Legislature(2015 - 2016)BUTROVICH 205

03/17/2015 01:00 PM SPECIAL CMTE ON ENERGY

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01:10:23 PM Start
01:11:04 PM SB57
01:33:09 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSB 57(NRG) Out of Committee
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               SENATE SPECIAL COMMITTEE ON ENERGY                                                                             
                         March 17, 2015                                                                                         
                           1:10 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Click Bishop, Co-Chair                                                                                                  
Senator Peter Micciche, Co-Chair                                                                                                
Senator Lyman Hoffman                                                                                                           
Senator Bert Stedman                                                                                                            
Senator Dennis Egan                                                                                                             
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 57                                                                                                              
"An Act relating to the development of state emission standards                                                                 
in accordance with the federal Clean Air Act."                                                                                  
     - MOVED CSSB 57(NRG) OUT OF COMMITTEE                                                                                      
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 57                                                                                                                   
SHORT TITLE: CLEAN AIR ACT PLAN                                                                                                 
SPONSOR(s): SENATOR(s) GIESSEL                                                                                                  
02/20/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/20/15       (S)       NRG, RES                                                                                               
03/17/15       (S)       NRG AT 1:00 PM BUTROVICH 205                                                                           
WITNESS REGISTER                                                                                                              
SENATOR CATHY GIESSEL                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Sponsor of SB 57.                                                                                         
JERRY MULLINS, Vice President                                                                                                   
Government Affairs and External Relations                                                                                       
National Mining Association                                                                                                     
Washington, D.C.                                                                                                                
POSITION STATEMENT: Supports SB 57.                                                                                           
NORMAN ROKEBERG, Commissioner                                                                                                   
Regulatory Commission of Alaska                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:  Noted  rulemaking  concerns  regarding  the                                                             
Environmental Protection Agency.                                                                                                
ALICE EDWARDS, Deputy Commissioner                                                                                              
Division of Air Quality                                                                                                         
Department of Environmental Conservation                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Stated no departmental position on SB 57.                                                                 
ACTION NARRATIVE                                                                                                              
1:10:23 PM                                                                                                                    
CO-CHAIR PETER  MICCICHE called the  Senate Special  Committee on                                                             
Energy  meeting to  order at  1:10 p.m.  Present at  the call  to                                                               
order were Senators Egan, Hoffman,  Stedman, Co-Chair Bishop, and                                                               
Co-Chair Micciche.                                                                                                              
                    SB 57-CLEAN AIR ACT PLAN                                                                                
1:11:04 PM                                                                                                                    
CO-CHAIR MICCICHE announced the consideration of SB 57.                                                                         
CO-CHAIR MICCICHE asked  for a motion to adopt the  CS for SB 57,                                                               
version: I, as the working document.                                                                                            
CO-CHAIR BISHOP moved  that the committee adopt the CS  for SB 57                                                               
[version 29-LS0523\I].                                                                                                          
1:11:40 PM                                                                                                                    
CO-CHAIR MICCICHE  announced that  without objection,  version: I                                                               
was before the committee as the working document.                                                                               
1:11:46 PM                                                                                                                    
SENATOR CATHY GIESSEL, Alaska  State Legislature, Juneau, Alaska,                                                               
said SB 57  is a response to some  egregious regulation proposals                                                               
made by  the Environmental  Protection Agency  (EPA). She  read a                                                               
sponsor-statement as follows:                                                                                                   
