal   stimulus,  but  ACA  anticipates   there  will  be                                                               
additional funds  as Congress considers climate  change and other                                                               
energy-related legislation. Clearly it's  a smart move for Alaska                                                               
to have the  fund in place. She said she  understands that the CS                                                               
expands the eligible applicant pool  to include private companies                                                               
and it  adds the  advisory council.  She supports  those efforts.                                                               
She thanked  the Legislature for  establishing the fund  and said                                                               
it's critical that Alaska continue to be an energy leader.                                                                      
12:08:13 PM                                                                                                                   
BRENDON BABB,  representing himself,  stated support for  SB 150.                                                               
He drew an analogy  between JFK working to put a  man on the moon                                                               
and harnessing  the moon  to help  man. There  is huge  amount of                                                               
tidal resource here  and it's the moon that  causes these amazing                                                               
tides that Alaska has, he  said. Tidal power, geothermal and wind                                                               
are tremendous resources  that Alaska enjoys, and  this fund will                                                               
allow for R&D  as well as demonstration projects  to harness that                                                               
energy and  benefit rural  villages. This  is an  opportunity for                                                               
Lower 48 companies  to collaborate to do  a demonstration project                                                               
and  be able  to  say that  they  are saving  money  for a  rural                                                               
village at the same time.                                                                                                       
A  lot  of  the  world  looks  like  rural  Alaska  in  terms  of                                                               
remoteness and  lack of electricity. People  want electricity and                                                               
they want  it yesterday so there  is a huge marketplace  in which                                                               
to  sell any  new technology.  Emerging energy  is a  $55 billion                                                               
industry  that is  expected to  quadruple  by 2015.  This is  the                                                               
modern day  race to  put a man  on the moon.  Sadly, the  U.S. is                                                               
behind in that race, but  the emerging energy technology fund and                                                               
Alaska's vast natural  resources can make this state  a leader in                                                               
the U.S. and the world. The timing is perfect.                                                                                  
CHAIR MCGUIRE said  the Legislature has spent a lot  of time this                                                               
session  talking   about  alternative  energy  as   a  method  of                                                               
sustaining reliable  energy and  testimony today points  out that                                                               
it also provides opportunity for the creation of jobs.                                                                          
12:10:59 PM                                                                                                                   
WAYNE WEIHING,  representing himself from Ketchikan,  said SB 150                                                               
provides  opportunity  for  Alaska's  future. It  will  help  the                                                               
workforce  and address  energy issues  in  small communities.  In                                                               
Southeast  small communities  like  Kake and  Angoon are  hurting                                                               
because  of  power  generation  costs.  Right  now  Ketchikan  is                                                               
running on  diesel power  rather than  hydro because  lake levels                                                               
aren't  replenishing  in the  cold  weather.  Instead of  running                                                               
diesels there  is the opportunity  to generate backup  power with                                                               
tidal,   he  said.   The  opportunities   are  exciting   and  he                                                               
appreciates the  forward thinking  of the  committee to  put this                                                               
fund in place.                                                                                                                  
CHAIR MCGUIRE announced she would hold SB 150 in committee.                                                                     
        SB 136-IN-STATE PIPELINES: LEASES; CERTIFICATION                                                                    
CHAIR MCGUIRE announced the consideration of SB 136.                                                                            
12:13:05 PM                                                                                                                   
JOE  BALASH, Special  Assistant to  the Governor  for Energy  and                                                               
Natural Resource  Issues, said SB  136 is part of  the Governor's                                                               
three-part  plan  to initiate  an  instate  natural gas  pipeline                                                               
project.  The first  part is  to  secure funding  in the  current                                                               
legislative budget cycle to initiate  work to define the need for                                                               
and  timing of  a pipeline  to deliver  natural gas  to Alaskans,                                                               
particularly  in  areas where  it's  needed  most. That  includes                                                               
conducting an alternatives analysis,  selecting a route, applying                                                               
for  major  permits   including  rights-of-way,  identifying  the                                                               
source of gas  and customers, and bringing all  the technical and                                                               
commercial pieces  together to create an  opportunity to sanction                                                               
a  project as  early as  2011. The  Governor has  appointed Harry                                                               
Noah,  a former  DNR commissioner,  as project  manager for  this                                                               
first part.                                                                                                                     
The second  part of the plan  is a separate piece  of legislation                                                               
