Legislature(2023 - 2024)BELTZ 105 (TSBldg)
01/30/2024 03:30 PM Senate STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| EO128: Separate Membership of the Board of Directors of the Alaska Energy Authority and the Alaska Industrial Development and Export Authority | |
| Presentation: Aea Executive Order 128 Overview | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
January 30, 2024
3:31 p.m.
MEMBERS PRESENT
Senator Scott Kawasaki, Chair
Senator Jesse Bjorkman
Senator Bill Wielechowski
Senator Kelly Merrick
MEMBERS ABSENT
Senator Matt Claman, Vice Chair
COMMITTEE CALENDAR
EO 128 "Separate Membership of the Board of Directors of the
Alaska Energy Authority and the Alaska Industrial Development
and Export Authority"
-HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
EMILY NAUMAN, Director
Legislative Legal Services
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided the legal memo on EO 128.
PARKER PATTERSON, Senior Assistant Attorney General
Department of Law
Juneau, Alaska
POSITION STATEMENT: Answered questions about EO 128.
CURTIS THAYER, Alaska Energy Association (AEA)
Executive Director
Anchorage, Alaska
POSITION STATEMENT: Presented a presentation and provided
testimony on EO 128 on behalf of the administration.
ACTION NARRATIVE
3:31:05 PM
CHAIR SCOTT KAWASAKI called the Senate State Affairs Standing
Committee meeting to order at 3:31 p.m. Present at the call to
order were Senators, Bjorkman, Wielechowski, and Merrick, and
Chair Kawasaki.
^EO128: Separate Membership of the Board of Directors of the
Alaska Energy Authority and the Alaska Industrial Development
and Export Authority
EO 128 SEPARATE MEMBERSHIP OF THE BOARD OF DIRECTORS OF THE
ALASKA ENERGY AUTHORITY AND THE ALASKA INDUSTRIAL DEVELOPMENT
AND EXPORT AUTHORITY
3:31:42 PM
CHAIR KAWASAKI announced the consideration of EO 128 "Separate
Membership of the Board of Directors of the Alaska Energy
Authority and the Alaska Industrial Development and Export
Authority."
3:32:56 PM
CHAIR KAWASAKI said the committee received the Legal Services
memo a couple days ago and had not spent much time reviewing it.
3:33:23 PM
EMILY NAUMAN, Director, Legislative Legal Services, Alaska State
Legislature, Juneau, Alaska, provided the legal memo on EO 128.
In summary, it is likely a court would find that EO 128 exceeds
the governor's authority under the Alaska constitution.
3:34:29 PM
MS. NAUMAN said the Governor's authority to issue executive
orders is acknowledged under Art.III, Section 23 in the state
constitution. The Alaska Constitutional Convention Proceedings
referenced in the Legislative Legal Services memo indicate that
the delegates viewed the power as enabling the governor to amend
law as necessary to reorganize the functions of the executive
branch. However, the power of the executive branch is not
without bounds. Article 2, Section 1 states "The legislative
power of the State is vested in a legislature consisting of a
senate with a membership of twenty and a house of
representatives with a membership of forty. EO 128 removes
members of Alaska Energy Authority (AEA) board and replaces
those members with a new list of directors, created wholesale in
the executive order. The criteria in the list of board members
in EO 128 are not appearing elsewhere in law. Because EO 128
composes new members, Legal Services determined that it creates
new law.
3:37:28 PM
CHAIR KAWASAKI asked if Governor Dunleavy could withdraw this
order and submit legislation through the Rules Chair of both the
House and Senate chambers.
3:37:57 PM
MS. NAUMAN replied that it would be allowed and believes it is
the correct form.
3:38:53 PM
SENATOR WIELECHOWSKI asked for confirmation that if no action is
taken, EO 128 would go into effect despite its
unconstitutionality. If someone sought a lawsuit, he wondered
what remedies would be available.
3:39:30 PM
MS. NAUMAN replied that he is correct. The best course of action
would be to reject EO 128 in joint session. If the executive
order passes and the new AEA board is assembled, it could be
subject to lawsuit.
3:40:53 PM
PARKER PATTERSON, Senior Assistant Attorney General, Department
of Law, Juneau, Alaska, answered questions on EO 128.
3:41:04 PM
SENATOR WIELECHOWSKI asked whether Mr. Patterson agrees with
Legal Services' testimony.
3:41:21 PM
MR. PATTERSON said the Attorney General's Office is in agreement
with Legal Services' perspective, but has a slightly different
interpretation. This is a unique provision of the constitution,
and has only occurred in Michigan's state constitution, which
was influential on Alaska's constitution. Precedence was found
and the distinction of "new law" determined that the governor
has the authority to make new changes to a board's structure,
but presupposes that it will require new law. From the Attorney
General's point-of-view, the question is whether the governor
would be appropriately exercising power to modify the
organization of the structure or functions of the board of
directors. Making changes to the structure of the organization
would be an appropriate exercise of Governor Dunleavy's
authority. Governors in the past have exercised authorities in a
similar fashion. A previous Alaskan governor created an entirely
new commission through an executive order.
