Legislature(2009 - 2010)BUTROVICH 205
02/18/2009 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| Performance Contracting for Energy Efficiency | |
| Alaska Energy Efficiency Program and Policy Recommendations | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 18, 2009
3:35p.m.
MEMBERS PRESENT
Senator Lesil McGuire, Co-Chair
Senator Bill Wielechowski, Co-Chair
Senator Charlie Huggins, Vice Chair
Senator Hollis French
Senator Gary Stevens
Senator Thomas Wagoner
MEMBERS ABSENT
Senator Bert Stedman
COMMITTEE CALENDAR
Overview:
Performance Contracting for Energy Efficiency
Alaska Energy Efficiency Program and Policy Recommendations
PREVIOUS COMMITTEE ACTION
No previous action to record.
WITNESS REGISTER
KEN BAUER
Siemens Building Technology
Buffalo Grove IL
POSITION STATEMENT: Discussed energy-efficiency retrofitting.
CADY LISTER, Senior Consultant
Information Insights, Inc
Fairbanks AK
POSITION STATEMENT: Presented a report called Alaska Energy
Efficiency Program and Policy Recommendations.
JOHN DAVIES, Research Director
Cold Climate Housing Research Center
Fairbanks AK
POSITION STATEMENT: Discussed energy efficient construction.
ACTION NARRATIVE
3:35:55 PM
CO-CHAIR LESIL MCGUIRE called the Senate Resources Standing
Committee meeting to order at 3:35 p.m. Present at the call to
order were Senators Wielechowski, French, Wagoner, Stevens,
Huggins, and McGuire.
CHAIR MCGUIRE introduced Ken Bauer from Siemens Building
Technology - just one of the companies looking at energy
solutions. It is appropriate for him to be here because some of
the recommendations that come out of the Cold Climate Housing
Report would entail modifications to Alaskan structures, and
Siemens has a creative business approach.
^Performance Contracting for Energy Efficiency
Performance Contracting for Energy Efficiency
3:37:12 PM
KEN BAUER, Siemens Building Technology, Buffalo Grove, Illinois,
said he will give an overview of performance contracting, which
allows entities to improve their facilities "by using their
energy and operational budgets to fund a project with guaranteed
results." Performance contracting begins with an energy audit to
show how the customer's energy efficiency compares with similar
buildings around the country. It is followed by a detailed audit
that identifies facility improvement measures and their costs
and savings. Once a performance contract is signed, the project
is implemented and turned over to the customer. There are
ongoing verifications to confirm the energy and other savings.
MR. BAUER showed a flowchart of the process, which is a
partnership between Siemens and the customer to design the best
plans. The goal is to achieve maximum efficiency for each
individual building. Financing is arranged and the savings
generated repay the financing. There should be operational,
maintenance, and energy savings. "Siemens guarantees that the
savings exceed the cost of the financing, otherwise we pay the
difference." Siemens will issue a check in the amount of the
difference and/or it will implement free additional facility
improvements to meet the energy guarantee.
3:42:52 PM
MR. BAUER showed a flow chart of the "project execution
process." Siemens is finishing phase 2 of a project with the
state of Alaska. Eight buildings were done in phase 1: Diamond
Courthouse, Alaska Office Building, Court Plaza building,
Douglas Island building, and the State Office Building in
Juneau, and the Aviation building, Department of Transportation
annex, and Public Safety building in Anchorage. Siemens is also
finishing a Department of Corrections project for 8 buildings
around the state.
3:44:36 PM
MR. BAUER said some of the improvements include lighting
upgrades, low-flow plumbing fixtures, heating system upgrades,
insulation, and "retro commissioning," which is fine-tuning
existing systems. Siemens installed an ozone machine in one
prison so detergent works with colder water, which saves on hot
water costs.
MR. BAUER said another facet is alternative energy, which is
especially important in the Bush. In conclusion, there are
several other energy services companies that do the same thing.
3:47:34 PM
SENATOR WIELECHOWSKI asked if the state or municipality has to
pay up front.
MR. BAUER gave an example of a project estimated to cost $1
million and that Siemens believed would save the facility
$100,000 per year. Without any financing costs, it would take
ten years to pay the $1 million back. There would be an up-front
cost for the detailed audit, which would be rolled into that.