to  change  the statutory  missions  of  the Alaska  Natural  Gas                                                               
Development Authority. The notion is to broaden the horizon.                                                                    
The third  part, which is contained  in SB 136, makes  changes to                                                               
the  Right-of-Way  Leasing  Act  and the  Pipeline  Act  for  the                                                               
purpose of facilitating the  commercial and business arrangements                                                               
between shippers  of gas, a  pipeline project, and  the customers                                                               
that will be necessary for a commercial project to move forward.                                                                
12:15:11 PM                                                                                                                   
MR.  BALASH  explained that  in  late  2008  and early  2009  the                                                               
administration  began  discussions  with the  parties  that  were                                                               
interested in  pursuing a  bullet pipeline  project, specifically                                                               
Enstar and  Anadarko, and  identified some  things that  could be                                                               
smoothed  out  to  make  the process  flow  easier.  The  biggest                                                               
potential roadblock  they identified  was that under  current law                                                               
state  right of  way leases  require that  a pipeline  and lessee                                                               
commit  to providing  common carrier  service  on that  pipeline.                                                               
Describing common carrier service as  the gold standard of access                                                               
for  shippers of  gas, he  explained that,  in general,  a common                                                               
carrier pipeline  has to  provide service to  any and  all comers                                                               
when  requested.  If shippers'  requests  for  service reach  the                                                               
maximum  capacity of  that pipeline,  the pipeline  must pro-rate                                                               
the existing shippers and make room for the new entrant.                                                                        
MR. BALASH  pointed out that  a 24  inch pipeline from  the North                                                               
Slope  to Southcentral  is certainly  a world-class  project that                                                               
would require some significant financial  commitments on the part                                                               
of  the players  in order  to secure  the financing  necessary to                                                               
construct the project. The shipper,  in this case Anadarko, would                                                               
like contractual certainty  that they won't be  pro-rated if they                                                               
make the  financial commitments to  develop a gas field  and then                                                               
want to  get that gas  to market.  They want certainty  that they                                                               
won't lose any  of their capacity in the pipe  so that they'll be                                                               
able to  follow through on  contractual commitments  they've made                                                               
to customers in terms of delivery.                                                                                              
12:17:31 PM                                                                                                                   
MR.  BALASH said  that  as the  administration  moved forward  to                                                               
introduce  the  bill  and was  taking  into  consideration  other                                                               
dynamics with regard to the role  and scope of ANGDA and the need                                                               
to get  gas to more  than just Southcentral Alaska,  the Governor                                                               
asked  why   the  kind  of   provisions  they  were   asking  the                                                               
Legislature to make for a bullet  line aren't good enough for any                                                               
other pipeline.  Thus SB 136  is drafted  in a manner  that would                                                               
apply to all instate pipelines.                                                                                                 
MR.  BALASH said  he would  throw out  one caveat  before getting                                                               
into   the  sectional   analysis.  That   is  that   because  the                                                               
administration did  its homework  with parties interested  in the                                                               
bullet  line,  they   did  not  do  the   homework  necessary  to                                                               
understand  how  these changes  might  impact  the operations  of                                                               
existing pipelines in Cook Inlet  and in particular the potential                                                               
impact to future pipelines in Cook Inlet.                                                                                       
CHAIR MCGUIRE said the bill is not retroactive in nature.                                                                       
MR. BALASH said that's correct.                                                                                                 
CHAIR MCGUIRE asked if there are  any pipelines that are in early                                                               
stages that this may impact.                                                                                                    
MR.  BALASH replied  he isn't  aware  of any  but the  bill is  a                                                               
fairly  complicated body  of law,  particularly  in the  Pipeline                                                               
Act.  With the  Chair's  indulgence  he said  he  may defer  some                                                               
questions  to  the  attorneys who  are  online  representing  the                                                               
Department of Law and the Regulatory Commission of Alaska.                                                                      
12:20:00 PM                                                                                                                   
CHAIR MCGUIRE noted  that page 10, line 11, says  that the Act is                                                               
effective immediately.  She asked  Mr. Ostrovsky and  Mr. Stoller                                                               
if  they see  any impact  to  existing pipelines  in Cook  Inlet.                                                               
Existing pipelines  would probably  argue that they  shouldn't be                                                               