The order would be entirely within the text of the constitution.
3:45:16 PM
SENATOR WIELECHOWSKI questioned Mr. Patterson's agreeance with
Ms. Nauman despite her testimony claiming that EO 128 is
unconstitutional.
3:45:30 PM
MR. PATTERSON replied that the Attorney General's office agrees
that EO 128 alters the board's structure but its function
remains. The Governor could not eliminate a board's function,
but could move units between units of the executive branch.
3:46:31 PM
SENATOR WIELECHOWSKI stated that there is general agreement to
make these changes through legislation. He asked if he agreed
that it would be a safer approach than risking legal
repercussions.
3:47:20 PM
MR. PATTERSON suggested consulting with the administration on
the best path forward. The Attorney General's Office determined
EO 128 would be a permissible and legal path forward.
3:47:59 PM
CHAIR KAWASAKI announced the consideration of a presentation
titled "AEA Executive Order 128 Overview."
^Presentation: AEA Executive Order 128 Overview
PRESENTATION: AEA EXECUTIVE ORDER 128 OVERVIEW
3:48:18 PM
CURTIS THAYER, Alaska Energy Association (AEA), Executive
Director, Anchorage, Alaska, presented a presentation and
provided testimony on EO 128 on behalf of the administration. He
moved to slide 2 and provided an overview of AEA, which is
broken down into six areas:
1. Railbelt Energy
2. Power Cost Equalization (PCE)
3. Rural Energy
4. Renewable Energy
5. Grants and Loans
6. Energy Planning
In the last two-and-a-half years, the AEA has been successful in
obtaining over $600 million in federal grants, resulting in over
one thousand percent capital budget growth in the past four
years.
3:51:30 PM
MR. THAYER moved to slide 3 and briefly listed some active AEA
projects and services.
3:51:46 PM
MR. THAYER moved to slide 4 explaining the purpose of EO 128.
[Original punctuation provided.]
Executive Order 128: The "Why"
"As governor, I find that it is in the best interests
of efficient administration to separate the membership
of the board of directors of the Alaska Energy
Authority from the membership of the board of
directors of the Alaska Industrial Development and
Export Authority." EO 128
• Historical: From 1976 until 1993, AEA was
governed by its own board of directors.
• Distinct Purpose: The underlying purposes of
AIDEA and AEA are fundamentally different. AEA's
mission is to reduce the cost of energy in
Alaska. Whereas, AIDEA's mission is to provide
various means of financing to promote economic
growth and diversity.
• Unique Mission: In addition to the lowering the
cost of energy in Alaska, AEA works to diversify
Alaska's energy portfolio, and increase
resiliency, reliability, and redundancy and our
mission is growing.
• Exponential Growth: AEA's capital budget has
increased over 1,000% in the last four years.
• Distinct Expertise: A distinctive set of skills
and expertise is required for optimal governance.
It is common and appropriate for a single-purpose
entity to have a governing board made up of
experts in the topic area.
• Staffing: AEA has 68 PCNs (20 IIJA PCNs pending);
AIDEA has 31 PCNs; and Shared Services 15 PCNs.
AEA has 48 PCNs and hopes to add 20, but is already at a larger
volume than AIDEA. Between the two services, AIDEA and AEA have
some shared services. AEA continues to grow in size.
3:54:43 PM
SENATOR WIELECHOWSKI asked for a fiscal note for shared PCNs.
3:55:00 PM
MR. THAYER replied that the fiscal note holds that approximately
$28,500 is needed to cover the cost of the AIDEA Board. AIDEA
assumes about 50 percent of costs and pays for certain employee
needs.
3:55:58 PM
SENATOR WIELECHOWSKI asked if AEA expects EO 128 to maintain
shared services.
3:56:14 PM
MR. THAYER said he believes that is the intent of EO 128. At
this time, 15 people are sharing services between AEA and AIDEA.
Further review is needed on whether the order would lead to a
complete separation.
3:57:02 PM
MR. THAYER moved to slide 5 and provided a rundown of the
proposed AEA Board makeup under EO 128.
[Original punctuation provided.]
New AEA Board Makeup.
As proposed in the Governor's EO 128, AEA's board
membership makeup would include:
(1) the commissioner of commerce, community, and
economic development
(2) six public members appointed by the governor as
follows:
- (A) one member with expertise or experience in
managing or operating an electric utility that is
not connected to an interconnected electric
energy transmission network, as that term is
defined in AS 42.05.790;
- (B) one member with expertise or experience in
developing energy projects in rural communities;
- (C) one member with expertise or experience in
managing or operating an electric utility
connected to an interconnected electric energy
transmission network, as that term is defined in
AS 42.05.790;
- (D) one member with financial expertise in
large-scale energy project development; and
- (E) two members with expertise or experience in
finance, energy policy, energy technology,
engineering, law, or economics.