     In  June 2014,  the  EPA released  a  proposed rule  to                                                                    
     regulate emissions from  power generators. The proposed                                                                    
     rule has two main  elements: 1) state-specific emission                                                                    
     reduction   targets   and   2)   guidelines   for   the                                                                    
     development,  submission, and  implementation of  state                                                                    
     plans to meet  those targets. The EPA  set Alaska's CO2                                                                    
     emissions reduction target at 26 percent by 2030.                                                                          
     First and  foremost, SB 57  requires the  Department of                                                                    
     Environmental Conservation  (DEC) to  seek a  waiver or                                                                    
     similar  exemption for  Alaska  to  the EPA's  proposed                                                                    
     rule known  as "Existing Source  Performance Standards"                                                                    
     under section 111(d)  of the Clean Air Act.  SB 57 also                                                                    
     provides guidance  to DEC regarding the  development of                                                                    
     a State  Implementation Plan (SIP) should  this rule go                                                                    
     into effect as it is currently proposed.                                                                                   
     So  what  are  some  of the  elements  in  the  state's                                                                    
     implementation plan  that the  bill would  prohibit; in                                                                    
     other  words, the  bill tells  the department  that the                                                                    
     plan should not result in:                                                                                                 
        1. Increased retail electric rates in a way that                                                                        
          would disproportionally affect households of low                                                                      
          or moderate income.                                                                                                   
        2. Less   reliable   electric    service,   resource                                                                    
          inadequacy, or transmission constraints.                                                                              
        3. Impairment of investments in existing electricity                                                                    
          generating capacity.                                                                                                  
        4. Impairment of the competitive position of                                                                            
          manufactures or other public or private sectors                                                                       
          of the state economy.                                                                                                 
        5. Decrease in employment in the state.                                                                                 
        6. Decrease in state or local revenue.                                                                                  
     You can  see that  there are  some sidebars  set around                                                                    
     what  this plan  could and  could not  do, specifically                                                                    
     could not  do. We  don't want  negative effects  on our                                                                    
     economy and on our citizens.                                                                                               
     The  EPA's   proposed  rule  would   cause  significant                                                                    
     increases in  Alaska's electrical rates,  challenge the                                                                    
     reliability of  electric service, and  will effectively                                                                    
     preempt  the state's  energy policy.  The state's  plan                                                                    
     must include  some specific  and forcible  measures and                                                                    
     responsible  parties. Once  approved  by  the EPA,  the                                                                    
     state plan would be federally enforceable.                                                                                 
     SB  57  is written  to  protect  the state  from  EPA's                                                                    
     overreach and protect the citizens.  So SB 57 is a tall                                                                    
     order,  but we  are  not alone.  15  other states  have                                                                    
     either passed legislation  or resolutions in opposition                                                                    
     to EPA's section 111(d) of the Clean Air Act.                                                                              
     There  are  some folks  asserting  that  this piece  of                                                                    
     legislation is somehow  copied from other organizations                                                                    
     and I  will tell  you that  that is  not true;  this is                                                                    
     specifically  written  for  Alaska  by  my  office  and                                                                    
     collaboration  with other  offices  who  have the  same                                                                    
     concern I do.  So this would set  parameters that would                                                                    
     protect Rail  Belt ratepayers from Seward  to Anchorage                                                                    
     to the Interior.                                                                                                           
