Legislature(2023 - 2024)BELTZ 105 (TSBldg)
03/27/2024 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB154 | |
| SB239 | |
| SB257 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 239 | TELECONFERENCED | |
| += | SB 257 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 154 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 27, 2024
1:32 p.m.
MEMBERS PRESENT
Senator Jesse Bjorkman, Chair
Senator Kelly Merrick
Senator Forrest Dunbar
MEMBERS ABSENT
Senator Click Bishop, Vice Chair
Senator Elvi Gray-Jackson
COMMITTEE CALENDAR
SENATE BILL NO. 154
"An Act relating to bidder preferences in state procurement."
- MOVED SB 154 OUT OF COMMITTEE
SENATE BILL NO. 239
"An Act relating to the Alaska Industrial Development and Export
Authority; and relating to workforce housing development
projects."
- HEARD & HELD
SENATE BILL NO. 257
"An Act relating to the Regulatory Commission of Alaska;
relating to public utilities; relating to electric reliability
organizations; relating to the Alaska Energy Authority; relating
to the Railbelt Transmission Organization; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 154
SHORT TITLE: BIDDER PREF MILITARY CAREER SKILLS PROG
SPONSOR(s): SENATOR(s) WIELECHOWSKI
05/17/23 (S) READ THE FIRST TIME - REFERRALS
05/17/23 (S) L&C
03/04/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/04/24 (S) Heard & Held
03/04/24 (S) MINUTE(L&C)
03/27/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 239
SHORT TITLE: AIDEA WORKFORCE HOUSING DEVELOPMENT
SPONSOR(s): SENATOR(s) DUNBAR
02/19/24 (S) READ THE FIRST TIME - REFERRALS
02/19/24 (S) L&C, FIN
02/21/24 (S) FIN REFERRAL REMOVED
03/27/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 257
SHORT TITLE: ELECTRIC UTILITY REGULATION
SPONSOR(s): RESOURCES
03/01/24 (S) READ THE FIRST TIME - REFERRALS
03/01/24 (S) L&C, RES, FIN
03/01/24 (S) L&C WAIVED PUBLIC HEARING NOTICE,RULE
23
03/04/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/04/24 (S) Heard & Held
03/04/24 (S) MINUTE(L&C)
03/04/24 (S) RES AT 3:30 PM BUTROVICH 205
03/04/24 (S) <Bill Hearing Canceled>
03/27/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
KALEB CALLAHAN, Intern
Senator Bill Wielechowski
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided an overview of SB 154.
JAMES HOLZENBERG, Staff
Senator Forrest Dunbar
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis for SB 239.
SENATOR CATHY GIESSEL, District E
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 257.
ANGELA RODELL, Staff
Senator Cathy Giessel
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis for SB 257.
GWEN HOLDMANN, Senior Researcher
Associate Vice Chancellor for Research,
Innovation & Industry Partnerships UAF,
Alaska Center for Energy and Power (ACEP)
Fairbanks, Alaska
POSITION STATEMENT: Answered questions on SB 257.
ACTION NARRATIVE
1:32:35 PM
CHAIR JESSE BJORKMAN called the Senate Labor and Commerce
Standing Committee meeting to order at 1:32 p.m. Present at the
call to order were Senators Dunbar, Merrick, and Chair Bjorkman.
SB 154-BIDDER PREF MILITARY CAREER SKILLS PROG
1:33:33 PM
CHAIR BJORKMAN announced the consideration of SENATE BILL NO.
154, "An Act relating to bidder preferences in state
procurement."
1:33:59 PM
KALEB CALLAHAN, Intern, Senator Bill Wielechowski, Alaska State
Legislature, Juneau, Alaska, provided an overview of SB 154 and
explained that this would establish a two percent bidder
preference for military service members who are transitioning to
veteran status. In addition, businesses would be encouraged to
partner with SkillBridge and other similar programs, creating
additional procurement opportunities for veterans entering the
civilian workforce.
1:35:00 PM
CHAIR BJORKMAN opened public testimony on SB 154; finding none,
he closed public testimony.
1:35:25 PM
CHAIR BJORKMAN found no further questions or comments and
solicited a motion.
1:35:29 PM
SENATOR MERRICK moved to report SB 154, work order 33-LS0545\B,
from committee with individual recommendations and attached
fiscal note(s).