forced  to  be  common  carriers  when,  looking  forward,  other                                                               
pipelines  have  the opportunity  to  be  contract carriers,  she                                                               
LARRY  OSTROVSKY,  Civil Division,  Oil,  Gas  & Mining  Section,                                                               
Department of  Law, Anchorage,  agreed with  Mr. Balash  that the                                                               
bill is written to be prospective.  It would apply to anybody who                                                               
is  going  to apply  for  a  pipeline  right-of-way lease  so  it                                                               
applies equally to every intrastate pipeline.                                                                                   
SENATOR  WIELECHOWSKI asked  if these  provisions would  apply if                                                               
the line were built intrastate from Prudhoe Bay to Valdez.                                                                      
MR. OSTROVSKY replied they would apply.                                                                                         
SENATOR WIELECHOWSKI  asked if this  would apply to a  line built                                                               
under AGIA by TransCanada Alaska to Valdez.                                                                                     
MR.  OSTROVSKY  said this  is  designed  for gas  pipelines  that                                                               
originate  and terminate  within Alaska.  He cited  Section 3  on                                                               
page 2, line 19.                                                                                                                
ROBERT  STOLLER,  Assistant  District Attorney,  Civil  Division,                                                               
Commercial/Fair Business  Section, Department of  Law, Anchorage,                                                               
stated agreement with Mr. Ostrovsky.                                                                                            
CHAIR MCGUIRE said at least  one proposal envisions supplying the                                                               
LNG plant  in Kenai  for export capacity.  Noting that  this goes                                                               
back to the  FERC decision on jurisdiction, she  asked what would                                                               
happen if  the line meets  the requirements under Section  3, but                                                               
it's envisioned, and it happens, that  export of LNG comes out of                                                               
that line.                                                                                                                      
MR. BALASH said  the fundamental question will be  whether or not                                                               
FERC asserts jurisdiction,  because in the Pipeline  Act RCA more                                                               
or  less  concedes  federal  jurisdiction  in  cases  where  that                                                               
happens. When  federal law preempts  state regulation,  the state                                                               
does not  assert regulation over  the facilities or  pipelines or                                                               
assets. Fortunately  TransCanada's license terms require  them to                                                               
abide by many of the things that are asked in SB 136.                                                                           
12:24:05 PM                                                                                                                   
SENATOR WIELECHOWSKI  asked if  this would apply  to a  spur line                                                               
off the main line as is being contemplated by ANGDA.                                                                            
MR. BALASH  replied he believes  the answer  is yes, but  it will                                                               
depend on where federal jurisdiction begins and where it ends.                                                                  
CHAIR MCGUIRE asked if the FERC mandates common carrier status.                                                                 
MR.  BALASH  explained  that  under  the  Natural  Gas  Act  FERC                                                               
provides  for contract  service in  the regulation  of pipelines.                                                               
Firm  service  contracts  are  contemplated,  but  then  all  the                                                               
provisions  in  the  Natural  Gas Act  are  designed  to  prevent                                                               
discriminatory behavior by pipelines.                                                                                           
CHAIR   MCGUIRE  observed   that   if   an  intrastate   pipeline                                                               
contemplated  export  it would  be  a  contract pipeline,  so  it                                                               
wouldn't matter if it was under federal or state regulation.                                                                    
MR. BALASH replied  we would hope so but  if federal jurisdiction                                                               
is not asserted over the pipeline,  the state right of way leases                                                               
require  the lessee  to covenant  that they  will provide  common                                                               
carrier access.  The Pipeline Act allows  for firm transportation                                                               
service  to be  offered and  regulated by  the RCA,  but it's  an                                                               
incongruity  between   the  Right-of-Way  Leasing  Act   and  the                                                               
Pipeline Act.  It's a brain  teaser to try  to marry the  two and                                                               
make sure  that when  the state enters  into a  lease arrangement                                                               
with a pipeline  that it is getting the kind  of commitments from                                                               
the pipeline  that will protect  the public interest.  The Right-                                                               
of-Way Leasing Act in intended to do that.                                                                                      
SENATOR WIELECHOWSKI asked the value  of the lease for state land                                                               
on TAPS.                                                                                                                        
MR.  BALASH said  he doesn't  have that  information but  he'd be                                                               
happy to find out.                                                                                                              
12:27:29 PM                                                                                                                   
SENATOR WIELECHOWSKI noted that he  had mentioned $1 million, and                                                               
asked if he  has a sense of  what the lease would  run from Gubik                                                               
to Southcentral.                                                                                                                