1:15:49 PM                                                                                                                    
CO-CHAIR MICCICHE noted that the  next committee of referral will                                                               
be Senate Resources. He stated that he  has no need to hold on to                                                               
the bill and noted his intent to move the bill out of committee.                                                                
1:17:43 PM                                                                                                                    
JERRY MULLINS,  Vice President,  Government Affairs  and External                                                               
Relations, National Mining  Association, Washington, D.C., stated                                                               
that  he  supports  SB  57.  He  revealed  that  20  other  state                                                               
legislatures  are making  sure  that  their State  Implementation                                                               
Plans (SIP) complies with the  President's Clean Power Plant Rule                                                               
without causing  higher electricity  rates or  future reliability                                                               
issues. He pointed  out that some states  have passed legislation                                                               
that  requires  state  legislatures  to  approve  their  SIP.  He                                                               
revealed that there  is worry the EPA can simply  force a Federal                                                               
Implementation  Plan (FIP)  on states  that  are slow  or do  not                                                               
offer plans as  fast as the EPA expects. He  pointed out that the                                                               
EPA  cannot  simply go  into  a  state  and start  telling  power                                                               
plants,   businesses,  or   households  what   to  do   regarding                                                               
electricity production or consumption.  He summarized that making                                                               
sure  a state  has  elected officials  serving  as a  responsible                                                               
stakeholder regarding  SIP development  is the best  path forward                                                               
to  ensure that  affordable  and reliable  electricity remains  a                                                               
reality for all Alaskans.                                                                                                       
CO-CHAIR  MICCICHE asked  Commissioner  Rokeberg if  he sees  any                                                               
problems  with  SB  57  getting  in the  way  of  the  Regulatory                                                               
Commission of Alaska's  (RCA) processes or impeding  the state on                                                               
complying with the EPA's requirements.                                                                                          
1:20:09 PM                                                                                                                    
NORMAN ROKEBERG,  Commissioner, Regulatory Commission  of Alaska,                                                               
Anchorage, Alaska, replied  that his only concern  is making sure                                                               
that all  of the leadership  and people  of Alaska have  a common                                                               
goal. He  stated that the  RCA has significant problems  with the                                                               
EPA's rulemaking  docket under  111(d) of the  Clean Air  Act. He                                                               
revealed that the  RCA's executive branch worked  hard in putting                                                               
together comments that were submitted  to the EPA in December. He                                                               
explained  that the  most  appropriate action  was  to request  a                                                               
waiver from the EPA. He pointed  out that Alaska is not connected                                                               
to the continental-grid  and the impact from 111(d)  on Alaska is                                                               
quite  extraordinary. He  revealed that  Alaska had  joined other                                                               
states in  filing a  lawsuit to set  the EPA's  rulemaking aside,                                                               
but noted  that Alaska was subject  to the EPA's imposition  of a                                                               
plan if the  state did not file  a plan. He detailed  that an EPA                                                               
drafted  plan  would  be  enforced  by the  EPA  and  subject  to                                                               
citizen's suits.  He summarized that  he was concerned  if Alaska                                                               
did not provide a SIP.                                                                                                          
1:23:12 PM                                                                                                                    
CO-CHAIR MICCICHE  closed public  testimony. He noted  letters of                                                               
support  from  the Teamster's  Local  959,  Fairbanks Chamber  of                                                               
Commerce,  Alaska Railbelt  Cooperative  Transmission &  Electric                                                               
Company  (ARCTEC), Alaska  State  Chamber  of Commerce,  Consumer                                                               
Energy  Alliance-Alaska, Alaska  Miners  Association, and  Golden                                                               
Valley Electric  Association. He  noted one letter  of opposition                                                               
submitted  by Ms.  Whytal  from  Homer where  she  worries SB  57                                                               
prohibits  DEC   from  hearing  a  very   unique,  state-specific                                                               
implementation plan. He asked Senator  Giessel if SB 57 prohibits                                                               
a plan from being constructed.                                                                                                  
