Legislature(2015 - 2016)BUTROVICH 205

03/15/2016 01:00 PM SPECIAL CMTE ON ENERGY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 192 AIDEA BONDS, LOANS, FUND; AEA LOAN TELECONFERENCED
Heard & Held
-- Public Testimony --
*+ SB 193 EXTEND EXEMPTION FOR SMALL POWER PLANTS TELECONFERENCED
Heard & Held
-- Public Testimony --
                    ALASKA STATE LEGISLATURE                                                                                  
               SENATE SPECIAL COMMITTEE ON ENERGY                                                                             
                         March 15, 2016                                                                                         
                           1:07 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. 192                                                                                                             
"An Act authorizing the Alaska  Industrial Development and Export                                                               
Authority  to  issue  bonds to  finance  the  infrastructure  and                                                               
construction costs of the  Sweetheart Lake hydroelectric project;                                                               
and relating  to legislative approval  for a loan from  the power                                                               
project fund to the Lynn Canal Transmission Corporation."                                                                       
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 193                                                                                                             
"An Act extending the exemption from regulation by the                                                                          
Regulatory Commission of Alaska for certain facilities or plants                                                                
generating energy from renewable energy resources."                                                                             
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 192                                                                                                                  
SHORT TITLE: AIDEA BONDS, LOANS, FUND; AEA LOAN                                                                                 
SPONSOR(s): SENATOR(s) MCGUIRE                                                                                                  
                                                                                                                                
02/22/16       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/22/16       (S)       NRG, FIN                                                                                               
03/15/16       (S)       NRG AT 1:00 PM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SB 193                                                                                                                  
SHORT TITLE: EXTEND EXEMPTION FOR SMALL POWER PLANTS                                                                            
SPONSOR(s): SENATOR(s) MCGUIRE                                                                                                  
                                                                                                                                
02/22/16       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/22/16       (S)       NRG, L&C                                                                                               
03/15/16       (S)       NRG AT 1:00 PM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JESSE LOGAN, Chief of Staff                                                                                                     
Senator McGuire                                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided an overview of SB 192.                                                                           
                                                                                                                                
DUFF MITCHELL, Managing Director                                                                                                
Juneau Hydropower, Inc.                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided an overview of the Juneau                                                                        
Hydropower projects addressed by SB 192.                                                                                        
                                                                                                                                
MARY BECKER, Mayor                                                                                                              
City and Borough of Juneau                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 192.                                                                           
                                                                                                                                
PAUL GROSSI, lobbyist                                                                                                           
Alaska State Pipe Trades, Alaska Ironworkers, and Juneau                                                                        
Building Trades                                                                                                                 
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 192.                                                                           
                                                                                                                                
ROBERT GRIMM, President/CEO                                                                                                     
Alaska Power and Telephone Company                                                                                              
Skagway, Alaska                                                                                                                 
POSITION STATEMENT: Testified in support of SB 192.                                                                           
                                                                                                                                
MIKE CRAFT, President/CEO                                                                                                       
Delta Wind Farm                                                                                                                 
Delta Junction, Alaska                                                                                                          
POSITION STATEMENT: Testified in support of SB 192.                                                                           
                                                                                                                                
RODNEY HESSON, Representative-Local 1547                                                                                        
International Brotherhood of Electrical Workers (IBEW), and                                                                     
Juneau Building Trades                                                                                                          
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 192.                                                                           
                                                                                                                                
MAX MIELKE, Business Manager                                                                                                    
Plumbers and Pipefitters Local 262                                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 192.                                                                           
                                                                                                                                
COREY BAXTER, Representative-Local 302                                                                                          
International Union of Operating Engineers (IUOE)                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 192.                                                                           
                                                                                                                                
WAYNE ZAGARLICK, Vice President and General Manager                                                                             
Coeur Alaska-Kensington Mine                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 192.                                                                           
                                                                                                                                
JOHN SPRINGSTEEN, Executive Director                                                                                            
Alaska Industrial Development and Export Authority (AIDEA)                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 192.                                                                           
                                                                                                                                
GENE THERRIAULT, Team Leader                                                                                                    
Interior Energy Project                                                                                                         
Alaska Industrial Development and Export Authority (AIDEA)                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Announced his availability to answer                                                                      
questions regarding SB 192.                                                                                                     
                                                                                                                                
JESSE LOGAN, Chief of Staff                                                                                                     
Senator McGuire                                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided an overview of SB 193.                                                                           
                                                                                                                                
DUFF MITCHELL, Executive Director                                                                                               
Alaska Independent Power Producers Association (AIPPA), and                                                                     
Juneau Hydropower, Inc.                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 193.                                                                         
                                                                                                                                
MIKE CRAFT, President/CEO                                                                                                       
Delta Wind Farm                                                                                                                 
Delta Junction, Alaska                                                                                                          
POSITION STATEMENT: Testified in support of SB 193.                                                                           
                                                                                                                                
JAN WILSON, Commissioner                                                                                                        
Regulatory Commission of Alaska (RCA)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified that RCA has no positon on SB 193.                                                              
                                                                                                                                
KIRK PERISICH, Representative-Local 1281                                                                                        
Pacific Northwest Regional Council of Carpenters (PNWRCC)                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 192.                                                                           
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:07:09 PM                                                                                                                    
CO-CHAIR PETER  MICCICHE called the  Senate Special  Committee on                                                             
Energy  meeting to  order at  1:07 p.m.  Present at  the call  to                                                               
order  were   Senators  Egan,   Co-Chair  Bishop,   and  Co-Chair                                                               
Micciche.                                                                                                                       
                                                                                                                                