MR.  BALASH said  the $1  million  threshold in  bill Section  3,                                                               
mimics  language  in  AS 38.35.120  regarding  covenants  that  a                                                               
lessee is required to make for  pipelines valued at $1 million or                                                               
more. He isn't  certain in what year the $1  million was put into                                                               
law, but  the decision was  to use  the amount that's  in statute                                                               
for purposes of consistency.                                                                                                    
SENATOR  WIELECHOWSKI  said if  he  reads  this correctly  "these                                                               
covenants are triggered  when you have a  noncompetitive lease of                                                               
state land for  rights-of-way for natural gas  pipeline valued at                                                               
a million dollars or more."                                                                                                     
MR. BALASH said it's for a  pipeline that is valued at $1 million                                                               
or more.                                                                                                                        
SENATOR WIELECHOWSKI  said he  isn't sure that  it says  that and                                                               
asked  if he's  saying that  the million  dollars applies  to the                                                               
value of  the natural gas  pipeline and not  to the value  of the                                                               
MR. BALASH said that's his understanding.                                                                                       
SENATOR  WIELECHOWSKI asked  for legal  clarification because  he                                                               
reads it differently.                                                                                                           
MR. OSTROVSKY  said he reads  the statute  to mean a  natural gas                                                               
pipeline valued  at a million  dollars or more. He  conceded that                                                               
he can see  how it could be  read both ways and  he'll verify his                                                               
12:29:27 PM                                                                                                                   
SENATOR WIELECHOWSKI said if there's  uncertainty he'd argue that                                                               
it should be clarified.                                                                                                         
CHAIR MCGUIRE  suggested some modifying language.  She asked what                                                               
pipelines would  be valued at  less than  $1 million and  who the                                                               
state might want to keep out of this new statutory framework.                                                                   
MR.  BALASH  said he  believes  the  provision  was put  into  AS                                                               
38.35.120 in  1972 or 1974, but  the question is at  what point a                                                               
pipeline becomes  big enough to  affect the public  interest such                                                               
that these kinds of protections and requirements should apply.                                                                  
CHAIR MCGUIRE asked him to  clarify that before the next hearing.                                                               
She understands that this is  incorporates an existing statute to                                                               
marry philosophical concepts, but  it reflects a policy decision.                                                               
Either the  policy decision is  good today and the  dollar amount                                                               
needs to  coincide or the  policy decision is no  longer relevant                                                               
and all pipelines should be regulated under this structure.                                                                     
12:31:20 PM                                                                                                                   
MR. BALASH continued  the bill overview and said  that sections 1                                                               
and 2  make corrective  references in  statute sections  of Title                                                               
38. Section  3 adds a  new section 38.35.121 to  the Right-of-Way                                                               
Leasing  Act.  Section 120  requires  a  lessee to  make  certain                                                               
covenants to  the state and section  121 would put into  place an                                                               
additional  set  of  covenants  that a  lessee  would  make  when                                                               
applying  for   a  state   right-of-way  lease.   The  additional                                                               
covenants are contained  on pages 2-6 and are built  on the must-                                                               
haves in the  Alaska Gasline Inducement Act. They  are the things                                                               
that were  requested of applicants  under AGIA that  are intended                                                               
to  ensure that  benefits of  a project  accrue to  the citizens,                                                               
businesses and  workers in Alaska.  In addition they  provide the                                                               
predictability  of access  to a  pipeline that  is important  for                                                               
additional exploration and development to occur.                                                                                
The first  is the  commitment to solicit  demand every  two years                                                               
for additional  pipelines. Next  are the  terms under  which they                                                               
would solicit that  demand. Item three is the  commitment to seek                                                               
the  approvals to  make the  expansion happen.  Item four  is the                                                               
commitment to reasonable  engineering increments, and identifying                                                               
what those  increments might be based  on the design of  the pipe                                                               
when  it's first  constructed.  Item five  is  the commitment  to                                                               
expand on those increments on commercially reasonable terms.                                                                    
Item six is  the commitment to treat the expansions  on a rolled-                                                               
in basis with a  cap up to 115 percent of  the day-one rate. Item                                                               
seven is  the commitment to  offer distance sensitive  rates. The                                                               