There would also be financing costs. So if the final cost were
$1.2 million, there would be a $1.2 million note to be paid off.
So the payments would be tailored so that each year the customer
would pay $100,000 on this note, which would come from the
realized savings (on electricity, gas, etcetera). Siemens will
not guarantee dollars, but it will guarantee consumption because
of energy price fluctuations. If an entity has a grant, it may
shorten the time and save money on interest.
3:50:03 PM
SENATOR WIELECHOWSKI said the Finance Committee will appreciate
the zero fiscal note. He asked for examples on the state
buildings that Siemens has done.
MR. BAUER said the first Department of Transportation project
has a 12-year contract and is saving a little over $250,000 per
year. The project investment was a little over $4 million.
"However when they did the measurement and verification, the
project actually came in 24 percent better then we had
originally planned, so the last figure I saw is probably going
to pay off in ... a little under nine years." He doesn't have
the figures for the Department of Corrections, but it originally
was a 15-year payback, and a $750,000 savings per year. But that
has not been verified yet. Normally the company looks for a 15-
year pay back or less.
CHAIR MCGUIRE asked him to keep the committee posted on
projects.
3:51:49 PM
^Alaska Energy Efficiency Program and Policy Recommendations
Alaska Energy Efficiency Program and Policy Recommendations
CADY LISTER, Senior Consultant, Information Insights, Inc,
Fairbanks, said she was one of the principal authors of the
Alaska Energy Efficiency Program and Policy Recommendations.
When the report was written the price of fuel was significantly
higher than now. She used slides for her presentation.
MS. LISTER said the benefits of energy efficiency include the
ability to do it now. There is voluminous data to prove its
worth. Efficiency relies on advances in technology, which are
becoming more plentiful instead of being depleted like fossil
fuels. Saving energy usually costs less than buying it. It
reduces pollution and carbon use. The project started with a
literature review of Alaska energy programs. The last time
Alaska saw high energy prices was in the 1980s during the
Iran/Iraq war. Money was spent on energy programs, and some
programs were then adopted, and some of those went away when the
price of oil went down. She reviewed those programs to find out
why they did not work or did not stick. She also reviewed best
practices in other countries. The Rocky Mountain Institute
assisted in that.
MS. LISTER said an energy efficiency work session was held in
January 2008. Experts sat down and hammered out what had and had
not been done in Alaska; what had been talked about; and where
road blocks were. The Alaska Energy Authority (AEA) and the
Alaska Housing Finance Corporation (AHFC) have collected a lot
of data about energy programs in Alaska for a long time. Interim
recommendations for the legislature were developed. Energy and
policy professionals gave a lot of feedback. Then the final
recommendations were produced.
MS. LISTER said Alaska is ranked at 41 in the nation by ACEEE
[American Council for an Energy-Efficient Economy]. The criteria
used was utility spending on efficiency and conservation;
combined heat and power; building codes; transportation
policies; appliance standards; tax incentives; and state
leadership by example. There are only two positives. Alaska does
combined heat and power in rural areas, and the AHFC building
codes are good, but there is no state energy code for buildings.
Alaska is dead-last in utility spending on efficiency. Only two
states are behind Alaska in terms of dollars spent per resident.
Alaska spent 11 cents per person, and most of that was spent by
the Golden Valley Electric Association (GVEA).
MS. LISTER looked at best practices but steered away from those
of California because Alaskans wouldn't like them. She said 39
states have building energy codes that require a minimum level
of efficiency for new residential and commercial construction.
Alaska does not. Other best practices include appliance
standards; efficiency funding to pay for program and outreach,
which helps change behaviors; energy efficiency in state
facilities, which is fairly widespread and found in at least 36
states; tax incentives, used in many states and most effective
in states with significant taxes; pay-as-you save programs,
which are similar to the Siemens program and may include
incentives for switching to efficient light bulbs, for example.
4:00:53 PM
SENATOR WAGONER asked about building energy codes. Is it
necessary to create a code or could the state set up design
specifications for any state buildings? Universities are using
less glass in their buildings.
MS. LISTER said setting up a list of how to build is essentially
a building code.