1:35:46 PM
CHAIR BJORKMAN found no objection and SB 154 was reported from
the Senate Labor and Commerce Standing Committee.
1:35:56 PM
At ease
SB 239-AIDEA WORKFORCE HOUSING DEVELOPMENT
1:38:22 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 239, "An Act relating to the
Alaska Industrial Development and Export Authority; and relating
to workforce housing development projects."
1:38:43 PM
SENATOR FORREST DUNBAR, District J, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 239, informed the committee that
those testifying by invitation were not able to attend the
meeting and offered a brief overview of the legislation. He
briefly explained genesis of SB 239, which would allow Alaska
Industrial Development and Export Authority (AIDEA) to engage in
financing for housing construction. He emphasized the importance
of building more housing in the state. He stated that AIDEA
agrees that housing for workers is a part of industrial
development and building value-added industrial industries. He
noted that AIDEA did take part in housing construction and
financing in the early 1980s; however, a housing market crash
ended this practice. He explained that while AIDEA is
technically able to use their current resources to fund housing,
the intention behind SB 239 is to make this explicit. He stated
that this is not creating a mandate but states that AIDEA has
the legal authority to finance housing construction. He stated
that "multi-family workforce housing" is highlighted. He
explained that the Bankers' Association was not comfortable with
potentially competing with AIDEA for certain kinds of loans.
SENATOR DUNBAR said there are very few multi-family workforce
housing projects currently under construction. He stated that
the only projects he is aware of in Anchorage are funded by the
Cook Inlet Housing Authority and he expressed the desire to see
more private builders taking on these kinds of projects. He said
he is hopeful that AIDEA would provide additional financing
mechanisms. He reiterated that this legislation is not
prescriptive and leaves it to AIDEA to determine what this would
look like in practice and added that AIDEA is comfortable with
this insofar as no mandate is included. He said that Alaska
Housing Finance Corporation (AHFC) does not oppose SB 239.
1:42:35 PM
JAMES HOLZENBERG, Staff, Senator Forrest Dunbar, Alaska State
Legislature, Juneau, Alaska, presented the sectional analysis
for SB 239.
[Original punctuation provided.]
SECTIONAL ANALYSIS
SB 239: AIDEA WORKFORCE HOUSING DEVELOPMENT
Section 1: AS 44.88.070: Adds new subsection 7 to AS
44.88.070 stating the purpose of the authority. Part
of the mission of the authority will now be to provide
financing and the means of financing construction of
new workforce housing facilities with five or more
units.
Section 2: AS 44.88.080: Adds new subsection 33 to AS
44.88.080, granting AIDEA the ability to provide the
various means of financing and facilitating the
financing of construction of new workforce housing
facilities with five or more dwelling units.
Section 3: AS 44.88.900(6): Conforming change to
extend the definition of "development project" to
include workforce housing facilities with five or more
dwelling units, as defined in the new section J.
Section 5: AS 44.88.900: Adds a new section J to
define "workforce housing". Workforce housing will be
defined as residential housing that costs the
occupants less than 30 percent of the income of a
household with 120 percent of the area median family
income, as determined by the United States Department
of Housing and Urban Development.
1:44:45 PM
SENATOR MERRICK asked if Senator Dunbar has spoken with any
private contractors who have expressed interest in utilizing
this program.
1:44:55 PM
SENATOR DUNBAR said that he has spoken with a developer who
expressed interest; however, the developer does not build
workforce housing and would therefore not be able to take
advantage of this program.
1:46:14 PM
SENATOR DUNBAR asked if the committee would hear public
testimony at this time.
1:46:22 PM
CHAIR BJORKMAN replied that public testimony was not noticed for
this hearing; however, the committee is flexible if anyone
present wished to testify.
1:46:46 PM
SENATOR DUNBAR thanked the committee for hearing the bill.
1:46:57 PM
CHAIR BJORKMAN held SB 239 in committee.
1:47:05 PM
At ease
SB 257-ELECTRIC UTILITY REGULATION
1:49:11 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 257, "An Act relating to the
Regulatory Commission of Alaska; relating to public utilities;
relating to electric reliability organizations; relating to the
Alaska Energy Authority; relating to the Railbelt Transmission
Organization; and providing for an effective date."
