Legislature(2011 - 2012)BUTROVICH 205
02/02/2011 03:30 PM Senate RESOURCES
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| Presentation: Follow-up to Alaska Sustainable Energy Act (sb 220, 26th Alaska State Legislature) Remarks by Senator Mcguire and Senator Wielechowski. | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
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ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 2, 2011
3:35 p.m.
MEMBERS PRESENT
Senator Joe Paskvan, Co-Chair
Senator Thomas Wagoner, Co-Chair
Senator Bill Wielechowski, Vice Chair
Senator Bert Stedman
Senator Lesil McGuire
Senator Hollis French
Senator Gary Stevens
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Senator Fred Dyson
Senator Cathy Giessel
COMMITTEE CALENDAR
PRESENTATION: FOLLOW-UP TO ALASKA SUSTAINABLE ENERGY ACT (SB
220-26TH ALASKA STATE LEGISLATURE) AND REMARKS BY SENATOR
MCGUIRE AND SENATOR WIELECHOWSKI.
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to consider
WITNESS REGISTER
GWEN HOLDMAN, Executive Director
Alaska Center for Energy and Power (ACEP)
University of Alaska
Fairbanks, AK
POSITION STATEMENT: Provided update on ACEP's implementation of
SB 220.
MARILYN LELAND, Executive Director
Alaska Power Association (APA)
POSITION STATEMENT: Provided update of APA's implementation of
SB 220 for ACEP.
HANNAH GUSTAFSON, Deputy Director
Renewable Energy Alaska Projects (REAP)
Anchorage, AK
POSITION STATEMENT: Provided update of REAP's implementation of
SB 220.
SARAH FISHER-GOAD, Executive Director
Alaska Energy Authority (AEA)
Department of Commerce, Community and Economic Development
(DCCED)
Anchorage, AK
POSITION STATEMENT: Provided update of AEA's implementation of
SB 220.
PETER CRIMP, Deputy Director
Alternative Energy and Energy Efficiency, Alaska Energy
Authority
Department of Commerce, Community and Economic Development
(DCCED)
Anchorage, AK
POSITION STATEMENT: Provided an update of the Emergency Energy
Technology Fund (EETF) relative to SB 220.
RON KREHER, Acting Director
Division of Public Assistance
Department of Health and Social Services (DHSS)
Juneau, AK
POSITION STATEMENT: Provided update on the Alaska Portable
Heating Assistance Program relative to SB 220.
JOEL ST. AUBIN, Chief
Statewide Public Facilities
Department of Transportation and Public Facilities (DOTPF)
Juneau, AK
POSITION STATEMENT: Provided update on the DOTPF's
implementation of SB 220.
DIANA ROTKIS, Manager
Statewide Fleet
Department of Transportation and Public Facilities (DOTPF)
POSITION STATEMENT: Provided update on the Division of Public
Facilities' implementation of SB 220.
JERRY BURNETT, Deputy Commissioner
Treasury Division
Department of Revenue (DOR)
POSITION STATEMENT: Provided update on DOR implementation of SB
220.
ACTION NARRATIVE
3:35:01 PM
CO-CHAIR JOE PASKVAN called the Senate Resources Standing
Committee meeting to order at 3:35 p.m. Present at the call to
order were Senators French, Stevens, Wielechowski, McGuire, Co-
Chair Wagoner, and Co-Chair Paskvan.
^Presentation: Follow-up to Alaska Sustainable Energy Act (SB
220, 26th Alaska State Legislature) Remarks by Senator McGuire
and Senator Wielechowski.
Presentation: Follow-up to Alaska Sustainable Energy Act (SB
220, 26th Alaska State Legislature) Remarks by Senator McGuire
and Senator Wielechowski
CO-CHAIR JOE PASKVAN said last year the legislature passed SB
220, sponsored by Senators McGuire and Wielechowski, and this is
a follow-up on how much progress has been made. Its purpose was
to find ways to lower energy costs, increase greater efficiency
of energy usage and increase the use of non-renewable resources.
3:38:39 PM
SENATOR MCGUIRE said she and Senator Wielechowski were asked to
give a short overview of this measure, because agency officials
were invited to walk through more of the details where they have
implemented parts of it. She explained that last year the
majority of committee members are the same as this year, and
they, along with the help of Senate President Stevens, put in
place an energy vision, and with it an Omnibus Energy Act, for
the first time in state history, and got it through two bodies.
She said many parts to the bill benefit many different parts of
Alaska, but the bottom line is that Alaskans want access to
affordable energy.