JOHN DAVIES, Research Director, Cold Climate Housing Research
Center, Fairbanks, said the AHFC adopted the Building Energy
Efficiency Standards for Alaska, and it is an energy efficiency
code that applies to projects that AHFC finances. The discussion
is about broadening that code to include all buildings. There
are two approaches to how such codes can be structured. It can
be a list of prescriptive specifications or it could be a
performance standard. Both paths are allowed in code. Most
people use the performance standard for residential buildings.
SENATOR HUGGINS said Alaska has a weatherization rebate program,
and he asked if that was factored in.
MS. LISTER said her group promoted the program, but it was not
included when ACEEE rated the states. It would likely give
Alaska a few more points.
4:03:33 PM
SENATOR HUGGINS said he would like to get an A- on that.
MS. LISTER continued her discussion of best practices. She said
other states use revolving loan funds that are capitalized for
purposes of providing money for energy efficiencies. The loans
would be repaid and available for others to use. It could be
used for school districts, for example.
4:04:40 PM
MS. LISTER said other incentives include fast-tracking building
permits and allowing agencies to keep the money that is saved by
reducing energy bills. Alaska has a weak regulatory environment
and has little end-use management programs in any of the
utilities. In other parts of the world utilities use end-use
management. There is interest among the utilities in moving that
way, and GVEA has. Another strategy is requiring utilities to
use a total-resource cost test and purchase all energy efficient
measures that meet the test.
MS. LISTER said another best practice is aligning utility
incentives equally. Often utility incentive programs do not
align the utility's profits equally with supply and demand
resources, and utilities will profit from high consumption.
Another idea is to create rate structures that encourage lower
consumption. Most utilities do the opposite. Another strategy is
a non by-passable charge on a utility bill that is used to fund
energy efficiency initiatives. She noted that GVEA did that and
had very, very little push-back from consumers.
4:07:05 PM
SENATOR FRENCH asked what a non by-passable charge is.
MS. LISTER said, "It just means you have to pay it." It is a
fixed charge of a dollar or two a month. Some utilities don't
feel like they can charge more, but GVEA did it and didn't have
a lot of problem with it. GVEA explained what it was used for.
MS. LISTER said there are education best practices of ongoing
consumer education about energy efficiency and renewable energy.
When people talk about behavior change they bring up tobacco,
which took consistent and dedicated funds to succeed.
4:08:54 PM
MS. LISTER suggested builder education for new technology and
school curricula that includes the value of energy efficiency
and conservation. There are lesson plans available to schools.
CHAIR MCGUIRE noted a meeting at 5:15 tonight to discuss energy
and alternative energy in Alaska's schools.
4:10:32 PM
MS. LISTER agreed there are a lot of opportunities in schools.
She said the recommendations in the report are presented in nine
categories: state leadership; funding energy efficiency; public
education; baseline data; existing and new residential
buildings; existing and new commercial buildings; and public
buildings. The entire report is on the web.
MS. LISTER said the governor should articulate an energy
efficiency vision for Alaska and provide leadership in terms of
action. She should designate a sub-cabinet for state end-use
efficiency programs. "Whenever the demand side gets together
with the supply side, the supply side gets a lot more exciting
because it's about stuff and projects, and it can create jobs,
and it uses new snazzy-looking technology." If there are not
people whose sole task is looking at the end-use efficiency
side, then the effort gets sucked into the supply side.
4:12:23 PM
MS. LISTER said the report recommends four options for funding
energy efficiency programs. The first is the state funding
energy efficiency programs through legislative appropriation.
That is least favorable because funds won't get reappropriated
in low money years. The second is the RCA implementing a system
benefit charge to support end-use efficiency programs. The
charge would show up on the utility bill, and it would be a
dedicated, continuous funding stream. Thirdly, the state should
capitalize an end-use efficiency endowment. The fourth option is
the state offering matching grants to local governments
interested in creating a local energy plan that incorporates
energy efficiency and conservation. It makes the most sense to
have the RCA require a system benefit charge, but it may be the
most difficult to implement.
4:13:43 PM
MS. LISTER recommended that the legislature fund a comprehensive
public awareness campaign with at least $1 million per year.
There is some good baseline data, but it is pretty spotty, even
along the Railbelt. That is where they focused this work. A
baseline is important so the state can know if programs are
working. "You could be spending money and think its working, but
you just don't really know."