                                                                                                                                
           SB 192-AIDEA BONDS, LOANS, FUND; AEA LOAN                                                                        
                                                                                                                              
1:08:16 PM                                                                                                                    
CO-CHAIR MICCICHE announced the consideration of SB 192.                                                                        
                                                                                                                                
JESSE LOGAN, Chief of Staff, Senator McGuire, Alaska State                                                                      
Legislature, Juneau, Alaska, stated that SB 192 does two things:                                                                
                                                                                                                                
   1. Provides bonding authority to Alaska Industrial Development                                                               
     and Export Authority (AIDEA) to finance the Sweetheart Lake                                                                
     Hydroelectric Project (SLHP) up to $120 million.                                                                           
   2. Authorizes Alaska Energy Authority (AEA) to issue a $22                                                                   
     million loan through the Power Project Loan Fund (PPF) for                                                                 
     necessary transmission lines.                                                                                              
                                                                                                                                
MR. LOGAN disclosed that SLHP was seeking alternative funding                                                                   
and asked that the committee consider removing the AEA portion                                                                  
from the bill in a future amendment or committee substitute.                                                                    
                                                                                                                                
He explained that SLHP would encompass the following:                                                                           
                                                                                                                                
   · Provide a maximum capacity of 19.8 megawatts.                                                                              
   · Designed to fully supply power to the Kensington Mine with                                                                 
     year-round power.                                                                                                          
   · Possibly supply additional power to Alaska Electric Light                                                                  
     and Power Company (AEL&P).                                                                                                 
                                                                                                                                
MR.  LOGAN  provided   an  overview  of  SLHP's   impact  on  the                                                               
Kensington Mine and Southeast Alaska as follows:                                                                                
                                                                                                                                
   · Major economic driver in the Juneau area.                                                                                  
   · SLHP has the potential to lower the cost of the mine.                                                                      
   · SLHP has the potential to extend the life of the mine.                                                                     
   · SLHP could help the mine realize environmental benefits                                                                    
     from switching from diesel to clean hydropower.                                                                            
   · SLHP would run a submarine transmission cable across                                                                       
     Berners Bay in the Lynn Canal to the mine.                                                                                 
   · Additional power from the mine could be sold to AEL&P and                                                                  
     utilized for the Greens Creek Mine which currently buys                                                                    
     from AEL&P and is under-supplied.                                                                                          
                                                                                                                                
MR. LOGAN pointed out that  with any AIDEA bonding authority, the                                                               
state would  not be obligated to  pay. He added that  SB 192 does                                                               
not   obligate   AIDEA   to  issue   bonds   until   suitability,                                                               
feasibility,  and  due  diligence   analysis  was  conducted.  He                                                               
specified  that  SB 192  was  necessary  should AIDEA  deem  SLHP                                                               
suitable for  issuing bonds to  provide loans. He added  that the                                                               
issuance of the  bonds for sales provides an  additional round of                                                               
due  diligence by  the  international bond  market.  He said  the                                                               
additional  due diligence  helps protect  AIDEA's investment  and                                                               
ensure a solid return for AIDEA and the State of Alaska.                                                                        
                                                                                                                                
1:09:27 PM                                                                                                                    
SENATOR STEDMAN joined the committee.                                                                                           
                                                                                                                                
1:10:39 PM                                                                                                                    
DUFF  MITCHELL,  Managing   Director,  Juneau  Hydropower,  Inc.,                                                               
Juneau, Alaska,  stated that he  would provide an overview  as to                                                               
why  Juneau Hydropower  has asked  AIDEA for  money. He  said the                                                               
intent for  SLHP was to supply  power to both Kensington  Mine as                                                               
well as the proposed Juneau District Heating Project (JDHP).                                                                    
                                                                                                                                
MR. MITCHELL provided details on SLHP as follows:                                                                               
                                                                                                                                
   · 19.8 megawatts.                                                                                                            
   · Located at the very southern tip of the City and Borough of                                                                
     Juneau.                                                                                                                    
   · Sweetheart Lake is approximately 5-1/2 miles long and 1/2                                                                  
     mile wide.                                                                                                                 
   · Sweetheart Lake was initially studied in 1906 for                                                                          
     hydropower.                                                                                                                
   · Sweetheart  Lake currently  has a  power-site classification                                                               
     and a Federal Reserve designation for hydropower.                                                                          
   · Sweetheart  Lake  has  been  studied  by  the  Alaska  Power                                                               
     Authority, U.S. Geological Services, and others.                                                                           
   · SLHP construction would  start in 2016 and  be in production                                                               
     by 2018.                                                                                                                   
   · Sweetheart Lake  is 35 miles  from Juneau, but only  8 miles                                                               
     from the AIDEA Snettisham line.                                                                                            
   · SLHP  is designed  to provide  firm-power during  the winter                                                               
     months.                                                                                                                    
   · SLHP will add  about 25 percent new  generation and capacity                                                               
     to Juneau.                                                                                                                 
                                                                                                                                