1:49:33 PM
SENATOR CATHY GIESSEL, District E, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 257, explained that this
legislation would establish a railbelt transmission organization
that would oversee the function and dispatch of the lowest-cost
electrons across a grid, thereby lowering consumers' cost. She
emphasized the importance and need for this organization as
Alaska moves toward lower cost electrons. In addition, this
would make it possible for independent power producers - who are
expanding the state's renewable energy access - to utilize the
backbone transmission system. She expressed hope that reviewing
the sectional analysis would clear up confusion around what SB
257 does.
1:50:51 PM
ANGELA RODELL, Staff, Senator Cathy Giessel, Alaska State
Legislature, Juneau, Alaska, presented a presentation on the
sectional analysis for SB 257. She advanced to slide 2:
[Original punctuation provided.]
Improvements to the Regulatory Commission of Alaska
(RCA)
Section 1:
Amends AS 42.04.020 (a) to clarify and update the
qualifications of individuals nominated to serve as a
commissioner for the Regulatory Commission of Alaska
(RCA) by requiring at least 5 years of experience in
the field associated with the degrees.
Section 2:
Amends AS 42.05.381 by clarifying that the RCA may
consider diversity of energy supply, promotion of load
growth or enhanced energy reliability or security in
determining if an electric utility's rate is just and
reasonable.
MS. RODELL explained that current law requires RCA to consider
cost and this would give RCA the option of adding these
additional factors for consideration.
1:52:54 PM
CHAIR BJORKMAN asked if RCA has a hierarchy of needs or
preference when deciding on a project - or rate in this case -
that helps to determine whether the power is "good power" for a
project or when creating a rate.
1:53:20 PM
MS. RODELL deferred to the RCA and said she would follow up with
RCA's response.
1:53:31 PM
CHAIR BJORKMAN shared his understanding that reliability is a
priority, along with markets (cost to produce power), quality of
power, and other factors. He asked how SB 257 would help RCA
make good decisions about permitting projects and rates - while
still prioritizing low costs for homeowners, members,
businesses.
1:54:19 PM
MS. RODELL deferred to Gwen Holdmann.
1:54:36 PM
GWEN HOLDMANN, Senior Researcher, Associate Vice Chancellor for
Research, Innovation & Industry Partnerships, UAF, Alaska Center
for Energy and Power (ACEP), Fairbanks, Alaska, said that many
projects developed at a given time may not be the lowest cost
project. She offered the Bradley Lake Hydroelectric Project and
explained that at the time of its construction, this was the
most expensive project for the railbelt grid. She noted that
this project was left out of regulation due to concerns that, if
subject to regulation, it would not have been approved by the
RCA, due to the cost of delivering power at the time of
construction. However, this project currently provides one of
the lowest forms of electric power on the grid. She suggested
that there is a benefit to considering the future of these
electric systems in order to create systems that best meet the
needs of consumers both now and future - rather than focusing
solely on present-day costs.
1:55:52 PM
CHAIR BJORKMAN asked if there were currently any projects that
would benefit from the changes in Section 2.
1:56:11 PM
MS. HOLDMANN shared her understanding that SB 257 was not
drafted with the intention of benefitting a particular project -
and is not related specifically to renewable or non-renewable
energy sources. She stated that "diversity of supply" could be
interpreted as seeking more local energy sources that could
displace declining Cook Inlet gas supplies. This could include
increasing the amount of coal, etc.
1:56:56 PM
CHAIR BJORKMAN commented that this could include coal,
hydroelectric sources, etc.
1:57:02 PM
MS. HOLDMANN said that this is correct.
1:57:09 PM
MS. RODELL advanced to slide 3 and continued the sectional
analysis for SB 257:
[Original punctuation provided.}
Improvements to the Electric Reliability Organization
(ERO)
Section 3:
Amends AS 42.05.762 by repealing the requirement that
an electric reliability organization (ERO) must
develop integrated resource plans and adding the
requirement that the ERO must participate in an
integrated grid plan conducted by the Railbelt
Transmission Organization. It also adds the
requirement that the ERO prioritize reliability and
stability of the system served by the ERO while also
taking into account cost to the consumer.
1:57:51 PM
CHAIR BJORKMAN asked about the difference between participating
in an integrated grid plan and developing a resource plan.
1:58:05 PM
MS. RODELL offered her understanding that the integrated grid
plan takes all sections (including operations and management) of
the transmission/grid system into account. In contrast, the
integrated resource plan includes reliability standards as well
as transmission, generation, and distribution. She explained
that SB 257 bifurcates this requirement and instructs the
electricity reliability organization (ERO) to focus on the
reliability standards to ensure that the incoming electricity is
reliable.