administration asked  for that  under AGIA for  the big  pipe and                                                               
believes it  is applicable  here as well.  Item eight  relates to                                                               
Alaska hire to  make sure that the citizens are  benefited in the                                                               
construction  of  a  project  such  as this.  Item  nine  is  the                                                               
commitment to  negotiate, prior to construction,  a project labor                                                               
agreement (PLA) that  the lessee will commit to. Item  ten is the                                                               
commitment  to be  regulation  by  the RCA  under  AS 42.06,  the                                                               
Pipeline Act.                                                                                                                   
12:34:30 PM                                                                                                                   
Section 4  sets out the definitions  for "commercially reasonable                                                               
terms" and  "reasonable engineering increments" in  the Right-of-                                                               
Way Leasing Act  to make sure everyone is talking  about the same                                                               
thing in section 121.                                                                                                           
Section  5  amends the  Pipeline  Act  and  spells out  that  the                                                               
covenants  in Title  38 under  the Right-of-Way  Leasing Act  are                                                               
applicable to  the lessee, and  that the RCA has  jurisdiction to                                                               
enforce  the covenants  as  a  matter of  its  regulation of  the                                                               
pipeline provider.                                                                                                              
Section 6 allows an additional  certificate to be provided by the                                                               
RCA. Mr. Balash continued as follows:                                                                                           
     This goes back  to the bigger picture in  terms of what                                                                    
     it is  we're hoping to  achieve in  the next two  and a                                                                    
     half  years  in  terms  of getting  all  of  the  major                                                                    
     permits  under way  and basically  accumulated and  put                                                                    
     together for  a project  to be  sanctioned as  early as                                                                    
     2011. What  this would allow the  RCA to do is  grant a                                                                    
     conditional  certificate  and identify  the  conditions                                                                    
     that  need  to be  met.  If  for  instance, we  had  an                                                                    
     application for  a certificate on a  particular project                                                                    
     that  didn't necessarily  have a  gas supply  committed                                                                    
     yet. We  want them to be  able to go through  the steps                                                                    
     at the RCA  to be able to get their  certificate - much                                                                    
     like we  do for  conditional rights-of-way at  DNR. You                                                                    
     can get a conditional  right-of-way granted that spells                                                                    
     out the conditions that must  be satisfied to make that                                                                    
     right-of-way  firm.  So  this   would  take  that  same                                                                    
     concept and  apply it to a  certificate that's required                                                                    
     by the  Regulatory Commission of Alaska  and allow that                                                                    
     same kind of head start,  as it were, on the regulatory                                                                    
     process to take place.                                                                                                     
Section 7 sets out the enforcement authority of the RCA.                                                                        
Section 8  changes the definition of  firm transportation service                                                               
in the  Pipeline Act  to make  it clear  that firm  service means                                                               
that a shipper on a pipeline can not be prorated.                                                                               
Section 9  adds the definition  for "common carrier"  that allows                                                               
somebody  who has  an existing  right-of-way lease  - where  they                                                               
made the  commitment to common  carrier service  - to be  able to                                                               
then   offer  firm   transportation  service   and  interruptible                                                               
transportation service on that pipeline.                                                                                        
12:37:48 PM                                                                                                                   
SENATOR  WIELECHOWSKI asked  the status  of ANGDA's  work on  the                                                               
spur line.                                                                                                                      
MR. BALASH replied his understanding  is that ANGDA very recently                                                               
entered into a reimbursable arrangement  and paid funds to BLM to                                                               
continue with  the EIS  for the Richardson  Highway route  on the                                                               
spur line work.                                                                                                                 
SENATOR  WIELECHOWSKI   asked  if  the   administration  supports                                                               
ANGDA's efforts to build the spur line.                                                                                         
MR. BALASH replied:                                                                                                             
     We  have been  supporting ANGDA  since day  one of  the                                                                    
     Palin    administration.   And    the   question    is,                                                                    
     fundamentally, how  to evaluate what  opportunities and                                                                    
     needs  there  are for  pipeline  service  in Alaska  in                                                                    
     terms  of the  spur line  project that  has been  under                                                                    