She referenced page 2 of the Governor's letter to the
Legislature that said a commercial energy efficiency loan
program would be one improvement to SB 220, so she and Senator
Wielechowski created the program for public buildings in it. But
only one community so far has applied for this loan. She stated
that $250 million worth in loans are available through the
Alaska Housing Finance Corporation (AHFC) for energy efficiency
upgrades, and it is available municipalities, boroughs, state
agencies, or any kind of public facility in the State of Alaska.
A place holder was also created for a loan program for Alaskan
businesses which wasn't funded.
3:42:06 PM
CO-CHAIR WAGONER asked which community applied.
SENATOR MCGUIRE answered Fairbanks.
CO-CHAIR WAGONER added that Kenai applied, too.
CO-CHAIR PASKVAN remarked they are trying to increase the use of
renewable resources.
3:42:48 PM
SENATOR WIELECHOWSKI said the energy omnibus bill had many
components; one in particular is the Energy Loan Efficiency
Program, which he hoped more communities would take advantage of
in the future. They had estimated it would create several
thousand jobs and save tens of millions of dollars across
Alaska. SB 220 also had a provision for an Energy Efficiency
Revolving Loan Fund and a provision to expand the state's
heating assistance program to provide additional help for
Alaskan families when oil prices soar. Another provision
required the state to retrofit 25 percent of state buildings
over 10,000 sq. ft., which will save the state millions of
dollars in the very short term - and again create jobs. They
also created an Emerging Energy Technology Fund (EETF) to
provide grants to test new energy technologies in Alaska. He
said they also co-primed SB 32 that asks the state to capitalize
the Alternative Energy Loan Fund to the amount of $10 million.
GWEN HOLDMAN, Executive Director, Alaska Center for Energy and
Power (ACEP), University of Alaska, said as a whole, SB 220 set
a very firm statutory foundation for implementing state energy
policy. As a University employee, and as the ACEP is housed
within the University of Alaska, her role is to provide the
legislature with information, so it can make wise policy
choices. She commended the committee for taking advantage of
them as a resource maybe more than any other committee in the
building. In contrast, every single day she is on the front line
trying to reduce energy costs. In her case, she is spending a
lot of time considering whether small-scale nuclear is a viable
option for Alaska, another provision in SB 220. She works very
closely with the Alaska Power Association in looking for ways to
improve diesel energy efficiency or delivering energy-related
curricula to schools through partnerships with Renewable Energy
Alaska Projects.
3:48:57 PM
MS. HOLDMAN encouraged members to pick up on where they left off
last session and make sure they are managing a diversified
portfolio of energy resources, both renewable and fossil-based,
and determine the appropriate mechanisms for funding projects
and programs as they move forward.
She said some unanswered questions were left on the table last
year in the process of shaping SB 220, and the legislature chose
to approach at least some of those by seeking more information,
which has come back through reports from various offices and
agencies. The legislature specifically tasked the Governor's
Office to recommend improvements to the existing structure, and
it submitted "The Energy Report to the Legislature." In it the
Governor advances the concept of an energy policy coordinator
(EPC) to coordinate energy programs and policies between state
agencies, the Governor's Office and the legislature. She looks
forward to seeing how this EPC role develops and emphasized how
important a coordinated approach is to many of the stakeholders.
The next steps are about money, Ms. Holdman said. They need to
work to make sure the programs in SB 220 are expanded and do not
become unfunded mandates, particularly as related to education,
outreach, data collection and reporting - something of special
interest to ACEP. SB 220 established a program for commercial
energy efficiency retrofits, but that program was not
capitalized.
The Emerging Energy Technology Grant Fund was probably the most
popular part of SB 220 from a public relations stand point. It
received a one-year funding increment of $2.4 million; the
Denali Commission contributed $3.1 million to the program last
year and it has planned an additional $2.4 million in their
budget for this year. But that is contingent on the state both
continuing the program and providing matching funds or better.
MS. HOLDMAN said ACEP has worked very closely with the Denali
Commission to develop this pilot program that has served as the
basis for the Emerging Technology Grant Fund in what is called
"round zero" of the program. The Denali Commission funded 11
projects totaling approximately $8 million and they are all
actively and aggressively moving forward. Basically, every
single one of them is on-time and on-budget. ACEP is both
managing the program and collecting and analyzing the data from
individual projects to make recommendations for future
applications for these kinds of technologies. She looked forward
to working with the AEA as it develops a program at the state
level as outlined in SB 220.