1:59:21 PM
MS. HOLDMAN clarified that an integrated resource plan typically
focuses more on the generation assets of the system. Citing
Hawaii as an example, she explained that as the grid evolves and
power use changes, taking a wholistic approach across the entire
system allows for continued system development and upgrades.
This helps to ensure that consumer needs are met and prices
contained. She agreed that this function is bifurcated away from
EROs and places this responsibility with the Railbelt
Transmission Organization (RTO). She explained that the ERO
would remain responsible for setting (and enforcing) reliability
standards and interconnection standards for utilities and
independent power producers. She reiterated that "planning" is
moved to RTO and is redefined as a more wholistic effort.
2:00:57 PM
MS. RODELL advanced to slide 4 and continued the sectional
analysis for SB 257:
[Original punctuation provided.]
Clarifying the Responsibilities of an ERO
Section 4:
Amends AS 42.05.765(a) by clarifying that an ERO must
develop, monitor, and enforce reliability standards
and it is the responsibility of an ERO is to ensure
the stable operation of the interconnect bulk-electric
system served by an ERO and specifically require
coordination with the Railbelt Transmission
Organization (RTO) when developing reliability
standards that impact the RTO.
2:01:38 PM
MS. RODELL advanced to slide 5:
[Original punctuation provided.]
Conforming the ERO Tariff to Streamlined ERO Duties
Section 5:
Repeals AS 42.05.770 (1) which is the requirement that
an ERO tariff include standards for nondiscriminatory
open access transmission and interconnection and
standards for transmission system cost recovery.
Sec. 42.05.770. Regulations. The commission shall
adopt regulations governing electric reliability
organizations, reliability standards, and
modifications to reliability standards consistent with
this section. Regulations under AS 42.05.760
42.05.790 must
(1) require that an electric reliability
organization's tariff include
(A) standards for nondiscriminatory open access
transmission and interconnection;
(B) standards for transmission system cost recovery;
MS. RODELL explained that this section ensures that the changes
made by SB 257 do not conflict with existing statute.
2:02:21 PM
MS. RODELL advanced to slide 6 and continued the sectional
analysis for SB 257:
[Original punctuation provided.]
Streamlining the ERO's Responsibilities
Section 6:
Amends AS 42.05.772 by adding that a load-serving
entity that would otherwise be exempt from regulation
under this chapter, shall adhere to the ERO's
reliability standards, coordinate with the ERO, and if
applicable, coordinate with the Railbelt Transmission
Organization to integrate reliability standards into
the load-serving entity's operational procedures.
Section 7:
Amends AS 42.05.785 to repeal (d) requiring the RCA to
adopt regulations addressing projects undertaken
before integrated resource plan approval for an
interconnected electric energy transmission network.
2:03:00 PM
CHAIR BJORKMAN asked who would be considered "otherwise exempt".
2:03:24 PM
MS. RODELL deferred the question and offered her understanding
of what is meant by "load-serving entity."
2:03:38 PM
MS. HOLDMANN explained that a "load-serving entity" is defined
as a distribution utility with customers. She shared her
understanding that the current section relates to the ERO and
falls under RCA regulations.
2:04:09 PM
MS. RODELL agreed that this is correct. She then continued her
discussion of section 7 on slide 6. She explained that this
section brings RCA requirements in line with the new statutory
language.
2:04:57 PM
MS. RODELL advanced to slide 7 and continued the sectional
analysis for SB 257:
[Original punctuation provided.]
Administrative Needs - Conformity
Section 8:
Amends AS 42.05.790 by adding that the definition of
"Railbelt" has the same meaning given in AS 44.83.750
and "Railbelt Transmission Organization" means the
transmission organization established by AS 44.83.700.
Section 9:
Amends AS 44.83.080 by adding to the powers of the
Alaska Energy Authority the ability to carry out the
duties and powers assigned under AS 44.83.700-
44.83.750 (Section 10 creating the RTO) and adds the
ability to acquire battery energy storage systems by
construction, purchase, gift or lease.
2:06:15 PM
CHAIR BJORKMAN asked what is changing besides section 9,
subsection 20.