1:12:46 PM                                                                                                                    
MR. MITCHELL stated that SLHP  would support power for the Juneau                                                               
District Heating Project (JDHP). He  detailed that JDHP would use                                                               
Alaska-based technology  that has  been developed in  Juneau with                                                               
the  [Ted Stevens  Marine Research  Institute (TSMRI).]  He noted                                                               
that the Alaska Sealife Center  in Seward uses another generation                                                               
of the  technology. He  summarized that  the technology  would be                                                               
brought  full-circle   around  to  provide   district-heating  in                                                               
Juneau.                                                                                                                         
                                                                                                                                
1:13:19 PM                                                                                                                    
SENATOR HOFFMAN joined the committee.                                                                                           
                                                                                                                                
MR. MITCHELL detailed JDHP as follows:                                                                                          
                                                                                                                                
   · Designed to harvest heat from the Gastineau Channel.                                                                       
   · Emerson  Climate Technologies  (ECT), subsidiary  of Emerson                                                               
     Company with $22 billion in sales, has developed and                                                                       
     patented the technology that produces 180 to 190 degree                                                                    
     heat from seawater.                                                                                                        
   · ECT has  deployed their technology-suite in  Drammen, Norway                                                               
     since 2011.                                                                                                                
   · The technology  is 300-percent efficient  where one  unit of                                                               
     electricity going in produces three kilowatts units of                                                                     
     heat.                                                                                                                      
   · JDHP  would circulate  heat around  Juneau from  180 to  190                                                               
     degrees through a pipe-distribution network that contains a                                                                
     non-volatile fluid.                                                                                                        
   · JDHP's  pipe-distribution  network   would  use  directional                                                               
     drilling   from   basement-to-basement   to   minimize   the                                                               
     installation's impact on city streets.                                                                                     
   · JDHP could provide all of Juneau with low-cost heating.                                                                    
   · JDHP's technology can be transferred to other locations in                                                                 
     Southeast Alaska.                                                                                                          
                                                                                                                                
CO-CHAIR MICCICHE asked if TSMRI  was currently using the heating                                                               
technology.                                                                                                                     
                                                                                                                                
MR. MITCHELL  answered yes. He  detailed that TSMRI  broke ground                                                               
and "Treaded where  nobody else had treaded before."  He said the                                                               
Seward  SeaLife  Center added  on  to  the technology-suite  that                                                               
TSMRI started. He summarized as follows:                                                                                        
                                                                                                                                
        We are really proud that this is an Alaska-based                                                                        
     technology that we are bringing around full-circle and                                                                     
     it's neat to see Alaskans developing this technology.                                                                      
                                                                                                                                
CO-CHAIR BISHOP asked if JDHP would use seawater.                                                                               
                                                                                                                                
MR. MITCHELL  answered that JDHP  would take seawater out  of the                                                               
channel at a depth of 100 feet.                                                                                                 
                                                                                                                                
CO-CHAIR  BISHOP asked  if  the  piping used  for  JDHP would  be                                                               
stainless steel or incorporate a corrosion inhibitor.                                                                           
                                                                                                                                
MR. MITCHELL  explained that  JDHP would  use a  pipeline-pig for                                                               
internal cleaning.  He added that  filter systems would  keep the                                                               
"big stuff" from  coming in. He noted that the  system would draw                                                               
seawater  at  low  velocity  so  a vacuum  was  not  created.  He                                                               
detailed that the seawater would be  brought in for the heat pump                                                               
system and circulated back out.  He specified that the seawater's                                                               
heat would be transferred to  freshwater that would be circulated                                                               
through the pipe-distribution network to buildings.                                                                             
                                                                                                                                
CO-CHAIR  MICCICHE   remarked  that   the  system   Mr.  Mitchell                                                               
described was similar to a reverse of the refrigerant process.                                                                  
                                                                                                                                
SENATOR  HOFFMAN asked  what  would happen  to  salmon and  other                                                               
ocean sea life swimming near the system's intake.                                                                               
                                                                                                                                
MR.  MITCHELL explained  that TSMRI  and the  SeaLife Center  use                                                               
filters to stop  all of the fish and octopus  from coming in, but                                                               
microscopic things like barnacles are not stopped.                                                                              
                                                                                                                                
1:18:17 PM                                                                                                                    
MR.  MITCHELL presented  a video  to  the committee  on JDHP.  He                                                               
divulged  that John  Cooper and  his team  from TSMRI  received a                                                               
federal renewable energy award from  the White House for the cost                                                               
savings from their work on the seawater heat pump system.                                                                       
                                                                                                                                
CO-CHAIR BISHOP asked what the  seawater intake pipe was made out                                                               
of.                                                                                                                             
                                                                                                                                
MR.  MITCHELL replied  that the  pipe  was metal  with some  high                                                               
density polyethylene (HDP) parts within it.                                                                                     
                                                                                                                                
CO-CHAIR  MICCICHE  noted  that  the introduction  to  the  video                                                               
touted an anti-hydrocarbon message.                                                                                             
                                                                                                                                
MR.  MITCHELL  replied  that  the  heating  system  did  not  use                                                               
hydrocarbons and saved money.                                                                                                   
                                                                                                                                
1:22:46 PM                                                                                                                    
CO-CHAIR MICCICHE asked how the  heat taken from the seawater was                                                               
condensed.                                                                                                                      
                                                                                                                                
MR.  MITCHELL answered  that the  heat pump  technology condenses                                                               
the heat. He  noted that the technology has been  around for over                                                               
100 years. He specified that the  heat pump would take about 4 or                                                               
5 degrees out of the saltwater and return it back to the ocean.                                                                 
                                                                                                                                