CHAIR MCGUIRE said it is important to know if enough money is
being spent and to know if something is working.
MS. LISTER said the AEA should establish an energy use index for
all public buildings. That will let people know how much energy
their buildings are consuming. It needs to be put in context.
4:15:39 PM
SENATOR FRENCH said that is a great suggestion and asked how to
make it happen.
MS. LISTER said it's not that tricky, it is just how much a
building consumes. Buildings with shared costs might be more
difficult to assess.
MR. DAVIES said it can happen by executive order. It is not
expensive, but it requires someone to do it.
CHAIR MCGUIRE asked if it would be a website.
MR. DAVIES said it would be a database of BTUs per square foot.
SENATOR FRENCH said that would be a way to pick the ten worst
buildings in the state that need to be weatherized.
4:17:27 PM
MS. LISTER said the legislature significantly increased the
funding for low-income weatherization, which was one of the
recommendations. Also, the AHFC should create a certification
and training program for energy retrofit and new construction,
and it should subsidize up to 100 percent of costs for home
energy audits for households not eligible for low-income
weatherization and offer low-interest loans for energy
conservation improvements. The legislature also did that in the
form of grants or rebates.
CHAIR MCGUIRE asked why AHFC was chosen as the entity to do
certification and training.
MS. LISTER said it has the most expertise.
MR. DAVIES said AHFC has a program for training energy raters.
MS. LISTER said the legislature should fund a pilot smart-meter
program through the AHFC and AEA. Some people like smart meters
and others are skeptical. There are cheaper units that appear to
improve peoples' behavior. The Ontario government bought a smart
meter for every single household, and it expects to recoup those
costs by delaying new infrastructure development.
4:19:13 PM
CHAIR MCGUIRE asked how smart meters work. "Does it yell at you
when you leave the lights on?"
MR. DAVIES said they just provide immediate feedback, which
causes people to change their behavior and save up to 10 percent
in energy costs. It is like getting an electric bill every day.
Some utilities vary their rates by the time of day, so smart
meters can help people schedule their energy use.
MS. LISTER said the report recommends the legislature adopt BEES
(building energy efficiency standard) as the new state code for
residential construction. The state should enforce the codes and
contractor licensing to ensure quality and energy efficiency.
4:21:11 PM
SENATOR WIELECHOWSKI said he thinks Alaska could get about $28
million from the federal stimulus package. One requirement is a
state building code.
MS. LISTER said, "You have to have assurances that you will have
one."
SENATOR WIELECHOWSKI noted that 39 states already have them.
MS. LISTER said the report recommends that the AEA subsidize
energy audits for existing commercial facilities and offer loans
for improvements. Commercial facilities are often large and
built with blueprints from California, and they waste a huge
amount of energy. The RCA should require utilities to implement
pay-as-you-save loan programs.
4:22:10 PM
MS. LISTER said the AEA should contract for a stakeholder
process to develop a commercial energy efficiency building code
for new commercial construction. The governor should direct each
state agency to reduce energy consumption by 20 percent from
2000 levels. The Board of Regents should direct the university
to do the same. The legislature should fund an energy audit for
every school in the state. The state should fund AEA to revive
the Institutional Conservation Program to offer public schools
energy conservation matching grants.
CHAIR MCGUIRE asked if there are federal dollars for that.
MS. LISTER said no. The AEA should establish a low-interest loan
program for public facilities with payments geared to projected
savings in energy.
MR. DAVIES said the energy audit for schools could be funded by
stimulus funds.
MS. LISTER gave an overview of where Alaska stands now.
Weatherization received $200 million, the home energy rebate
program was funded at $160 million, and renewable energy was
funded at $100 million. There is a fair amount of market driven
conservation now in rural Alaska. Rural Alaskans use less energy
than urban Alaskans.
4:24:49 PM
MS. LISTER said there is a broad and growing awareness of energy
issues. Supply side solutions continue to dominate discussions,
which are important but they aren't the only thing.
4:25:29 PM
CHAIR MCGUIRE said it is interesting that the supply side has
more interest. Conserving and saving is always less interesting
to people than expanding and spending. She has heard the term
"nega-watts," and simply not expending a kilowatt hour is the
best thing to do, but we talk about other solutions.