2:06:25 PM
MS. RODELL answered that the RTO would be required to carry out
the duties and powers assigned under AS 44.83.700-44.83.750. She
explained that Section 10 creates these areas of statute - which
create the RTO. She noted that this tells the ERO that the RTO
would take on these responsibilities.
2:07:10 PM
MS. RODELL advanced to slide 8:
[Original punctuation provided.]
Creation of the Railbelt Transmission Organization
Section 10
Amends AS 44.83 by adding a new subsection creating
the Railbelt Transmission Organization (RTO).
44.83.700
(a) establishes the RTO under the Alaska Energy
Authority for the purpose of developing a backbone
transmission system for the Railbelt.
(b) establishes the governance structure that provides
for oversight of the RTO, creating a management
committee that is composed of members representing
each of the utilities, the executive director of the
Alaska Energy Authority and the chair of the ERO;
requires the RTO to establish a conflict resolution
process, and facilitates public participation in the
operations of the RTO.
(c) clarifies the RTO is subject to the jurisdiction
of the Regulatory Commission of Alaska and the RCA
will adopt regulations as necessary including defining
by regulation the term "backbone transmission asset."
44.83.710 sets out the powers and duties of the RTO
including managing Railbelt backbone transmission
assets, follow reliability standards established by
the ERO, ensure safe, resilient, reliable, efficient,
and economical operation and development of the
integrated transmission system, preserve non
discriminatory open access, maintain capacity rights
of legacy transmission owners and perform integrated
transmission planning. The RTO is also given the
authority to purchase, lease or acquire backbone
transmission assets; construct, own, and operate new
transmission assets; establish tariffs subject to the
approval of the RCA and enter into contracts,
agreements, and partnerships that enhance safety,
reliability, and efficiency of the Railbelt integrated
transmission system.
2:08:29 PM
SENATOR DUNBAR referred to Section b and shared his
understanding that there are 4 railbelt utilities: Chugach
Electric Association, Homer Electric Association, Matanuska
Electric Association (MEA), and Golden Valley Electric. He asked
if this is correct - or if other organizations would be
considered "railbelt utilities."
2:08:53 PM
MS. RODELL said that Seward Electric Association may also be
included. She added that "railbelt" is already defined in
statute and this would help the RCA move forward.
2:09:21 PM
SENATOR DUNBAR commented that "railbelt" is defined and asked if
there are any small utilities along the railbelt.
2:09:52 PM
MS. HOLDMANN replied that the five utilities mentioned are the
only independent utilities with a load-servicing area along the
railbelt. She added that there is no reason to believe a new
utility would be created in the future but acknowledged that it
is a possibility.
2:10:16 PM
SENATOR DUNBAR pointed out that, as currently written, Seward
Electric would have as much weight on the board as Chugach -
despite the large difference in the size of the populations
served. He asked if this would be an issue.
2:10:47 PM
MS. RODELL answered that they do not believe this would be an
issue. She added that this management committee was inspired by
the Bradley Lake management committee and shared her
understanding that no issues have arisen for that committee due
to the size of the customer base since 1987.
2:11:17 PM
SENATOR DUNBAR stated that he is not casting aspersions on
Seward Electric and commented that it is interesting that Seward
Electric would have the same voting authority as much, much
larger utilities.
2:11:37 PM
CHAIR BJORKMAN directed attention to Section 10, AS
44.83.700(b)(3), and commented that there is discussion about
separating governance and operations in many areas of government
(e.g. education and fire service). He said that the sentence in
this section appears to blur the lines between public
participation and operations. He asked if there has been
feedback from the utilities on this issue and if there is
currently any public participation in the operation of the
Bradley Lake Project.
2:12:41 PM
MS. RODELL shared her understanding that the Bradley Lake
Project does not have an avenue for public participation. She
added that she has not received comments from the utilities - or
requests for the removal of this section. She stated that she is
not aware of any concerns regarding this language and explained
that the intent is to create a mechanism for public comment,
given the number of people impacted by a railbelt transmission
organization.
2:13:26 PM
CHAIR BJORKMAN asked Ms. Holdmann how public participation and
operations for a transmission organization would work - and what
the effect of public participation may be.
2:13:43 PM
MS. HOLDMANN offered her understanding that the desire is to
have as much transparency as possible (e.g. one way of creating
this transparency is to have RTO fall under RCA regulation) and
to have robust public participation in the process. She
suggested that the language of this subsection could be improved
for clarity.