3:52:00 PM
Other programs that are not explicitly mentioned in SB 220 will
require some attention including the Renewable Energy Fund that
was originally scheduled to sunset next year. There may be
opportunities to work with the AEA to improve this program or
add a complimentary loan component moving forward, Ms. Holdman
said. Similarly, programs like the AHFC Home Weatherization and
Rebate Program have been warmly received and have seen high
demand and quick paybacks. They should continue to invest where
successful models like this exist.
Another example of people slipping through the cracks on
reporting is the Power Cost Equalization Program (PCE), Ms.
Holdman said, and many feel this program needs restructuring to
more effectively meet its objectives which is levelizing energy
costs between rural and urban communities. SB 220 was widely
viewed as a first step to implementing state energy policy as
laid out in HB 306 [26th legislature]. The policy included well-
known goals for achieving 15 percent energy efficiency
improvement by 2020 and 50 percent renewable energy for electric
power generation by 2020.
MS. HOLDMAN drew their attention to another example of a policy
that was mentioned in two separate sections in HB 306, but only
partially addressed in SB 220, that says:
It is the intent of the legislature that the state
remain a leader in petroleum and natural gas
production and become a leader in renewable and
alternative energy development. And secondly, the
state should invest in applied energy research and
development of alternative and emerging technologies
including university programs to achieve reductions in
state energy costs and stimulate industry investment
in the state.
She said this is something the ACEP strongly supports, and
speaks to the larger objective of incentivizing economic
development, which is ultimately a big part of what they are
trying to accomplish. Alaska should become a leader in improving
extraction technologies for tight reservoirs and heavy oils that
are known to exist on state lands where development could result
in significant revenue generation for the state and improve
throughput of the TAPS.
Other examples include development of methane hydrates, coal-to-
liquids and gas-to-liquids technology, ocean and river energy,
underground coal gasification, high-penetration wind and
advanced storage technologies. These are all areas where Alaska
either has a unique need or a unique opportunity in terms of a
world-class resource and where the UAA and ACEP, as part of the
university system, are currently conducting research in
partnership with the private sector. She said she looked forward
to working with the legislature on these efforts.
3:56:02 PM
MARILYN LELAND, Executive Director, Alaska Power Association
(APA), said SB 220 was a bill they actively supported last year,
but a number of provisions in it do not directly relate to
electric utilities, so she would limit her testimony today to
those that do.
In section 1, she was pleased to see language that helps to
remove the barriers to the development of nuclear energy as an
alternative technology in Alaska. But, she was not aware that
any nuclear projects are under way as a result of the new
provisions yet.
Section 14 deals with the Emerging Energy Technology Fund and
they believe this section to be very important. Ms. Leland said
there is no silver bullet that is going to help everyone in
Alaska solve their energy problems and she commended the
legislature for creating this fund and including an advisory
committee populated by experts in the science and engineering
fields. APA has a designated seat on that committee which has
been filled by Eric Erickson who is an engineer with Alaska
Electric Light and Power in Juneau. The committee has had its
initial organizational meeting at which a draft request for
grant applications was reviewed. That RFA was issued on January
7 with applications due March 2. She explained that once the
applications are received the advisory committee would meet
again to review them and make recommendations on the grant
award.
3:58:23 PM
One concern, Ms. Leland said, is that the bill does not allow a
business or organization represented by a member of the advisory
committee to actually receive a grant. She understood the
reasoning behind that provision, but thought they should
consider removing it, because Alaska has a very small pool of
individuals who are qualified for serving on the committee and
who have the technical ability to develop emerging technologies.
Rather than simply prohibiting them from receiving the grants
she thought it would be better to allow them to apply for the
grants, but prohibit them from actually being involved in any
deliberations or voting on the recommendations of the grant
awards.
Section 42 adds a provision allowing the AHFC to issue bonds in
an amount not to exceed $250 million and to make loans from the
Alaska Energy Efficiency Revolving Loan Fund. This is an
excellent provision although she didn't know the status of the
expended bonding capacity.
3:59:46 PM
MS. LELAND said she was asked what the legislature needs to
focus on now, and APA developed a list of initiatives that
should be considered. They don't all relate to SB 220, but she
wanted to summarize them.
· First, develop an implementation plan for Alaska's energy
policy authorized by HB 306 last year.
· Develop large-scale hydro electricity for the Railbelt and
develop renewable energy resources - hydro, geothermal and
wind - for other regions of the state. Large hydro electric
projects could meet the needs of as much as 75 percent of
Alaska's population well into the future, but communities
not on the Railbelt can't be forgotten.
· Encourage the development of the Cook Inlet gas management
plan for continued gas delivery to South Central. Natural
gas is critical to South Central and the economy statewide;
demand for natural gas in South Central is expected to
exceed supply as early as 2013.