SENATOR  HOFFMAN asked  how far  north the  heat pump  technology                                                               
could be utilized.                                                                                                              
                                                                                                                                
MR. MITCHELL  replied that  the technology  was dependent  on the                                                               
water temperature, not  the latitude. He noted  that the seawater                                                               
heat pump system  was used in Drammen, Norway,  which was located                                                               
118 miles [latitudinally] north of Juneau.                                                                                      
                                                                                                                                
SENATOR  HOFFMAN asked  if the  heat-pump technology  has to  use                                                               
seawater.                                                                                                                       
                                                                                                                                
1:25:04 PM                                                                                                                    
MR.  MITCHELL  answered  no.  He explained  that  the  heat  pump                                                               
technology can use any water source.                                                                                            
                                                                                                                                
He  summarized  that  Juneau Hydropower's  projects  would  lower                                                               
Juneau's electricity  costs. He  pointed out that  the Regulatory                                                               
Commission   of   Alaska   (RCA)  recently   passed   regulations                                                               
specifying that  any purchases by  a local utility must  be just-                                                               
and-reasonable  where  the   local  utility  cannot  discriminate                                                               
against  the qualifying  facility as  long as  consumers are  not                                                               
adversely  effected. He  added that  the power  transmission from                                                               
JDHP would add  additional revenue for both  the AIDEA Snettisham                                                               
and  AEL&P.  He remarked  that  SLHP  is  not getting  its  power                                                               
transmission for  free, a fee  would be paid that  ultimately may                                                               
pressure rates  to go down. He  set forth that the  SLHP business                                                               
model improves  competitiveness and  noted that  "Firm hydropower                                                               
always beats diesel."                                                                                                           
                                                                                                                                
SENATOR EGAN noted  that he was told that  the power transmission                                                               
outbound  from Lena  Cove to  Kensington  Mine would  have to  be                                                               
upgraded. He asked  who would pay for the upgrade  from Lena Cove                                                               
on out.                                                                                                                         
                                                                                                                                
MR. MITCHELL replied that the  upgrade would be Juneau Hydropower                                                               
through the Lynn Canal Transmission Corporation.                                                                                
                                                                                                                                
SENATOR EGAN  asked him  to verify  that Juneau  Hydropower would                                                               
take care of the cost for the whole thing.                                                                                      
                                                                                                                                
MR. MITCHELL answered  yes. He specified that  the upgrade's cost                                                               
ultimately would be  paid for by customers  like Kensington Mine,                                                               
but the  cost would be  prorated over 30  years to keep  rates as                                                               
low as possible.                                                                                                                
                                                                                                                                
He  reiterated that  Juneau's heating  costs would  go down  with                                                               
JDHP. He remarked  that he has nothing against  fossil fuels, but                                                               
noted that  JDHP would advantage of  a local resource as  well as                                                               
helping  Juneau  deal  with   fossil-fuel  price  volatility.  He                                                               
asserted that adding  another fuel or heating  source into Juneau                                                               
was  just competition  in a  free market  that ultimately  drives                                                               
prices down.                                                                                                                    
                                                                                                                                
He  pointed  out that  SLHP  would  benefit  Juneau with  a  $125                                                               
million  private   capital  investment   that  would   create  85                                                               
construction jobs and 35 indirect  jobs. He added that JDHP would                                                               
create   another   $25   million   investment   with   additional                                                               
construction  and   indirect  jobs.   He  said  the   Lynn  Canal                                                               
transmission  upgrades would  also  provide benefits  from a  $22                                                               
million  investment of  private capital.  He summarized  that the                                                               
projects he  noted would provide  economic development  in Juneau                                                               
during a period of decline in the state.                                                                                        
                                                                                                                                
1:29:51 PM                                                                                                                    
CO-CHAIR  MICCICHE asked  why the  number of  SLHP's construction                                                               
jobs were so low.                                                                                                               
                                                                                                                                
MR. MITCHELL  explained that  the 85  construction jobs  would be                                                               
for a  2-year project. He noted  that the dam at  Sweetheart Lake                                                               
was only  111-feet high  and 278-feet  across, but  the project's                                                               
tunnel and some other things created  the jobs. He added that the                                                               
dam-construction stage could be done in one-construction season.                                                                
                                                                                                                                
MR. MITCHELL set forth that  Juneau Hydropower's team was looking                                                               
forward  to  making  their  proposal   happen  and  having  AIDEA                                                               
participate   in  its   financing.  He   specified  that   Juneau                                                               
Hydropower  was  not  looking  at  AIDEA to  fully  take  on  the                                                               
projects' full  load, equity and  private capital  investment was                                                               
part  of  the plan.  He  summarized  that Juneau  Hydropower  was                                                               
excited  to  bring the  technology  forward  and provide  Alaskan                                                               
leadership to make the projects  happen with the local community,                                                               
its players, and its local-labor force.                                                                                         
                                                                                                                                
CO-CHAIR BISHOP  asked how much  has been invested in  the Juneau                                                               
hydro-project to date.                                                                                                          
                                                                                                                                
MR.  MITCHELL answered  that approximately  $4  million in  hard-                                                               
dollars in addition to soft-dollars have been invested.                                                                         
                                                                                                                                
CO-CHAIR MICCICHE opened public testimony.                                                                                      
                                                                                                                                