2:14:19 PM
CHAIR BJORKMAN said that constituents have expressed concerns
about this line and indicated that it warrants further
discussion. He said that if RTO is a management tool used to
deliver massive amounts of electrons from Homer to Healy, it is
important to separate the creation of the governance structure
and standards from what it means to have an organization that is
responsible for operating the backbone transmission.
2:15:07 PM
MS. RODELL continued her discussion of the slide 8:
[Original punctuation provided.]
Creation of the Railbelt Transmission Organization
Section 10
Amends AS 44.83 by adding a new subsection creating
the Railbelt Transmission Organization (RTO).
44.83.700
(a) establishes the RTO under the Alaska Energy
Authority for the purpose of developing a backbone
transmission system for the Railbelt.
(b) establishes the governance structure that provides
for oversight of the RTO, creating a management
committee that is composed of members representing
each of the utilities, the executive director of the
Alaska Energy Authority and the chair of the ERO;
requires the RTO to establish a conflict resolution
process, and facilitates public participation in the
operations of the RTO.
(c) clarifies the RTO is subject to the jurisdiction
of the Regulatory Commission of Alaska and the RCA
will adopt regulations as necessary including defining
by regulation the term "backbone transmission asset."
44.83.710 sets out the powers and duties of the RTO
including managing Railbelt backbone transmission
assets, follow reliability standards established by
the ERO, ensure safe, resilient, reliable, efficient,
and economical operation and development of the
integrated transmission system, preserve non
discriminatory open access, maintain capacity rights
of legacy transmission owners and perform integrated
transmission planning. The RTO is also given the
authority to purchase, lease or acquire backbone
transmission assets; construct, own, and operate new
transmission assets; establish tariffs subject to the
approval of the RCA and enter into contracts,
agreements, and partnerships that enhance safety,
reliability, and efficiency of the Railbelt integrated
transmission system.
2:16:16 PM
MS. RODELL advanced to slide 9 and continued the sectional
analysis for SB 257:
[Original punctuation provided.]
Duties of the New RTO
Section 10, continued
44.83.720 creates a revenue mechanism, subject to the
approval of the RCA, whereby the RTO shall hold and
administer an open access transmission tariff; shall
adopt a transmission cost recovery methodology that
ensures the reliability and sufficient capacity of the
integrated transmission to support and promote the
economy. In addition, the cost recovery methodology
must eliminate per-unit wholesale transmission charges
and pool backbone transmission costs and allocate
those costs to end users.
44.83.730 requires the RTO to engage in integrated
grid planning at least every 10 years. The plan must
use a whole system approach which articulates the
strategic trajectory, capital funding requirements and
outlook for the Railbelt transmission system and shall
take into consideration technological advancements,
load growth, fuel supply among others.
44.83.740 requires the RTO to identify existing
backbone transmission assets and that the Railbelt
utilities will transfer management of those assets to
the RTO by July 1, 2026.
44.83.750 defines "backbone transmission system" as
the assets of the interconnect electric energy
transmission network that serves the Railbelt; defines
"commission" as the RCA; defines "interconnected
electric energy transmission network" as the same
definition as that used for the ERO in 42.05.790;
defines "Railbelt" as the area of Alaska that ranges
from the Kenai Peninsula to Interior Alaska, connected
by a common electric transmission backbone; defines
"railbelt utility" to mean a public utility
certificated to operate in the Railbelt; and defines
transmission organization to the RTO established in
this bill.
MS. RODELL said that this section eliminations "wheeling" and
"pancaking" - which have been referred to in previous
presentations.
2:17:02 PM
CHAIR BJORKMAN said that, on the Kenai peninsula, Homer Electric
Association (HEA) is planned to be islanded for 4-5 months out
of the year, for many years - which limits their ability to sell
power off the peninsula (if independent power producers (IPP)
were to be cited there or if they were to have excess generation
during those months). He asked if there is a mechanism that
would reduce tariffs and cost recovery from the ERO or otherwise
compensate HEA members during this time.
2:18:07 PM
MS. RODELL shared her belief that this is one reason SB 257 is
important - it creates an organization that requires all of the
utilities to come together to find a solution and put together a
tariff request for the RCA. She added that, without SB 257,
there is no requirement for the utilities to coordinate with
HEA.