· The legislature and the governor need to take a
comprehensive view of the situation; develop policies and
ensure coordinated actions.
· Next, fund the Renewable Energy Fund and the Power Project
Loan Fund. Both funds are the primary state sources of
capital funding for new energy projects, and they have been
woefully undercapitalized in recent years in light of the
goals set forth in the state energy policy. Fund $50
million annually for the Renewable Energy Fund as
authorized and properly capitalize the Power Project Fund
at a level that supports the goals set forth in Alaska's
energy policy.
· Next, continue to fund the power cost equalization (PCE)
program, as the very survival of many rural Alaskan
communities depend on meaningful relief from the crippling
cost of energy. The legislature should continue the PCE
benefit at 100 percent for FY11 and fully fund PCE in the
administrations FY12 operating budget.
· Last, develop policy and legislation that expands funding
for energy efficiency and conservation activities. Continue
to support the highly successful programs of the AEA and
AHFC for home energy audits, energy improvement rebates and
weatherization.
In addition, she encouraged providing commercial energy audits
for government, schools, and public institutions that offer
energy efficiency and conservation block grants. HB 36 has
already been introduced this session to expand the AHFC's energy
efficiency program for commercial buildings. She complimented
the legislature again on all the hard work that went into the
development of SB 220. It was an excellent beginning to what
needs to be done to solve Alaska's energy problems.
4:03:45 PM
HANNAH GUSTAFSON, Deputy Director, Renewable Energy Alaska
Projects (REAP), said REAP is a coalition of over 70 Alaska
electric utilities, businesses, consumer and conservation
groups, Alaska Native organizations and local, state and local
entities that all share the goals of increasing the production
of renewable energy and promoting energy efficiency in Alaska.
The passage of SB 220 along with HB 306 provides a landmark from
which Alaska can move forward. She said renewable energy in
particular provides a hedge against the inevitable rise in
fossil fuel prices in the coming decades. HB 306 set ambitious
goals for the state and SB 220 contains the beginning steps to
meet these goals.
4:05:22 PM
She said REAP was a great proponent of the Emerging Energy
Technology Fund (EETF) in SB 220. Because the Renewable Energy
Grant Fund that passed in 2008 was not designed to fund immature
or emerging technologies, REAP and many other entities including
the Denali Commission, the Alaska Center for Energy and Power,
the National Renewable Energy Laboratory and the Alaska Power
Association recognized that Alaska needed a program to take
advantage of the many excellent opportunities it has to develop
emerging technologies that use Alaska's vast biomass, river
current, and tidal and wave resources. Grants from the EETF will
help demonstration projects leverage private and federal monies
to accelerate the technology innovation in Alaska while at the
same time providing ways to sustainably provide energy to the
state's communities.
She said the AEA administered EETF as part of SB 220 and issues
concerning intellectual property rights and allowable costs are
currently being worked out within the advisory committee
process. They hope the legislature will consider funding the
EETF this year as a piece of federal funding from the Denali
Commission would be contingent upon a state match.
MS. GUSTAFSON thanked the legislature for its commitment to
energy efficiency measures and programs over the last several
years. Since the appropriation of $360 million for existing home
weatherization and rebate programs in 2008, she said this body
clearly recognized that efficiency measures result in much
quicker paybacks than investment in generation resources.
The legislature added to the state's energy efficiency
commitment last year with the passage of SB 220 - in particular
the new $250 million Revolving Loan Fund Program for
retrofitting public buildings, which will help the state meet
the mandate for retrofitting 25 percent of its buildings by 2020
(in Section 17). REAP is currently working with AHFC to educate
public building owners about the program, which is important
both because it will bring energy savings to the state and
because it's also an innovative way to leverage state funds that
the state could potentially use to finance other energy
infrastructure projects.
In addition, Sections 20-28 of SB 220 deal with energy
efficiency loans for commercial businesses. However no funds
have yet been appropriated for this program; it's an important
piece that still needs some attention. They must find a way to
get commercial lending potentially to become more involved in
making these loans, whether it be through education, incentives
or both.
4:09:00 PM
MS. GUSTAFSON said SB 220 has several provisions that call for
state agencies to collect and/or provide technical assistance.
These include sections 11, which requires the Office of
Management and Budget (OMB) to work with various agencies to
collect and store energy consumption data; section 16, which
asks DOTPF to consider converting its fleet to alternative fuel
vehicles; section 43, which requires the Department of Revenue
(DOR) to make recommendations on the feasibility of a municipal
energy improvement program; and section 40, which requires the
Governor's Office to submit a report to the legislature
describing current energy programs and make recommendations on
how best to structure and coordinate them.