MS. LISTER said people think that conservation means they have
to negatively changes their lives and be cold or not have clean
clothes. But with new technology and by building homes
correctly, we can still have our homes at 70 degrees.
MR. DAVIES said new construction is easy, but retrofitting can
be messy and difficult. Every home is different. Conservation is
the cheapest and is what we should do.
4:27:10 PM
CHAIR MCGUIRE said her constituents tell her it is hard to get
the audit; it is taking months. Are you recruiting more energy
auditors? We don't have enough.
MR. DAVIES said he believes it is at equilibrium with the number
of people on list and the number getting service. People were on
multiple lists so it looked worse than it was, and now we may
need a few more raters, but not many.
4:28:28 PM
MS. LISTER said new people are being certified nearly every
week, and she thinks there are enough raters. Anchorage didn't
have enough at first.
CHAIR MCGUIRE noted the downturn in the economy, and there is
not as much work for appraisers. Perhaps some of them could be
re-trained.
MS. LISTER said the real opportunity is for people actually
doing the energy work. There are enough raters. It will be hard
to find contractors who know how to do energy retrofits, but it
is an opportunity for them.
4:30:49 PM
MR. DAVIES noted the Cold Climate Housing Research Center and
its website with this entire report - www.cchrc.org. This
presentation is also available through Senator Wielechowski's
office. He said a statewide building code has been discussed.
Experts recommend it as the single most important strategy. It
provides education and a reasonable standard. There is a lot of
debate about regulating people in the last frontier. "But if
we're going to start providing hundreds of millions of dollars
to help people retrofit, then I think there's a public interest
in making sure that we don't go too low." There are also
pollution and greenhouse gas issues.
4:33:16 PM
MR. DAVIES said he looked at the amount of money being spent in
Fairbanks on energy. It is over $450 million per year. By
cutting that, the money could stay in the economy and circulate.
It's a big deal.
4:34:06 PM
SENATOR WAGONER said this committee won't take on the task of a
statewide building code. Who will enforce it? He thinks what is
needed is a sub-code that becomes part of a statewide building
code. He recommends that someone tackles this outside of the
building code and then attach it later.
MR. DAVIES said that is the approach CCHRC took. It was tasked
with helping AHFC revise the building energy efficiency
standard. When it started it recast it in terms of the
International Energy Conservation Code. The terms are code-like,
so it could be slipped right into the building code. AHFC has
seen the need for a level playing field for a long time. When
homeowners finance a house, they can use an AHFC loan to get a
small reduction in mortgage rates, or they can go to Fannie Mae
or Freddie Mac and not have energy efficiency requirements. That
may change at the federal level, but it hasn't yet. A lot of
people don't want to deal with it even though AHFC will get them
a lower mortgage rate. Within the last month, the Alaska State
Homebuilders Association passed a resolution supporting a
statewide energy conservation code, so that removes a major
resistance - it is a big change.
4:37:30 PM
MR. DAVIES said the association tried a voluntary code, but it
hasn't worked. Also, being on track to adopt a statewide energy
conservation code is required to get some of the federal
stimulus funds, particularly the state energy program grants.
SENATOR WIELECHOWSKI said one of his concerns is the additional
cost to people building homes. But Mr. Davies said that wouldn't
be much. He asked him to explain that.
MR. DAVIES said there are trade offs in designing an energy
efficient home. One might spend more on insulation and less on a
heating system, for example. That doesn't include the life cycle
savings. A little money spent on insulation will get paid back
fairly quickly. Adding energy efficiency at the end of a project
is more expensive, but if it is programmed in from the beginning
it isn't much more expensive. The biggest builder in Fairbanks
is building all 5-star-plus buildings, and his houses are
slightly lower than the mid-price point in the market.
4:40:31 PM
CHAIR MCGUIRE said a code has plumbing and other requirements.
MR. DAVIES said he would like to see a statewide building code
that includes all of those. There are a lot of devils in the
details. There will be issues on how to implement it in rural
Alaska. Most banks require inspections already, so "if you just
added a little more to the task of those inspectors and train
them, the additional work would not be that much more." It might
cost another $300 for a home inspection in new construction. If
it was done through the private sector like banks are doing,
there won't be a need for a large state bureaucracy.