SENATOR  GIESSEL  replied  that  SB 57  does  the  opposite.  She                                                               
detailed that SB  57 urges DEC to create a  plan that is specific                                                               
for Alaska in  addition to asking for an  exemption. She asserted                                                               
that there  was no prohibition and  her office had met  with DEC.                                                               
She revealed that DEC understood  SB 57's goal and the department                                                               
would carry its provisions forward.                                                                                             
CO-CHAIR MICCICHE  thanked Senator  Giessel and pointed  out that                                                               
the committee  was paying attention  to letters of  testimony and                                                               
that the sponsor was aware of the specified issues.                                                                             
SENATOR EGAN  asked if the  Administration had a position  on the                                                               
CO-CHAIR MICCICHE stated that he  nor the sponsor could speak for                                                               
the Administration.                                                                                                             
SENATOR GIESSEL concurred with Co-Chair Micciche.                                                                               
1:25:42 PM                                                                                                                    
ALICE  EDWARDS, Deputy  Commissioner,  Division  of Air  Quality,                                                               
Department   of  Environmental   Conservation,  Juneau,   Alaska,                                                               
replied  that  she does  not  have  a  formal position  from  the                                                               
Administration  on   SB  57.  She  concurred   with  Commissioner                                                               
Rokeberg  that DEC  shares concerns  regarding the  provisions in                                                               
111(d) about having  affordable and reliable power  in the state.                                                               
She  added that  the department  also shares  the RCA's  concerns                                                               
about the  state's ability to  meet both the  bill's requirements                                                               
and the  federal rule  requirements that may  be put  into place.                                                               
She summarized  that the department  is concerned that  the state                                                               
may end up with a federal plan rather than a state plan.                                                                        
SENATOR EGAN asked if the federal  plan would cost the state more                                                               
MS.  EDWARDS  replied that  DEC  believes  the analysis  required                                                               
would  cost  a  little  bit  more money  than  what  normally  is                                                               
SENATOR EGAN specified  that the state would have to  spend a lot                                                               
of money  fighting the  federal government  as other  states were                                                               
MS. EDWARDS  reiterated that  the state had  joined a  lawsuit in                                                               
addition to  requesting an  exemption. She  said the  EPA's rules                                                               
were not known and there was  uncertainty as to what steps should                                                               
be taken next.                                                                                                                  
1:27:59 PM                                                                                                                    
SENATOR EGAN  opined that  being involved  in something  does not                                                               
cost the state anything, but  fighting a federal regulation costs                                                               
a lot of money.                                                                                                                 
CO-CHAIR  MICCICHE noted  that the  fiscal note  was $75,000  for                                                               
FY16 and  $25,000 for  FY17. He  asked what  the cost  would have                                                               
been  without SB  57. He  opined that  a plan  would be  produced                                                               
anyway once there was a regulation.                                                                                             
MS. EDWARDS  specified that  the costs  identified in  the fiscal                                                               
note address  economic analysis that  typically goes  beyond what                                                               
DEC  normally   does.  She  specified   that  the   fiscal  noted                                                               
identified the  contractual costs  that go beyond  the division's                                                               
technical capacity.                                                                                                             
CO-CHAIR MICCICHE asked if the  fiscal note reflected the cost of                                                               
DEC or another department.                                                                                                      
MS. EDWARDS answered that DEC  would be assumed to be contracting                                                               
for assistance.                                                                                                                 
CO-CHAIR MICCICHE  opined that the  bill pushes  an understanding                                                               
of the impacts  from federal regulations on  the state's everyday                                                               
lives. He remarked  that the state would just comply  in the past                                                               
while  sometimes not  understanding the  unintended consequences.                                                               
He  said  understanding the  impact  is  a worthwhile  investment                                                               