4:09:48 PM
MS. GUSTAFSON said she supported the Energy Policy Coordinator
(EPC) position suggested in the Governor's report released on
Monday. The EPC would be the coordinator and mediator between
various agencies and corporations that deal with energy issues,
and it appears from the report that the EPC will make further
recommendations about administrative structure. While a
coordinator is needed, consistency in application the state of
Alaska needs over the long term will require that whatever
structure is deemed best be institutionalized so that it
outlives individual administration. It may be beneficial for
this committee to hold informational hearings on administrative
approaches that are being successfully applied in other states.
Suggestions:
1. All of these energy programs and initiatives get adequate
personnel and funding to succeed.
2. Develop a strategic energy focus for meeting goals and
playing to our strengths. For instance programs like the
Renewable Energy Grant Fund may benefit from developing a
strategic focus for making grants. The advisory committee has
considered developing an RFP to develop state-of-the-art
projects designed for rural applications, and then asking
applicants to compete for grant funds to fill them. Using some
of this grant money in this fashion would drive technology
innovation.
3. State should develop a production-based tax credit for
renewable energy where the more energy a project generates the
more the developer is rewarded with a credit on its taxes.
4. The state is going to have to keep investing money on energy
efficiency. Already it's paying dividends. If Alaska should
become the most energy efficient state in the nation, it will in
the process become one of the most attractive places for
companies to invest.
5. The state should consider developing a concurrent loan
program for renewable energy projects. Indeed, HB 306 names the
Power Project Loan Fund as the vehicle to finance projects, but
that fund must be further capitalized particularly for large
Railbelt utilities that have not seen as much of the renewable
energy grant funds. Because of its comparatively lower
electricity prices, low cost or zero interest loans for projects
would be nearly as valuable as grants. The availability of loans
and other financing mechanisms is going to be absolutely
necessary to develop large-scale hydro and other large scale
renewable energy projects in the state.
MS. GUSTAFSON said the bonding mechanism that has allowed AHFC
to set up $250 million in the revolving loan fund for energy
efficiency retrofits is one example that can be examined for
financing other projects. The state needs to continue to fund
energy innovation programs like the Emerging Energy Technology
Fund. There is literally a race around the world to find more
sustainable energy systems and Alaska can use its unique
situation to become a leader in such innovation. Nowhere else in
the nation has the combination of high energy prices and
abundant natural energy resources like Alaska.
She said overall there is a huge demand from communities across
the state to diversity their energy portfolios and state
assistance is going to play a very valuable role in making this
happen. Energy is arguably the most important infrastructure
investment to make because without energy, schools and other
public infrastructure cannot function.
4:15:20 PM
SARAH FISHER-GOAD, Executive Director, Alaska Energy Authority
(AEA), Department of Commerce, Community and Economic
Development (DCCED), provided the committee a status update of
their work on implementing SB 220. Later, Peter Crimp would
provide an update of the EETF program, which was the major
program that SB 220 provided to AEA to administer.
Revisiting the PCE program, the agency is making sure that the
utilities that are eligible for the program use it. They provide
training and technical assistance to those utilities to make
sure they are able to fill out the necessary paperwork. Their
operating budget asked for a small increment in training funds
to provide extra assistance for utilities that have a high
turnover in clerks. She explained in prior years the Denali
Commission had provided funds for that through the Denali
Training Fund and that was one program that they hadn't funded
for a while, which is why they asked for the increment.
Mention was made of the data collection and education and
outreach need. The AEA has been leading an energy efficiency
conservation working group and has received a US Department of
Energy grant.
4:18:01 PM
SENATOR STEDMAN joined the committee.
MS. FISHER-GOAD said with respect to the need for capitalization
of the Power Project Fund, that there was legislation that
authorized the AEA to sell its portfolio to raise money for new
loans, and the Alaska Industrial Development and Export
Authority (AIDEA) purchased the program and capitalized the fund
with additional cash. In addition, the legislature provided a
$10-million appropriation to the Power Project Fund. So, at the
moment the program has sufficient funds to meet current demands
for the loan program, and it is one area she wants to make sure
that utilities and eligible borrowers know about. Since there
are less federals funds for grants, they know there will be
additional demand.
4:19:17 PM
With respect to the Governor's report, she reported that some
work had been done on the Commercial Energy Efficiency Loan
Program. When that passed, AEA had discussed the coordination
and implementation of the program with the DCCED, and as the
conversations progressed during the Interim, putting this energy
program in the AEA was discussed. So, they moved towards
developing a way in legislation that would transfer that program
to the AEA. It wasn't just a clean transfer. There was a
realization that some improvements could be made to the program
making more of an emphasis on energy efficiency for the
commercial users.
