Legislature(2015 - 2016)BELTZ 105 (TSBldg)
03/26/2015 03:30 PM Senate SPECIAL CMTE ON ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| SB50 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 50 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE SPECIAL COMMITTEE ON ENERGY
March 26, 2015
3:34 p.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Peter Micciche, Co-Chair
Senator Lyman Hoffman
Senator Dennis Egan
MEMBERS ABSENT
Senator Bert Stedman
COMMITTEE CALENDAR
SENATE BILL NO. 50
"An Act relating to the programs and bonds of the Alaska
Industrial Development and Export Authority; related to the
financing authorization through the Alaska Industrial
Development and Export Authority of a liquefied natural gas
production plant and natural gas energy projects and
distribution systems in the state; amending and repealing bond
authorizations granted to the Alaska Industrial Development and
Export Authority; and providing for an effective date."
- MOVED CSSB 50(NRG) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 50
SHORT TITLE: AIDEA: BONDS; PROGRAMS; LOANS; LNG PROJECT
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/11/15 (S) READ THE FIRST TIME - REFERRALS
02/11/15 (S) NRG, RES, FIN
03/10/15 (S) NRG AT 3:30 PM BELTZ 105 (TSBld)
03/10/15 (S) Heard & Held
03/10/15 (S) MINUTE(NRG)
03/26/15 (S) NRG AT 3:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
LYNNE SMITH, Staff
Senator Micciche
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided an overview of the committee
substitute for SB 50.
EUGENE THERRIAULT, Director
Energy Policy and Outreach
Alaska Energy Authority
Anchorage, Alaska
POSITION STATEMENT: Addressed the committee substitute for SB
50.
MERRICK PIERCE, representing himself
Fairbanks, Alaska
POSITION STATEMENT: Supports SB 50.
PAMELA THROOP, representing herself
Fairbanks, Alaska
POSITION STATEMENT: Supports SB 50.
LUKE HOPKINS, Mayor
Fairbanks North Star Borough
Fairbanks, Alaska
POSITION STATEMENT: Supports SB 50.
LISA HERBERT, Executive Director
Greater Fairbanks Chamber of Commerce
Fairbanks, Alaska
POSITION STATEMENT: Supports SB 50.
DAVID PRUHS, Council Member
Fairbanks City Council
City of Fairbanks
Fairbanks, Alaska
POSITION STATEMENT: Supports SB 50.
JOMO STEWART, Energy Project Manager
Fairbanks Economic Development Corporation
Fairbanks, Alaska
POSITION STATEMENT: Supports SB 50.
ACTION NARRATIVE
3:34:53 PM
CO-CHAIR PETER MICCICHE called the Senate Special Committee on
Energy meeting to order at 3:34 p.m. Present at the call to
order were Senators Egan, Co-Chair Bishop, and Co-Chair
Micciche.
SB 50-AIDEA: BONDS; PROGRAMS; LOANS; LNG PROJECT
3:35:34 PM
CO-CHAIR MICCICHE announced that the purpose of the committee
meeting is to have the second hearing on SB 50, the Governor's
bill on the Alaska Industrial Development and Export Authority
(AIDEA). He noted that a committee substitute (CS) was before
the committee for consideration.
3:35:44 PM
SENATOR HOFFMAN joined the committee meeting.
3:35:51 PM
CO-CHAIR BISHOP moved that the committee adopt the CS for SB 50,
version: W, as the committee's working document.
CO-CHAIR MICCICHE objected for purposes of discussion.
3:37:23 PM
LYNNE SMITH, Staff, Senator Micciche, Alaska State Legislature,
Juneau, Alaska, explained the CS changes as follows:
Section 2, page 2, line 17, changes the word "law" to
the "Legislature" for approval.
Section 4, there is new language in there, the
definition of a qualified energy development. Page 4,
lines 22-25, it now reads in the sub-paragraph,
"Distribution does not include a natural gas-line
project for transporting natural gas from the North
Slope or Cook Inlet to market, unless the pipeline has
a diameter of 12-inches or less, and transports the
natural gas to Interior Alaska."
Section 5, page 5, lines 3-6, it now reads, "And the
state will provide natural gas to Interior Alaska as a
primary market and natural gas delivery and
distribution systems, and affiliated infrastructure
that will provide natural gas to Interior Alaska."