considering the  hundreds of millions  that would be  costing the                                                               
state in the long run.                                                                                                          
1:30:09 PM                                                                                                                    
CO-CHAIR BISHOP commended  the bill's sponsor. He  noted that the                                                               
Teamsters pointed  out in  a letter  that 80  full-time employees                                                               
work  at  the Usibelli  Coal  Mine  (UCM).  He revealed  that  47                                                               
percent of the  Alaska Railroad's revenue comes  from hauling UCM                                                               
coal. He  asserted that the  state needs  to stand up  and debate                                                               
the 111(d)  rule, a rule  that was clearly an  over-reach attempt                                                               
by the  EPA. He  noted an article  that detailed  Denali National                                                               
Park as having the cleanest air  of any national park in the U.S.                                                               
with  a coal  mine and  producing  coal plant  located within  30                                                               
miles. He  divulged that  samplings over the  past 35  years have                                                               
not  mentioned  anything  regarding   coal  mine  or  coal  plant                                                               
CO-CHAIR  MICCICHE  asked  Senator  Giessel  to  make  her  final                                                               
comments. He  reiterated that SB 57  will be heard in  the Senate                                                               
Resources Committee as well.                                                                                                    
SENATOR GIESSEL  commented that  SB 57  may ask DEC  to do  a bit                                                               
more  analysis than  what was  required in  writing the  SIP. She                                                               
opined that  the cost  of doing  nothing was  too high.  She said                                                               
Alaska and other states know  that the EPA's new regulations will                                                               
increase   energy  costs   for  citizens   and  businesses.   She                                                               
summarized  that  states may  be  able  to  convince the  EPA  to                                                               
abandon the 111(d) rulemaking procedure.                                                                                        
1:32:27 PM                                                                                                                    
CO-CHAIR BISHOP  moved that the committee  pass the CS for  SB 57                                                               
[29-LS0523\I] from the  committee with individual recommendations                                                               
and attached fiscal note(s).                                                                                                    
CO-CHAIR  MICCICHE  announced  that hearing  no  objection,  CSSB
57(NRG) passed from the Senate Special Committee on Energy.                                                                     
1:33:09 PM                                                                                                                    
There being no further business to come before the committee,                                                                   
Co-Chair Micciche adjourned the Senate Special Committee on                                                                     
Energy hearing at 1:33 p.m.                                                                                                     

Document Name Date/Time Subjects
SB 57 ver E.pdf SNRG 3/17/2015 1:00:00 PM
SB 57
CSSB 57 ver I.pdf SNRG 3/17/2015 1:00:00 PM
SB 57
SB 57 Sponsor Statement.pdf SNRG 3/17/2015 1:00:00 PM
SRES 3/20/2015 3:30:00 PM
SB 57
SB 57 Sectional Analysis.pdf SNRG 3/17/2015 1:00:00 PM
SRES 3/20/2015 3:30:00 PM
SB 57
SB 57 DEC fiscal note 3-13-15.pdf SNRG 3/17/2015 1:00:00 PM
SB 57
SB 57 - Backup Documents - Rokeberg - observations re 111(d) in Alaska 2-12-2015.pdf SNRG 3/17/2015 1:00:00 PM
SRES 3/20/2015 3:30:00 PM
SB 57
SB 57 Supporting Document - State of Alaska Comments, Docket # EPA-HQ-OAR-2013-0602.pdf SNRG 3/17/2015 1:00:00 PM
SRES 3/20/2015 3:30:00 PM
SB 57
SB 57 Supporting Document- Letter Fairbanks Chamber of Commerce- 3-12-15.pdf SNRG 3/17/2015 1:00:00 PM
SB 57
SB 57 - Supporting Document -Letter ARCTEC 3-12-15.pdf SNRG 3/17/2015 1:00:00 PM
SRES 3/20/2015 3:30:00 PM
SB 57
SB 57 Supporting Document - Article Bloomberg BNA.pdf SNRG 3/17/2015 1:00:00 PM
SRES 3/20/2015 3:30:00 PM
SB 57
SB 57 Supporting Document - Article NMA - EPA-Climate-Rules NMA Bullets.pdf SNRG 3/17/2015 1:00:00 PM
SB 57
SB 57 Supporting Document - Article - EPA imposes costly power plan on Tennessee, all states 3-9-15.pdf SNRG 3/17/2015 1:00:00 PM
SRES 3/20/2015 3:30:00 PM
SB 57
SB 57 Supporting Document -Article MINNPOST.pdf SNRG 3/17/2015 1:00:00 PM
SRES 3/20/2015 3:30:00 PM
SB 57
SB 57 Supporting Document - Article The Daily Signal 2-17-2015.pdf SNRG 3/17/2015 1:00:00 PM
SRES 3/20/2015 3:30:00 PM
SB 57
SB 57 Supporting Document - Article NMA - Fact Sheet-Electricity Prices EPA Power Plant Policies Impose Regressive Electricity Tax.pdf SNRG 3/17/2015 1:00:00 PM
SB 57
SB 57 Supporting Letter Support - Consumer Energy Alliance - AK.pdf SNRG 3/17/2015 1:00:00 PM
SRES 3/20/2015 3:30:00 PM
SB 57
SB 57 Supporting Document - Article The Pew Charitable Trusts 2-27-2015.pdf SNRG 3/17/2015 1:00:00 PM
SRES 3/20/2015 3:30:00 PM
SB 57
SB 57 Supporting Document - Alaska Chamber 3-13-15.pdf SNRG 3/17/2015 1:00:00 PM
SRES 3/20/2015 3:30:00 PM
SB 57
SB 57 Supporting Document - Alaska State Senate Leadership Letter - EPA-HQ-OAR-2013-0602 - Nov 24 2014.pdf SNRG 3/17/2015 1:00:00 PM
SB 57
SB 57 - Supporting Document - Article NMA -Electrical Grid Reliability.pdf SNRG 3/17/2015 1:00:00 PM
SRES 3/20/2015 3:30:00 PM
SB 57
SB 57 Supporting Document - EPA Clean Power Plan - NMA.pdf SNRG 3/17/2015 1:00:00 PM
SB 57
SB 57 Supporting Document - Letter - Golden Valley Electric Association 3-16-15.pdf SNRG 3/17/2015 1:00:00 PM
SB 57
SB 57 Supporting Document - Letter Alaska Miners Association 3-16-15.pdf SNRG 3/17/2015 1:00:00 PM
SB 57
SB 57 Supporting Document - Letter -Teamsters 3-16-15.pdf SNRG 3/17/2015 1:00:00 PM
SB 57
SB 57 Opposing Document - Email Sharon Whytal 3-17-15.PDF SNRG 3/17/2015 1:00:00 PM
SB 57