     pursuit here  for the  last 15 to  16 months  by ANGDA.                                                                    
     Certainly  it  is  complementary to  a  large  diameter                                                                    
     project  that  would be  going  across  the border  and                                                                    
     similar to that pursued  by TransCanada and Denali. And                                                                    
     in that regard is very  helpful to the overall delivery                                                                    
     of gas to Alaskans.                                                                                                        
     But,  whether  or not  that's  going  to be  the  right                                                                    
     vehicle - whether  or not we need to see  a bullet line                                                                    
     constructed sooner  than a large diameter  pipeline may                                                                    
     come into service - is  something that we're attempting                                                                    
     to spell out,  flesh out and understand  more fully. It                                                                    
     may be  that Cook Inlet  gas supplies reach  a critical                                                                    
     point here, whether it be  due to deliverability or any                                                                    
     number  of other  reasons, and  because  a bullet  line                                                                    
     requires such a  long lead time to  plan and construct,                                                                    
     we  want to  get started  now. And  so that's  been the                                                                    
     focus here lately from the Governor.                                                                                       
12:41:00 PM                                                                                                                   
SENATOR WIELECHOWSKI asked if the  administration has to sign off                                                               
on ANGDA expenditures.                                                                                                          
MR. BALASH said he'd be happy to find out.                                                                                      
SENATOR WIELECHOWSKI  asked if the administration  has refused to                                                               
sign off on expenditures that ANGDA has requested.                                                                              
MR.  BALASH  said  his  understanding is  that  the  most  recent                                                               
request for  the work with BLM  was delayed somewhat, but  it did                                                               
go through. They  have been scrutinizing whether  or not requests                                                               
by  ANGDA for  contracting and  expenditures are  consistent with                                                               
the  statutory mission  of the  authority and  the appropriations                                                               
made by the Legislature.                                                                                                        
SENATOR  WIELECHOWSKI  asked if  he  knows  if any  requests  for                                                               
expenditures by ANGDA have been denied.                                                                                         
MR. BALASH  replied he isn't  aware of any outright  denials, but                                                               
he isn't sure about the latest status.                                                                                          
SENATOR WIELECHOWSKI said  he'd appreciate an update  on that and                                                               
asked  if  the  administration   has  requested  any  changes  in                                                               
leadership at ANGDA.                                                                                                            
MR.   BALASH   said  he   understands   that   there  have   been                                                               
conversations  about   various  approaches  related   to  overall                                                               
direction  and willingness  to  consider additional  information,                                                               
but he hasn't participated in those deliberative conversations.                                                                 
12:43:20 PM                                                                                                                   
SENATOR WIELECHOWSKI restated the question.                                                                                     
MR. BALASH replied he doesn't have an answer.                                                                                   
SENATOR WIELECHOWSKI asked him to look  into that and get back to                                                               
MR. BALASH said he'd be happy to.                                                                                               
CHAIR MCGUIRE  asked Mr. Balash  find out how companies  that are                                                               
considering a bullet  line are reacting to  the implementation of                                                               
the covenants.  She noted that sometimes  attempts to incentivize                                                               
make  for less  incentive to  the  private sector.  A company  is                                                               
considering  building  a  bullet   line  and  Alaska  needs  that                                                               
project. She appreciates  many of the covenants  and she wouldn't                                                               
want  the committee  to pass  a piece  of legislation  that might                                                               
interfere  with  current  business  plans  and  the  free  market                                                               
opportunity for a bullet line.                                                                                                  
MR.  BALASH  agreed  and  added  that  the  parties  they've  had                                                               
discussions  with were  aware of  the  administration's view  and                                                               
position on  the need for the  must-haves. But, he said  he can't                                                               
speak for them here.                                                                                                            
CHAIR MCGUIRE announced she would hold SB 136 in committee.                                                                     
12:46:06 PM                                                                                                                   
There being no further business to come before the committee,                                                                   
Chair McGuire adjourned the meeting at 12:46 pm.                                                                                

Document Name Date/Time Subjects
Bill Packet for SB 150.pdf SENE 3/26/2009 11:00:00 AM
SENE 3/27/2009 11:00:00 AM
SB 150
Bill Packet for SB 136.pdf SENE 3/26/2009 11:00:00 AM
SB 136