1:31:51 PM                                                                                                                    
MARY BECKER, Mayor,  City and Borough of  Juneau, Juneau, Alaska,                                                               
disclosed  that   the  City  and   Borough  of   Juneau  Assembly                                                               
unanimously voted for a letter of support for SLHP and JDHP.                                                                    
                                                                                                                                
1:32:59 PM                                                                                                                    
PAUL  GROSSI,   lobbyist;  Alaska   State  Pipe   Trades,  Alaska                                                               
Ironworkers, and  Juneau Building Trades; Juneau,  Alaska, stated                                                               
that the  unions support the  projects because of the  added jobs                                                               
and positive  impact on Juneau's  economy. He estimated  that the                                                               
three projects  would create 100  construction jobs with 5  to 10                                                               
permanent fulltime  positions. He pointed  out that Juneau  has a                                                               
skilled  construction force  that will  have leave  the state  if                                                               
there  are no  jobs.  He  specified that  SB  192 was  permissive                                                               
language  that  does  not  require  AIDEA  to  loan  money  until                                                               
additional  analysis determines  viability. He  opined that  $120                                                               
million in loans from AIDEA could  allow the agency and the state                                                               
to make as much  as $120 million. He set forth  that SB 192 would                                                               
allow  a value-added  industry to  happen. He  remarked that  the                                                               
project  will  not  happen  if said  AIDEA  determines  that  the                                                               
project is not viable.                                                                                                          
                                                                                                                                
1:39:17 PM                                                                                                                    
ROBERT  GRIMM,  Alaska  Power  and  Telephone  Company,  Skagway,                                                               
Alaska, said  the proposed project  was innovative and  worth the                                                               
effort.  He  concurred with  Mr.  Grossi  that  SB 192  was  just                                                               
permissive language  and AIDEA still  had a lot of  due diligence                                                               
to conduct.                                                                                                                     
                                                                                                                                
1:40:21 PM                                                                                                                    
MIKE  CRAFT,  President/CEO,  Delta Wind  Farm,  Delta  Junction,                                                               
Alaska, stated that  he supported the project.  He disclosed that                                                               
he has been involved with  renewable energy development in Alaska                                                               
for the  last eight years and  admitted that the battle  has been                                                               
tough to  bring projects forward.  He pointed out that  the state                                                               
wanted  50 percent  of energy  sources to  be renewable  with the                                                               
intent  to  attract  private-sector  capital.  He  said  Alaska's                                                               
independent  power producers  heard the  state's message  to find                                                               
renewable  resources to  take advantage  of. He  opined that  Mr.                                                               
Mitchell's project had a lot of  attributes to it with respect to                                                               
economic development, public benefit, and jobs.                                                                                 
                                                                                                                                
1:41:41 PM                                                                                                                    
RODNEY  HESSON, International  Brotherhood of  Electrical Workers                                                               
(IBEW)  Local 1547  and Juneau  Building Trades,  Juneau, Alaska,                                                               
stated that  the project was  good because jobs would  be created                                                               
and the succession plan for a trained workforce can continue.                                                                   
                                                                                                                                
1:43:07 PM                                                                                                                    
MAX  MIELKE, Business  Manager,  Plumbers  and Pipefitters  Local                                                               
262, Juneau,  Alaska, stated that  he represented 100  members in                                                               
Southeast Alaska.  He said  his union has  15 apprentices  in its                                                               
program with  the intent to  keep the program going.  He revealed                                                               
that all  of the  building and  construction trades  in Southeast                                                               
Alaska has 950 members with 80  apprentices. He set forth that SB
192 was  about jobs  and the  project was  very important  to its                                                               
members.                                                                                                                        
                                                                                                                                
1:44:44 PM                                                                                                                    
COREY  BAXTER, Representative-Local  302, International  Union of                                                               
Operating  Engineers  (IUOE),  Juneau,  Alaska,  said  the  union                                                               
supported SHLP. He  set forth that SHLP was a  project that would                                                               
impact  and  benefit  Juneau and  Southeast  Alaska  by  creating                                                               
direct and indirect family-wages jobs.                                                                                          
                                                                                                                                
CO-CHAIR BISHOP  asked if IUOE  supported the use  of apprentices                                                               
for SHLP.                                                                                                                       
                                                                                                                                
MR. BAXTER answered yes.                                                                                                        
                                                                                                                                
CO-CHAIR  BISHOP stated  that he  wanted  to make  sure that  the                                                               
contractor utilized apprentices in the project.                                                                                 
                                                                                                                                
1:47:14 PM                                                                                                                    
WAYNE  ZAGARLICK,  Vice  President  and  General  Manager,  Coeur                                                               
Alaska-Kensington  Mine,  Juneau,  Alaska, disclosed  that  Coeur                                                               
Alaska  was the  owner and  operator of  the Kensington  Mine. He                                                               
detailed  that  the  mine employed  340  employees  and  provided                                                               
employment  opportunities for  30 contractors.  He revealed  that                                                               
labor was the  mine's largest operating expense,  followed by the                                                               
cost  for   electricity  from  diesel  fuel.   He  admitted  that                                                               
providing sustainable  employment for Juneau's local  economy was                                                               
dependent on the mine managing  and reducing its costs. He stated                                                               
that   competitively   priced   hydroelectricity   could   be   a                                                               
significant   contributor   towards    the   mine's   sustainable                                                               
viability. He opined that Alaska's  economy has greatly benefited                                                               
from  its significant  energy  supply through  its  vast oil  and                                                               
natural  resources.   He  set   forth  that   Southeast  Alaska's                                                               
hydroelectric  resource had  extensive  potential for  generation                                                               
and  exportation. He  stated that  SLHP was  a true  step towards                                                               
diversification.                                                                                                                
                                                                                                                                