2:18:43 PM
MS. HOLDMANN expressed confusion about the idea that HEA would
be "islanded" because the Bradley Lake Hydroelectric Project -
the state's most important asset - is on the Kenai Peninsula.
She said that the idea of disconnecting the asset - thus
removing access to this power source - does not make sense. She
surmised that there is a bottleneck in the system - meaning that
it is fully committed to moving the power off of the Kenai
Peninsula - which prevents the use of the same asset to move the
power in the other direction. She emphasized the importance of
building out new assets to free up bottlenecks in the system and
creating secondary sources power flowing both on and off the
Kenai Peninsula. She referred to a recently approved Grid
Resilience and Innovation Partnerships (GRIP) proposal and
stated that this is one component of this proposal (which
requires a 50 percent non-federal funding match).
2:20:14 PM
CHAIR BJORKMAN shared his knowledge of HEA's history of
islanding. He shared his understanding that Bradley Lake power
is used on the Kenai Peninsula and gave a brief overview of this
process. He noted that HEA does not financially benefit from
being islanded - the savings received must be shared with the
other utilities based on the Bradley management agreement. He
suggested that Curtis Thayer or Brian Hickey could speak to this
at a future hearing.
2:21:19 PM
SENATOR DUNBAR said he has heard conflicting descriptions of RTO
and what it does. He asked if RTO would be a systems operator.
2:22:24 PM
MS. RODELL answered no.
2:22:31 PM
SENATOR DUNBAR noted that some advocates have said that a
systems operator is needed. He questioned if this would be
considered at a later stage - or whether utilities would be able
to do this independently, without the centralization that is
seen in Iceland.
2:23:10 PM
MS. HOLDMANN agreed that this does not include a systems
operator element. She explained that SB 257 includes a portion
of what is done in Iceland - it does not include the dispatch of
power (which will still be done by the utilities). She explained
that the main advantage of a systems operator is to ensure
economic dispatch - i.e. that the lowest cost source of power is
turned on first and that this energy is flowing to consumers
across the system. She expressed her hope that by setting this
structure in place - and eliminating wheeling - there would be a
natural movement by the utilities toward a natural structure of
economic dispatch across the grid. She noted that, to some
extent, this has been mandated by the RCA and proposed that
natural market forces would do the rest. However, if that does
not happen, the legislature could choose to mandate this in the
future.
2:25:16 PM
SENATOR DUNBAR said he has heard two conflicting views of the
management of assets. He shared his understanding that
management does not mean ownership - therefore, the facilities
would still be owned by the utilities but managed by RTO. He
questioned what this would look like when put into action.
Specifically, whether AEA (on RTO's behalf) would build its own
workforce or manage without taking the work from the utilities.
2:26:23 PM
MS. RODELL answered that it is not the intent to have RTO build
up its own workforce. She noted that this was based on the
Bradley Lake management model, where the utilities remain
responsible for agreements to manage the assets. She said that
the backbone transmission assets would be managed collectively.
She explained that one utility would not decide on its own about
backbone transmission assets; instead, this would be discussed -
and decisions - made collectively within the RTO management
framework.
2:27:15 PM
SENATOR DUNBAR offered examples and asked how outages along the
railbelt would be dealt with.
2:27:44 PM
MS. RODELL said that these details would be worked out when RTO
is formed. However, she suggested that MEA would likely fix the
assets and pass along the costs to the RTO.
2:28:13 PM
MS. HOLDMANN explained that the Alaska Energy Authority (AEA)
currently owns about one third of the transmission assets and
does not have a labor force to work on those assets. AEA has an
agreement with local utilities to conduct any necessary
maintenance or repairs on the Alaska Intertie and the Sterling
to Quartz Creek (SSQ) Line. She said that, while significant
unexpected issues can arise, the costs are well understood and
thus possible to predict and plan for.
2:29:06 PM
MS. RODELL continued her discussion of slide 9:
[Original punctuation provided.]
Duties of the New RTO
Section 10, continued
44.83.720 creates a revenue mechanism, subject to the
approval of the RCA, whereby the RTO shall hold and
administer an open access transmission tariff; shall
adopt a transmission cost recovery methodology that
ensures the reliability and sufficient capacity of the
integrated transmission to support and promote the
economy. In addition, the cost recovery methodology
must eliminate per-unit wholesale transmission charges
and pool backbone transmission costs and allocate
those costs to end users.