AIDEA has a program for commercial lending, and they have been
exploring a guarantee program rather than a traditional loan
program. They were expecting at this point to have a better idea
of what type of legislation that would be, but some issues are
still being worked out.
4:21:40 PM
MS. FISHER-GOAD reported that their Commercial Energy Audit
Program started with $462,000 in stimulus funds, and was very
successful. This funding is expected to provide 125-150 energy
audits for the commercial sector. Katie Conway, primary energy
efficiency conservation staff, did a phenomenal job in taking in
growing this aspect of the AEA.
SENATOR WIELECHOWSKI said he appreciated her perspective on
wanting to limit the Alternative Energy Revolving Loan Fund to
energy efficiency. However, the legislature made a conscious
decision last year to go a little bit beyond that and allow
organizations - for commercial businesses that wanted to put in
a wind turbine or underground coil piping to strip out some
heat.
MS. FISHER-GOAD responded that she had conversations with
legislative staff, who have reminded them of the alternative
energy concept of the program, and they do not intend to leave
alternative energy out of the program, but they feel the
emphasis should be on energy efficiency. That would be a concept
as they move towards transferring the loan program to the AEA.
4:24:48 PM
PETER CRIMP, Deputy Director, Alternative Energy and Energy
Efficiency, Alaska Energy Authority, Department of Commerce,
Community and Economic Development (DCCED), provided an update
of the Emergency Energy Technology Fund (EETF). Last year the
fund was created by the legislature and it allows the AEA to
make grants to eligible applicants for demonstration projects
for technologies that can be developed within a five-year time
frame - for testing emerging energy technologies, improving
existing energy technologies or deploying a technology that has
not been used in Alaska before. There is $2.4 million in state
funds and $3.1 million in Denali Commission funds with the idea
that $2.4 million of that would go into the overall "kitty" for
distribution to projects that are selected by the advisory
committee and AEA.
MR. CRIMP said the program has been staffed by Barbara Triplet,
a mechanical engineer with 15 years of experience at
ConocoPhillips and other oil companies. The first thing AEA did,
working with ACEP, was to research other energy technology
development programs in the country; the Arctic Energy
Technology Development Laboratory and the Denali Commission,
which has conducted similar solicitations. The Governor
appointed the advisory committee in early November 2010 and
those members are: Erik Ericson with AEL&P (utilities), Carl
Raisha from AIDEA, Brent Pitrie with Alaska Village Electric
Cooperative (renewable energy sector), Joel Niemeyer with the
Denali Commission, Steven Trimble with MWH Americas (fossil fuel
energy sector), Brent Sheets with the Arctic Energy Office of
National Energy Technology Lab (fossil lab), and Bryant Hirsch
with National Renewable Energy Laboratory.
They released a solicitation on January 6, and the materials
included a request for application, sample grant agreements,
scoring guidelines, et cetera. That RFA is due on March 2.
4:29:34 PM
RON KREHER, Acting Director, Division of Public Assistance,
Department of Health and Social Services (DHSS), said he was
here to talk about the Alaska Portable Heating Assistance
Program. He introduced Susan Marshal, Program Coordinator,
Heating Assistance Programs. He said SB 220 was signed into law
in June 2010 and by October 1, 2010 Ms. Marshal had managed to
get the regulations drafted, made necessary changes to their
system that generates heating assistance benefits, made changes
to their application as well as getting ready for extensive
outreach about the new program. So that on October 1 they were
able to start the program. To date they have provided home
heating assistance supplements to over 1200 low-income families.
He explained that the Alaska Affordable Heating Assistance
Program (AHAP) was designed to very closely mirror the federally
funded Low Income Heating and Energy Assistance Program (LIHEAP)
with two major differences. One is that the income limits for
the Affordable Heating Program are from 151-225 percent of
poverty with a provision that the income limit could go up to
250 percent of poverty. But probably the most significant part
of it is that the amount of money they pay to households is tied
to the average price of a barrel of North Slope crude during the
prior fiscal year. The statutes mandate how much they have to
pay households based on the price of oil. This year, because the
price of oil last year was $75.20, they are making payments of
$140 for both programs.
Last year they served well over 19,000 households between the
state program and the tribal programs. To date, they are about
30 percent over where they were this time last year with the
state funded program. They have served 1200-plus families to
date. Last year about this time, under what was the Alaska
Heating Assistance Program, they had only served 900 families.