CO-CHAIR BISHOP asked how long  the mine's life might be extended                                                               
by the lowered operating costs from SLHP.                                                                                       
                                                                                                                                
MR.  ZAGARLICK  replied  that quantifying  the  mine's  life  was                                                               
difficult. He admitted  that metal prices played a big  role in a                                                               
mine's  viability.   He  said   reducing  operating   costs  made                                                               
extending the mine's life more likely.                                                                                          
                                                                                                                                
1:50:22 PM                                                                                                                    
JOHN SPRINGSTEEN,  Executive Director, AIDEA,  Anchorage, Alaska,                                                               
stated  that  the  preliminary  review  has  indicated  that  the                                                               
project may  be suitable for  AIDEA to  issue bonds for.  He said                                                               
AIDEA  would still  need to  go through  its feasibility  and due                                                               
diligence analysis.  He specified that  SB 192 would  allow AIDEA                                                               
to issue bonds  in excess of its $25 million  limit without prior                                                               
legislative approval.                                                                                                           
                                                                                                                                
1:51:35 PM                                                                                                                    
GENE  THERRIAULT, Team  Leader, Interior  Energy Project,  Alaska                                                               
Industrial Development  and Export Authority  (AIDEA), Anchorage,                                                               
Alaska,  stated  that  he  was  available  to  address  questions                                                               
regarding a possible  Alaska Energy Authority (AEA)  loan for $22                                                               
million through the  Power Project Loan Fund  (PPF) for necessary                                                               
transmission  lines. He  noted that  had been  part of  the Power                                                               
Project Loan Committee at AEA.  He pointed out that Jesse Logan's                                                               
testimony indicated that  dropping the AEA section  from the bill                                                               
would make the issue moot.                                                                                                      
                                                                                                                                
CO-CHAIR MICCICHE announced he would hold SB 192 in committee.                                                                  
                                                                                                                                
         SB 193-EXTEND EXEMPTION FOR SMALL POWER PLANTS                                                                     
                                                                                                                                
1:53:28 PM                                                                                                                    
CO-CHAIR MICCICHE announced the consideration of SB 193.                                                                        
                                                                                                                                
1:53:38 PM                                                                                                                    
JESSE LOGAN, Chief of Staff, Senator McGuire, Alaska State                                                                      
Legislature, Juneau, Alaska, Provided an overview of SB 193 as                                                                  
follows:                                                                                                                        
                                                                                                                                
     SB  193 seeks  to extend  the regulatory  exemption for                                                                    
     power plants that utilize  renewable resources under 65                                                                    
     megawatts. The  original exemption  "sunsetted" January                                                                    
     1  and we  are looking  to  extend that  to January  1,                                                                    
     2025.                                                                                                                      
                                                                                                                                
     The  electrical  demand  of the  relatively  small  and                                                                    
     dispersed population  of Alaska is generally  served by                                                                    
     regulated  utilities. RCA  is  charged with  clarifying                                                                    
     utilities,  regulating rates,  resolving disputes,  and                                                                    
     protecting customers; however, Alaska  has also seen an                                                                    
     increase   in   private   sector  investment   in   the                                                                    
     development  of  renewable  energy systems  across  the                                                                    
     state and I think the last bill helps exemplify that.                                                                      
                                                                                                                                
     Previously, Alaska  has exempted small  power producers                                                                    
     from  regulations if  they sell  power  on a  wholesale                                                                    
     basis to regulated utilities  who then distribute power                                                                    
     to local customers. The system  of exemption lowers the                                                                    
     barrier  cost  of  entry  and  reduces  the  regulatory                                                                    
     overreach and  regulatory cost borne  by the  state and                                                                    
     it helps  small-power producers that  develop brand-new                                                                    
     financing   for  renewable   systems.  This   exemption                                                                    
     expired on January 1. Regulation  can increase the cost                                                                    
     of a project and pose  barriers to investment, but also                                                                    
     increases the cost of government through the RCA.                                                                          
                                                                                                                                
     SB  193 continues  to put  Alaska on  the middle-ground                                                                    
     between a  thoroughly deregulated  market and  a highly                                                                    
     regulated market  that we have currently  in Alaska for                                                                    
     most   utilities.   This  arrangement   maintains   RCA                                                                    
     oversight on the Power  Purchasing Agreements (PPA) and                                                                    
     thereby continues to provide  a layer of protection for                                                                    
     rate payers.                                                                                                               
                                                                                                                                
     One of the  most valuable projects to  come to fruition                                                                    
     from the previous exemption is  CIRI's Fire Island Wind                                                                    
     Project  just  outside  of  Anchorage.  The  negotiated                                                                    
     offtake agreement  and private-risk  investment dollars                                                                    
     have now provided long-term  flat priced renewable wind                                                                    
     power to  Chugach Electric Association  for the  last 2                                                                    
     years and have another 22 years to go on their PPA.                                                                        
                                                                                                                                