3:37:28 PM
CO-CHAIR MICCICHE removed his objection and announced that the
CS was before the committee. He said he supports the project and
proclaimed that it is time for the Interior to have a realistic
and lower cost solution. He shared with Senator Hoffman that the
bill is a first step and that he has always focused on his
district as well. He remarked that in the future, a pipeline is
a better solution, but the bill allows the project to go forward
while allowing AIDEA to continue considering the pipeline as a
viable option.
CO-CHAIR MICCICHE addressed the Alaska LNG Project (AKLNG) as
follows:
If AKLNG goes through, if this route were the other
way, it could assist with a pipeline to Glennallen,
Copper Center, Fort Greely, Delta Junction, areas that
most likely would not be covered by a pipeline from
AKLNG.
I guess when I think about whether or not this
solution would be a waste in the future, there's still
very viable uses for a pipeline route. Again, I want
to just make sure that we are not applying a Band-Aid.
I am strongly requesting that AIDEA process this
solution even if the cost is slightly more to look at
the long term needs of the region and I believe that
it is a better solution; this allows that solution to
be considered and continued, but still doesn't get in
the way of AIDEA for moving forward on the project
they are looking at right now.
CO-CHAIR BISHOP commended Co-Chair Micciche's office's diligence
in adding the pipeline option into the bill. He concurred that a
pipeline provides the cheapest gas. He summarized that AIDEA has
all of the tools in its toolbox to bring the project over the
top.
3:40:42 PM
EUGENE THERRIAULT, Director, Energy Policy and Outreach, Alaska
Energy Authority (AEA), Anchorage, Alaska, said the CS was
appreciated and its language was acceptable.
MR. THERRIAULT pointed out that on page 5 of the language that
was adopted honors some language that was considered by the
other body's Interior delegation to not lose focus on the
Interior as the primary market to anchor the infrastructure when
"North Slope" was removed by the bill. He stated that there was
concern that focusing on the Interior might make other
geographic areas feel precluded. He explained that the
Department of Law advised that adding "The Interior is the
primary market," suggests that there could be secondary markets.
He detailed that adding secondary markets increases overall
volume and ultimately lowers the per unit price for everyone.
3:43:18 PM
SENATOR HOFFMAN stated that he fully appreciates Co-Chair
Micciche's comments. He pointed out that on page 5, line 4,
"Interior Alaska as a primary market" is noted and suggested
that "an affiliated infrastructure that will provide natural gas
to Alaska" be included starting on line 5. He explained that
"Interior" is already mentioned on line 4 and by saying "to
Alaska" would fulfill and strengthen Co-Chair Micciche's
comments regarding Southeast and the rest of Alaska.
CO-CHAIR MICCICHE remarked that the bill would have passed last
year if there wasn't a focus on one area. He asserted that the
language in SB 50 was better than what was proposed the previous
year. He said SB 50 clarifies a primary market, but the
remainder of the state is available. He stated that he hears
what Senator Hoffman is saying. He noted his background in the
natural gas industry and opined that Senator Hoffman's
suggestion may not be a solution for his community. He set forth
that a solution for Senator Hoffman's community is certainly
possible in the bill's language.
SENATOR HOFFMAN conveyed acceptance that Co-Chair Micciche's
comment regarding his community was on the record.
MR. THERRIAULT noted that Senator Hoffman is a member of the
Senate Finance Committee. He stated that when the bill reaches
Senate Finance, he is willing to work with Senator Hoffman on
its language as long as the Interior demand to anchor the
infrastructure is not lost.
3:45:53 PM
CO-CHAIR MICCICHE opened public testimony.
3:46:16 PM
MERRICK PIERCE, representing himself, Fairbanks, Alaska, stated
that one important consideration is paying attention to
Fairbanks' air quality. He said there is compelling evidence
that Fairbanks' dangerously polluted air is injuring human
beings. He explained that to get Fairbanks' air quality fixed,
3,000 to 5,000 woodstoves have to be eliminated by converting
from wood to propane or wood to natural gas. He detailed that
propane and natural gas are clean burning and emit almost no
particulates. He pointed out that Article 7, Section 4 of the
Constitution requires that the Legislature promote and protect
public health.
MR. PIERCE commended Senator Micciche for looking at a small-
bore pipeline coming from Big Lake or Cook Inlet to Fairbanks.
He pointed out that 305,000 miles of gas transmission pipeline
has been laid across the U.S. because pipelines are the safest,
fastest, and cheapest way to move gas. He suggested that the CS
for the bill change "pipeline" to "pipelines" in order to allow
for two pipes to be placed in the trench.