This is because of Ms. Marshal's excellent outreach efforts and
because of interest in the new program. Even with this new
program, they are still serving the most needy families in those
income brackets. A majority of the folks are between 151-175
percent of poverty. They anticipate it will be very similar to
their federally funded program where 60-70 percent of the
households served are going to be households with elders over
the age of 60, individuals with disabilities and households with
children under the age of 5. "So, while the AHAP is a very small
part of a very significant bill, it is making a big difference
in the lives of many, many Alaskans." They are pleased to say
the program is "moving apace - meeting the needs of households
in Alaska."
MR. CRIMP said that 7 out of their 11 tribal programs are
operating regional affordable heating assistance programs for
those areas the state is not providing services for.
4:34:17 PM
JOEL ST. AUBIN, Chief, Statewide Public Facilities, Department
of Transportation and Public Facilities (DOTPF), said that SB
220 required DOTPF to work with other state agencies to retrofit
at least 25 percent of state buildings, using a nexus of 10,000
sq. ft., by no later than January 1, 2020. To begin this effort,
the department gathered utilities bills from the past two years
for all facilities that are over 10,000 sq. ft. Most of the
agencies have provided the information and they are generating
energy-use indexes in order to prioritize the buildings from the
least to the most energy-efficient. This will be an ongoing
process and will use the information gathered from the
implementation of the standardized methodology for state
agencies to collect and store energy consumption and expense
data.
He said the department has worked with the AEA to collaborate on
this approach to prioritizing the facilities as required by SB
220. Additionally, in implementing this, they anticipate
grouping projects together by location that will expedite
project completion, reduce project costs and maximize resources.
Therefore, it may mean that one group of facilities may include
multiple departments and multiple funding sources, and that
energy retrofits to facilities may not be complete in the exact
order that their energy-use index may indicate. Concurrently,
they have issued an RFP for energy performance contracting and
are negotiating with three energy service companies to provide
services under that agreement. They anticipate the three
contracts will be awarded this month and that audits will begin
in March and implementation of energy efficiency projects will
start this summer.
MR. ST. AUBIN said initial funding for the Energy Efficiency
Retrofit Projects will come from a grant through the American
Recovery and Reinvestment Act (ARRA). AHFC has received $40
million from the US Department of Energy, $10 million of which
has been allocated to state buildings. This funding must be
expended by March 2012 under the terms of ARRA. Once those funds
are committed, the funding of energy retrofit projects will be
through the AEERF. It is possible that projects they do this
summer will be combined ARRA and loan funding if the projects
exceed available ARRA funding for an individual department.
He said prior to SB 220, the department had completed energy
retrofit projects under two phases of energy performance
contracting; the first phase was completed in 2006 and resulted
in energy cost avoidance of $366,000 in its first year; the
second phase completed in 2009 has resulted in $793,000 of cost
avoidance in its first year. In all, 16 facilities (5 for the
Department of Administration, 3 for Department of Transportation
and Public Facilities, and 8 for the Department of Corrections)
have been made more energy efficient through this program - or
10 percent of state facilities that are over 10,000 sq. ft.
4:39:41 PM
SENATOR WIELECHOWSKI asked how soon the loans will be paid off.
MR. ST. AUBIN replied that the work done to date under
performance contracting has different financing terms; the
shortest term is 10 years and the longest is 15.
SENATOR WIELECHOWSKI estimated about $1 million in savings a
year on those 16 buildings, and asked how quickly the amount
that has been spent will be made up through the savings.
MR. ST. AUBIN answered their savings are exceeding what their
loan payments are, so the initial amount should be recouped
closer to 8 years for the first projects and closer to 10-12
years for the second group of 15-year contracts.
4:41:10 PM
DIANA ROTKIS, Statewide Fleet Manager, Department of
Transportation and Public Facilities (DOTPF), said SB 220
required the DOTPF State Equipment Fleet to prepare a report on
the feasibility of using compressed natural gas to power
vehicles in the state and also make a recommendation and
proposal for a pilot program if it was found to be feasible. The
final report produced by Mercury and Associates was released on
January 31. It concluded that compressed natural gas is a
feasible fuel for certain Alaskan fleets and expansion of the
program would be beneficial toward Alaska's sustainability
efforts. The pilot program that is recommended would enhance the
existing compressed natural gas fuel infrastructure that is
located within the Anchorage Bowl. It would increase the number
of vehicles and equipment using compressed natural gas including
new state light-duty vehicles, four school buses for the
Anchorage School district, four solid waste trucks and two
transit buses for the Municipality of Anchorage.