     This bill  helps to maintain  an open-door  to Alaska's                                                                    
     electrical   market  and   encourages  private   sector                                                                    
     investment    in    renewable   energy    and    energy                                                                    
     infrastructure  across  the  state  in  general,  which                                                                    
     during this  time of fiscal  downturn is  probably much                                                                    
     needed.  It is  the belief  of the  sponsor that  it is                                                                    
     important   to  extend   the  sunset   so  that   other                                                                    
     independent   projects   can   also   have   regulatory                                                                    
     certainty  and  continue  to  develop  Alaska's  energy                                                                    
     potential and at no cost to the state.                                                                                     
                                                                                                                                
CO-CHAIR  BISHOP   asked  what  fits  under   the  definition  of                                                               
renewable energy under SB 193.                                                                                                  
                                                                                                                                
MR. LOGAN  answered that in  statute there  was a full  list that                                                               
included:  wind  power,  solar,  geothermal,  hydro-electric.  He                                                               
assumed that heat-pump  transfer would be listed, but  he did not                                                               
know the entire list.                                                                                                           
                                                                                                                                
CO-CHAIR BISHOP asked if the  federal government had decided that                                                               
hydropower was renewable.                                                                                                       
                                                                                                                                
MR. LOGAN  revealed that  U.S. Senator  Murkowski was  working on                                                               
the renewable listing for hydropower.                                                                                           
                                                                                                                                
1:57:26 PM                                                                                                                    
DUFF  MITCHELL,  Executive  Director,  Alaska  Independent  Power                                                               
Producers Association  (AIPPA), Juneau Hydropower,  Inc., Juneau,                                                               
Alaska,  detailed   that  AIPPA   represents  a  wide   range  of                                                               
independent power  producers that could be  called non-utilities.                                                               
He set  forth that SB  193 extends  the exemption of  small power                                                               
producers  to the  federal government's  lower level  and removes                                                               
some  state-overreach   in  RCA   regulations.  He   opined  that                                                               
regulation  was  costly in  terms  of  time, money,  and  project                                                               
delays if the  exemption was not extended. He  summarized that SB
193 allows independent power producers  to continue the exemption                                                               
at the  federal standard.  He added  that SB  193 would  keep the                                                               
"open  for  business"  sign  and  encourage  private  capital  in                                                               
Alaska's renewable  energy. He  noted that SB  193 had  no fiscal                                                               
impact  to  the  state,  avoided  added work  for  the  RCA,  and                                                               
lessened the  barrier for smaller independent  power producers to                                                               
enter the market.                                                                                                               
                                                                                                                                
SENATOR  EGAN asked  Mr.  Mitchell to  address  the Alaska  Power                                                               
Association's claim that the 65  megawatt size restriction within                                                               
the exemption was too high.                                                                                                     
                                                                                                                                
MR.  MITCHELL  revealed that  the  federal  size restriction  was                                                               
actually  80 megawatts.  He remarked  that  Alaska's 65  megawatt                                                               
size restriction was  a unique case where  the federal regulation                                                               
was less that  the state's regulation. He summarized  that SB 193                                                               
simply asks that  the 65 megawatt restriction  match the previous                                                               
bill.                                                                                                                           
                                                                                                                                
CO-CHAIR MICCICHE opened public testimony.                                                                                      
                                                                                                                                
2:00:49 PM                                                                                                                    
MIKE  CRAFT,  President/CEO,  Delta Wind  Farm,  Delta  Junction,                                                               
Alaska, stated  that he  supported the  extension proposed  in SB
193. He  asserted that developing  renewable energy  projects was                                                               
difficult and  adding the uncertainty in  obtaining a certificate                                                               
of  public convenience  or  getting permission  of  a utility  or                                                               
anybody  else in  Alaska would  be  a barrier.  He revealed  that                                                               
being exempt  allowed the  Delta Wind Farm  to bring  $54 million                                                               
worth of  development capital to  the Delta Junction area  in the                                                               
upcoming 2 years.  He remarked that the federal  exemption was 80                                                               
megawatts and the  majority of renewable energy  projects will be                                                               
well under 65 megawatts.                                                                                                        
                                                                                                                                
CO-CHAIR MICCICHE  asked Commissioner Wilson  from the RCA  if SB
193 had any potential negative  impacts to ratepayers in the long                                                               
run.                                                                                                                            
                                                                                                                                
JAN WILSON, Commissioner, Regulatory  Commission of Alaska (RCA),                                                               
Anchorage, Alaska,  replied that RCA  had no position on  SB 193.                                                               
She added that a public meeting  and vote by the commission would                                                               
be required for the RCA to take an official position on SB 193.                                                                 
                                                                                                                                
CO-CHAIR  MICCICHE  asked  in  what   ways  ratepayers  might  be                                                               
negatively  affected  by the  bill's  extension  for small  power                                                               
plants.                                                                                                                         
                                                                                                                                
MS. WILSON answered that her  personal position as a commissioner                                                               
was that ratepayers would not  be affected. She asserted that her                                                               
personal position was not the position of the RCA.                                                                              
                                                                                                                                
CO-CHAIR MICCICHE  asked her  to confirm that  the RCA  could not                                                               
provide  the committee  with advice  on key  issues regarding  SB
193.                                                                                                                            
                                                                                                                                
MS. WILSON  specified that  the RCA would  require an  inquiry to                                                               
the RCA's  chairman in  order to  have a  public meeting  for the                                                               
commission to discuss the bill and take a position.                                                                             
                                                                                                                                