44.83.730 requires the RTO to engage in integrated
grid planning at least every 10 years. The plan must
use a whole system approach which articulates the
strategic trajectory, capital funding requirements and
outlook for the Railbelt transmission system and shall
take into consideration technological advancements,
load growth, fuel supply among others.
44.83.740 requires the RTO to identify existing
backbone transmission assets and that the Railbelt
utilities will transfer management of those assets to
the RTO by July 1, 2026.
44.83.750 defines "backbone transmission system" as
the assets of the interconnect electric energy
transmission network that serves the Railbelt; defines
"commission" as the RCA; defines "interconnected
electric energy transmission network" as the same
definition as that used for the ERO in 42.05.790;
defines "Railbelt" as the area of Alaska that ranges
from the Kenai Peninsula to Interior Alaska, connected
by a common electric transmission backbone; defines
"railbelt utility" to mean a public utility
certificated to operate in the Railbelt; and defines
transmission organization to the RTO established in
this bill.
2:30:39 PM
MS. RODELL advanced to slide 10 and continued the sectional
analysis for SB 257:
[Original punctuation provided.]
Final Implementation
Section 11
Repeals AS 42.05.780 and 42.05.785(b) which sets forth
integrated resource planning and integrated resource
planning tariffs for the ERO.
Section 12
Sets the directive for Alaska Energy Authority and the
Regulatory Commission of Alaska to adopt the necessary
regulations to implement the changes made by Senate
Bill 257.
Section 13
Requires Alaska Energy Authority to immediately begin
an initial grid plan and capital improvement program.
Section 14
Sections 12 and 13 take effect immediately.
Section 15
All other sections take effect July 1, 2024.
2:32:04 PM
CHAIR BJORKMAN asked if changes to ERO board membership
qualifications (e.g. requiring expertise in the generation of
electrons) have been considered.
2:32:57 PM
MS. RODELL answered that no one has requested this change and
added that this could be discussed further.
2:33:24 PM
SENATOR GIESSEL expressed gratitude for the hearing and
discussion of SB 257 that provided an opportunity to clarify
misunderstandings. With respect to changing the ERO board
qualification requirements, she said this is an interesting idea
to consider.
2:34:30 PM
There being no further business to come before the committee,
Chair Bjorkman adjourned the Senate Labor and Commerce Standing
Committee meeting at 2:34 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB257 Sectional Analysis Presentation to SLAC 03.27.24.pdf |
SL&C 3/27/2024 1:30:00 PM |
SB 257 |
| SB257 Support Document-Letter-RIPP 03.24.24.pdf |
SL&C 3/27/2024 1:30:00 PM |
SB 257 |
| SB257 Fiscal Note-DCCED-AEA-03.03.24.pdf |
SL&C 3/27/2024 1:30:00 PM |
SB 257 |
| SB257 Fiscal Note-DCCED-RCA-03.04.24.pdf |
SL&C 3/27/2024 1:30:00 PM |
SB 257 |
| SB257 Fiscal Note-DCCED-AIDEA-03.04.24.pdf |
SL&C 3/27/2024 1:30:00 PM |
SB 257 |
| SB257 ver D.pdf |
SL&C 3/4/2024 1:30:00 PM SL&C 3/27/2024 1:30:00 PM |
SB 257 |
| SB257 Sectional Analysis ver D.pdf |
SL&C 3/4/2024 1:30:00 PM SL&C 3/27/2024 1:30:00 PM |
SB 257 |
| SB257 Sponsor Statement ver D.pdf |
SL&C 3/4/2024 1:30:00 PM SL&C 3/27/2024 1:30:00 PM |
SB 257 |
| SB239 ver B.pdf |
SL&C 3/27/2024 1:30:00 PM SL&C 4/12/2024 1:30:00 PM |
SB 239 |
| SB239 Sponsor Statement.pdf |
SL&C 3/27/2024 1:30:00 PM SL&C 4/12/2024 1:30:00 PM |
SB 239 |
| SB239 Sectional Analysis.pdf |
SL&C 3/27/2024 1:30:00 PM SL&C 4/12/2024 1:30:00 PM |
SB 239 |
| SB239 Fiscal Note-DCCED-AIDEA 03.22.24.pdf |
SL&C 3/27/2024 1:30:00 PM SL&C 4/12/2024 1:30:00 PM |
SB 239 |