It would also establish a fuel management system for the state's
bulk fuel tanks to manage existing fuel use and future program
savings and also designate an intergovernmental program
coordinator who would be responsible for facilitating finding
external financial support such as federal grants to allow the
state to move to the next phase. They will work with the
Municipality of Anchorage to acquire clean city status, which
also opens doors for federal grants and to get significant buy
in from the public and private sector for long-term
sustainability of the projects.
4:43:19 PM
SENATOR WIELECHOWSKI asked what policy recommendations she had
to implement this program.
MS. ROTKIS answered they just received the report on January 31;
the department is going through it and fine-tuning all of the
recommendations.
SENATOR MCGUIRE commented that she has a bill that provides a
state tax incentive for hybrid, electric, or compressed natural
gas vehicles, and she asked her to take into account the
hypothetical passage of that bill and what it might do to reduce
the numbers for department's purchase of a fleet. She didn't
know if the department was exempt from paying state taxes on
vehicles.
MS. ROTKIS answered the department is exempt from paying state
taxes, and that she had been provided a copy of the bill.
4:45:33 PM
JERRY BURNETT, Deputy Commissioner, Treasury, Department of
Revenue (DOR), said the DOR was tasked with a report to the
legislature on the feasibility of a municipal energy
improvements financing program. They did such a report that was
submitted on January 31, and they should all have a copy. The
tax assessed property financing for energy improvements is a new
concept that was created in 2008 in California, he explained. It
is not dissimilar from the way municipalities finance local
improvement districts for water, sewer, sidewalks and paving,
but it is a voluntary priority lien against the property.
Subsequent to the passage of SB 220, the Federal Housing
Financing Agency issued a statement that urged state and local
governments to reconsider such programs and called for a pause
in such programs so concerns could be addressed. He quoted from
the statement: "First liens for such loans represent a key
alteration of traditional mortgage lending practice, present
significant risk to lenders and secondary mortgage entities and
may alter valuations for mortgage-backed securities and are not
essential for successful programs to spur energy conservation."
He said 20 states have such programs and they are working with
the Federal Housing Financing Agency to resolve some of those
issues.
MR. BURNETT said he had some recommendations specific to Alaska
that has 162 local government entities that would have the
authority to do property tax assessments, 38 of which currently
do them. If they could work with the Federal Housing Finance
Agency and establish that this type of program could be
constructive and conform with national mortgage underwriting
standards, then it would be a practical program. Local
governments would have to be allowed to create what they call
"PACE districts" or property assessment, clean energy financing
districts. Local governments would have ongoing administration
for the property tax collection and lien implementation, but
there would have to be a statewide issuer of bonds to provide
for local government financing need ensuring accessibility to
smaller communities and efficiency and uniform statewide
standards - like those used by AHFC for the home energy rebate
program for determining energy savings at allowable costs under
the program.
If creating a PACE program is a priority, he said consideration
should be given to providing a capital appropriation for a
revolving loan fund eliminating the need to borrow from third-
parties in the short term. That loan fund could be used to do
the refinance and provide additional capital once a stream of
payments was coming from the local government entities.
In writing the report, Mr. Burnett said he looked at the savings
generated from the Home Energy Rebate Program at AHFC, and of
those that had been paid, so far, with a little over $10,000
average outlay, there is a little over $1580 in annual energy
savings. So, it would appear those same repairs could have been
paid with a loan program of this type over a period of 10 years
or less. It's a matter of working with the Federal Housing
Finance Authority and getting national standards in place.
CHAIR PASKVAN asked if it's safe to say it's working.
MR. BURNETT replied it's safe to say it's not working anywhere
right now; it would work, though. California actually has
litigation with the Federal Housing Finance Authority because
they have a number of programs. Twenty states have these
programs that work.
4:50:48 PM
SENATOR MCGUIRE asked him to tell her and Senator Wielechowski
what can be done to help him with this endeavor. They don't want
to end up in litigation.
4:52:22 PM
CO-CHAIR PASKVAN said that concludes the presentations on SB 220
and finding no further business to come before the committee, he
adjourned the meeting at 4:52 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SRES SB220 DOTPF Legislature Report Final Jan2011.pdf |
SRES 2/2/2011 3:30:00 PM |
SB 220 |
| SB 220 Requirements of Administration.docx |
SRES 2/2/2011 3:30:00 PM |
SB 220 |
| S RES_-_Alaska_Sustainable_Energy_Act_Presentation_to_Senate_Finance_3-25-10[1].pptx |
SRES 2/2/2011 3:30:00 PM |