He opined that $15 gas at-the-meter, $21 at the-burner-tip is
not going to work when wood is much cheaper. He stated that $15
gas will not fix Fairbanks' air quality, attain adequate
conversions, and put Fairbanks in parity with Anchorage. He said
you have to have affordable energy to have industry and you need
industry to have jobs.
He proposed that propane was a great fix for rural Alaska. He
set forth that not spending $250 million to do a full build-out
of the gas grid will subsequently lower the pipeline's tariff.
3:51:31 PM
PAMELA THROOP, representing herself, Fairbanks, Alaska, stated
that affordable energy on par with Anchorage is needed for
Fairbanks to attract and retain businesses. She pointed out that
Fairbanks' foreclosure rates have increased while the
university, state offices, and businesses have relocated to
Anchorage.
3:54:19 PM
LUKE HOPKINS, Mayor, Fairbanks North Star Borough, Fairbanks,
Alaska, thanked the committee for having SB 50 moving forward
with a CS. He opined that the CS adds flexibility for AIDEA to
find the lowest or the most economical project that can bring
low cost energy to Fairbanks. He referenced previous testimony
regarding Fairbanks' air quality conditions and economic stress.
He asserted that the cost of energy in Alaska's Interior area is
certainly hampering Fairbanks' economy. He suggested that
"secondary markets" be referenced in the bill, but noted Co-
Chair Micciche's intention to focus on what can be solved and
solved soon. He summarized that he looks forward to natural gas
coming to Fairbanks and then the secondary markets.
3:57:57 PM
LISA HERBERT, Executive Director, Greater Fairbanks Chamber of
Commerce, Fairbanks, Alaska, noted the difficulty in advocating
on behalf of businesses without affordable energy. She revealed
that the Greater Fairbanks Chamber of Commerce's board voted
unanimously to support HB 105 and SB 50 with the understanding
that the legislation provides the necessary flexibility to AIDEA
in advancing a natural gas project that will address Fairbanks'
high cost of energy.
3:59:38 PM
DAVID PRUHS, Council Member, Fairbanks City Council, City of
Fairbanks, Fairbanks, Alaska, stated that the City of Fairbanks
and the Fairbanks North Star Borough welcomes SB 50 as a way to
get affordable energy to Fairbanks and the Interior.
4:01:22 PM
JOMO STEWART, Energy Project Manager, Fairbanks Economic
Development Corporation, Fairbanks, Alaska, said the Fairbanks
Economic Development Corporation is in favor of SB 50. He
pointed out that 50 percent of the state's population suffers
from the high cost of energy. He revealed that when Fairbanks
moved forward on the Interior Energy Project, the intent was to
create a system that could be replicated in other communities.
He explained that the end result was creating a utility to help
move gas around town that was funded by a low grant-high loan
system. He detailed that the loan system would be replenished by
a revolving loan fund that would make funds available in the
future for other communities when gas became available to them.
He stated that gas from the Cook Inlet and other sources might
help Fairbanks attain the goal of $10/MCF at the city-gate,
$15/MCF to the burner-tip. He summarized that good work has been
done that not only benefits Fairbanks, but if done right, can
serve as a model that can serve other communities as well.
4:04:15 PM
SENATOR HOFFMAN said the project to get gas to Fairbanks is very
good. He opined that Bethel could receive energy transported on
the Yukon and Kuskokwim rivers.
SENATOR EGAN thanked Senator Hoffman for legislation from the
previous year that benefited Southeast Alaska as well.
CO-CHAIR MICCICHE summarized that politics was allowed to get in
the way and two years was wasted on getting gas to Fairbanks. He
declared that the Legislature needs to look at conversion rates,
air quality, and increasing cargo levels on the railroad with
lower cost refinery fuels. He opined that during the time of
lower oil prices, AIDEA should use their time wisely. He asked
for the best solution to be found for everyone along the route
that will remain in service after AKLNG is in service someday.
4:05:45 PM
CO-CHAIR BISHOP moved that the committee pass CS for SB 50,
version: 29-GS1019\W from committee with individual
recommendations and attached zero fiscal note(s).
4:06:07 PM
CO-CHAIR MICCICHE announced that hearing no objection, CSSB
50(NRG) has passed from committee with individual
recommendations and the attached zero fiscal note.
4:06:30 PM
There being no further business to come before the committee,
Co-Chair Micciche adjourned the Senate Special Committee on
Energy at 4:06 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 50 CS NRG version W dated 3-26-15.PDF |
SNRG 3/26/2015 3:30:00 PM SRES 4/10/2015 3:30:00 PM |
SB 50 |