CO-CHAIR  MICCICHE asked  Ms. Wilson  to suggest  a state  agency                                                               
that might be more helpful to the committee.                                                                                    
                                                                                                                                
MS.  WILSON replied  that  the RCA  has  five commissioners  with                                                               
differing  opinions.   She  reiterated  that  the   RCA  has  not                                                               
discussed SB 193 in order to  provide a position. She stated that                                                               
the RCA  would be  happy to address  SB 193 and  get back  to the                                                               
committee.                                                                                                                      
                                                                                                                                
CO-CHAIR  MICCICHE  announced  that  SB  193  would  be  held  in                                                               
committee.                                                                                                                      
                                                                                                                                
He set  forth that  he personally  supported both  SB 192  and SB
193.  He  asserted that  without  projects  that move  the  state                                                               
forward,  the  state begins  to  die.  He  addressed SB  192  and                                                               
recommended that  testimony should  also stress why  the projects                                                               
are  important   rather  than  strictly  focusing   on  jobs.  He                                                               
specified  that  explaining  why capital  infrastructure  was  so                                                               
important  was a  good  way  to reach  out  and communicate  with                                                               
Alaskans.                                                                                                                       
                                                                                                                                
He recognized a testifier who voiced his support for SB 192.                                                                    
                                                                                                                                
KIRK   PERISICH,  Representative,   Pacific  Northwest   Regional                                                               
Council of Carpenters (PNWRCC) Local  1281, Juneau, Alaska, noted                                                               
that  he  also  represented  millwrights  and  pile  drivers.  He                                                               
explained that  the projects in  SB 192 would provide  short term                                                               
and long  term jobs.  He added that  the "Alaska  Hire" provision                                                               
would assure that  the majority of labor money would  stay in the                                                               
state.                                                                                                                          
                                                                                                                                
2:07:14 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Co-Chair  Micciche  adjourned  the Senate  Special  Committee  on                                                               
Energy at 2:07 p.m.                                                                                                             

Document Name Date/Time Subjects
SB192 Version A.pdf SNRG 3/15/2016 1:00:00 PM
SB 192
SB 192 Sponsor Statement.pdf SNRG 3/15/2016 1:00:00 PM
SB 192
SB192 Fiscal Note-DCCED-AEA-3-11-16.pdf SNRG 3/15/2016 1:00:00 PM
SB 192
SB192 Fiscal Note-DCCED-AIDEA-3-11-16.pdf SNRG 3/15/2016 1:00:00 PM
SB 192
SB 192 and HB143 Letter of Support-Duff Mitchell-Juneau Hydropower-3-4-16.pdf SNRG 3/15/2016 1:00:00 PM
HB 143
SB 192
SB192 and HB143 Letters of Support Packet.pdf SNRG 3/15/2016 1:00:00 PM
HB 143
SB 192
SB192 and HB 143 Resolutions of Support CBJ, SEC, ANBC.pdf SNRG 3/15/2016 1:00:00 PM
HB 143
SB 192
SB192 and HB 143 Letter of Support- AIDEA Leonard 3-11-15.pdf SNRG 3/15/2016 1:00:00 PM
SNRG 3/31/2016 3:30:00 PM
HB 143
SB 192
SB192 and HB 143 Letter of Support-AEA SFG 3-16-15.pdf SNRG 3/15/2016 1:00:00 PM
SNRG 3/31/2016 3:30:00 PM
HB 143
SB 192
SB 192 Letter of Support- AIDEA JohnSpringsteen 3-11-16.pdf SNRG 3/15/2016 1:00:00 PM
SB 192
SB 192 Juneau Hydro Project Presentation 3-15-16.pdf SNRG 3/15/2016 1:00:00 PM
SB 192
SB 193 Version A.pdf SNRG 3/15/2016 1:00:00 PM
SB 193
SB193 Sponsor Statement.pdf SNRG 3/15/2016 1:00:00 PM
SNRG 3/31/2016 3:30:00 PM
SB 193
SB 193 Fiscal Note-DCCED-RCA-3-11-16.pdf SNRG 3/15/2016 1:00:00 PM
SNRG 3/31/2016 3:30:00 PM
SB 193
SB 193 SB277 Supporting Documents Letter CIRI Response to APA letter 3-19-10.pdf SNRG 3/15/2016 1:00:00 PM
SNRG 3/31/2016 3:30:00 PM
SB 193
SB 277
SB 193 Supporting Document letter APA 2-29-16.pdf SNRG 3/15/2016 1:00:00 PM
SNRG 3/31/2016 3:30:00 PM
SB 193
SB 193 Leg Research Report on Regulation Sb277 3-5-10.pdf SNRG 3/15/2016 1:00:00 PM
SNRG 3/31/2016 3:30:00 PM
SB 193
SB 277
SB 193 Letter of Support- AIPPA 3-4-16.pdf SNRG 3/15/2016 1:00:00 PM
SNRG 3/31/2016 3:30:00 PM
SB 193
SB 193 APT Letter of Support 3-11-16.pdf SNRG 3/15/2016 1:00:00 PM
SNRG 3/31/2016 3:30:00 PM
SB 193
SB 193 Letter of Support- CIRI 3-4-16.pdf SNRG 3/15/2016 1:00:00 PM
SNRG 3/31/2016 3:30:00 PM
SB 193