CHAIR MCGUIRE said there are a lot of Alaskans who build their
own homes.
MR. DAVIES said there is training out there already. Mr. Davies
built his own house and got some of that training. He advocates
not applying [the code] to those who self finance; but people
need to know that if they want to sell the house later through
bank financing, the bank may have issues.
4:43:42 PM
MR. DAVIES said that the state energy program grant requirements
from the stimulus bill require the governor to send a letter to
the Secretary of Energy that certifies three things: 1) It
assures that Alaska has a program where utilities are supporting
consumer energy efficiency policy - programs that provide
consumer education for saving energy. 2) The state has adopted
residential and commercial energy conservation codes. 3) The
state prioritizes these grants toward energy efficiency or
renewable energy programs wherever possible. Those three will
make Alaska eligible for the money from the stimulus package.
4:45:29 PM
MR. DAVIES said Alaska should consider a broad statewide program
that could be called Sustainable Northern Communities. Most
communities in Alaska are not sustainable, considering how they
are spending money and designing buildings. He suggested a
vision to use oil wealth to transition to a renewable economy.
Alaska has taken some steps in the right direction, but it needs
to enunciate it as a state vision. It will take enormous effort
to get there within 30 years. Alaska will need to focus clearly
on the goal. The integrated design process needs to be used. It
means coordinating the design and involving all the stakeholders
at the beginning of the process. Both AEA and AHFC have talked
about it as the "whole village" retrofit.
MR. DAVIES said energy is not separate from agriculture. When
planning sustainable communities, one needs to worry about food
security. He has heard that Fairbanks has only three days of
food in town. Alaskans need to think about how we will feed
ourselves. When looking at an energy plan, look at greenhouses
and using waste heat to grow food. That is especially important
in rural Alaska, but it applies all over the state.
4:49:20 PM
MR. DAVIES said the CCHRC facilitated the study and Information
Insights carried it out with Ms. Lister doing most of the work.
The funding came from AHFC and AEA.
CHAIR MCGUIRE thanked them and said when she was in Iceland she
saw "exactly this concept of a sustainable community that they
have developed." It made the link between energy sustainability
and food sustainably with hydroponic vegetable greenhouses. It's
exciting to think that Alaskans can decide what we want our
communities to look like. It's about sustaining culture and food
sources. "I think there are tremendous opportunities that spring
from that." Iceland has a sense that it has the energy and the
food to keep going.
4:51:46 PM
SENATOR HUGGINS said he was visiting Fairbanks about a month
ago, and he asked about the Anaktuvuk prototype.
MR. DAVIES said they have a program called Sustainable Northern
Shelters to provide housing in northern areas. It tries to use
an integrated design process and involve the communities. It was
applied in Anaktuvuk Pass, where the North Slope Borough asked
for a design of a new house. The town hadn't built a new house
in 10 years because the last quote for one house was $750,000.
No one could afford it. CCHRC set a goal to do it for $125,000
to $150,000 and fit all of the materials in one DC3 plane. A
five-person senior complex that was just built there took about
40 "Herc loads" to get the material there. There are no roads or
barges that go into Anaktuvuk. CCHRC went to the village and had
a two-day design charrette, and over half of the village
participated in this two-day discussion on what they wanted
their houses to look like. Important design features would
include a place to repair snow machines and skin a caribou.
Kitchens need to be large for a potlatch-type event. CCHRC
worked up a design and went back and had another charrette. The
approach that brings everyone together at the beginning is also
done with the contractors. "We hope to build this place this
summer." The ideas are being tested this winter in Fairbanks.
This approach can be used around the state, and other villages
have requested assistance. The house will get built with local
labor - like a barn raising.
CHAIR MCGUIRE said people will have pride and respect for the
building. Observing people being productive is great.
4:56:00 PM
There being no further business to come before the committee,
CHAIR MCGUIRE adjourned the meeting at 4:56 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Cold Climate Presentation 2 17 09.pptx |
SRES 2/18/2009 3:30:00 PM |
|
| Siemens Building Technologies Presentation Feb 18 2009.ppt |
SRES 2/18/2009 3:30:00 PM |