3:57:52 PM
MR. THAYER moved to slide 6 and highlighted AEA's funding
growth.
[Original punctuation provided.]
AEA's Exponential Growth
• AEA has received and anticipates a substantial
increase in federal funding from the Infrastructure
Investment and Jobs Act (IIJA) and others, over the
next several years.
• Pipeline of federal funding:
-$84 million awarded (Energy Efficiency
Conservation Block Grant, Department of Defense
Grant, State Energy Planning Grant, National
Electric Vehicle Infrastructure grant, and Grid
Resilience 40101(d) Grant)
-$573.5 million conditionally awarded (Grid
Resilience and Innovation Partnerships, Energy
Efficiency Reconciliation Loan Capitalization
Program, and Home Efficiency and Appliance
Rebates)
-$104 million competitive applications pending
decision (solar for all, wood innovations grant,
and energy future grant, and high-energy cost
grant)
• Availability of tax incentives for clean energy
projects and direct pay reimbursement available for
tax exempt entities for the first time.
• In addition to AEA's netbook value of $1.3 billion,
several large projects are underway:
-$413 million to build an undersea High Voltage
Direct Current from the Kenai Peninsula to
Anchorage
-$342 million for the Dixon Diversion project
(Estimated to offset 1.5 billion cubic feet of
natural gas per year in Railbelt power
generation)
-$90 million for Railbelt transmission upgrades
3:59:55 PM
MR. THAYER moved to slide 7 and listed AEA's statutory programs:
[Original punctuation provided.]
AEA's Statutory Programs
• Alaska Energy Security Task Force: Development of the
Governor's Alaska Energy Security Task Force Report
submitted in December 2023.
• New federal funding diversifies AEA's existing
statutory programs and projects portfolio including:
-Rural Power System Upgrades and Bulk Fuel
Upgrades: AEA continues to manage legacy funding
for critical rural energy projects and training
programs in partnership with the Denali
Commission.
-Renewable Energy Fund: AEA also manages this
competitive grant program, and has received
legislative funding for the last three
consecutive fiscal years (over $37 million).
-Alaska Intertie: AEA-owned transmission asset
that saves Interior ratepayers nearly $40 million
annually.
-Bradley Lake Hydroelectric Project: AEA-owned
generation asset that provides 10% of Railbelt's
energy.
o Required Project Work is anticipated to
utilize the bond proceeds from the $166
million bond issuance, which are being
planned, and will progress in the next
several years (transmission and BESS).
o New federal funds for transmission, grid
resiliency, and other power projects may be
leveraged by the bond funds to advance
energy projects and reduce the cost of
energy in the state.
-Power Cost Equalization: AEA manages this annual
~$45 million program vital for rural Alaskans.
-Renewable Energy and Energy Efficiency Programs:
To promote Alaska's clean energy sector, AEA
manages biomass, hydro, solar, and wind programs
and projects across the state.
4:01:04 PM
MR. THAYER moved to slide 8 showcasing a chart of AEA's status
from fiscal year 2021 to fiscal year 2024 in thousands.
4:01:38 PM
CHAIR KAWASAKI requested testimony from an AIDEA representative
for their input on EO 128's potential impact on the AIDEA's
operations.
4:01:57 PM
MR. THAYER replied that an AIDEA representative could provide
feedback.
4:02:12 PM
CHAIR KAWASAKI said the committee would appreciate a
comprehensive fiscal note for transfer cost.
4:02:29 PM
MR. THAYER responded that he would work with the legislative
office to provide one.
4:02:57 PM
CHAIR KAWASAKI mentioned that Senate State Affairs is the first
committee to hear an executive order this session, especially
one involving substantive changes.
4:03:37 PM
There being no further business to come before the committee,
Chair Kawasaki adjourned the Senate State Affairs Standing
Committee meeting at 4:03 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| exor0128.pdf |
SSTA 1/30/2024 3:30:00 PM |
|
| 2024.01.29 AEA EO 128 Overview Presentation to Senate State Affairs Committee (Final).pdf |
SSTA 1/30/2024 3:30:00 PM |
EO 128 PP |
| ALASKA LEGISLATURE '93 SPEAKER GET BILL HER WAY POWER PROJECT PLAN UNDERGOES CHANGES Anchorage Daily News (AK) May 8 1993 pA1.pdf |
SSTA 1/30/2024 3:30:00 PM |
EO 128 |
| Legal-Memo-EO128-AIDEA-AEA.pdf |
SSTA 1/30/2024 3:30:00 PM |
EC 128 EO 28 |
| Special Report - AEA Dissolution.pdf |
SSTA 1/30/2024 3:30:00 PM |
EO 128 |
| SB0117A.pdf |
SSTA 1/30/2024 3:30:00 PM |
SB 117 |