ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
April 23, 2021
3:33 p.m.
MEMBERS PRESENT
Senator Joshua Revak, Chair
Senator Peter Micciche, Vice Chair
Senator Natasha von Imhof
Senator Jesse Kiehl
MEMBERS ABSENT
Senator Click Bishop
Senator Gary Stevens
Senator Scott Kawasaki
COMMITTEE CALENDAR
HOUSE BILL NO. 115 AM
"An Act relating to aquatic farming and hatchery site leases;
and requiring the director of the division of lands to provide
the legislature with an annual report relating to aquatic
farming and hatchery site leases."
- HEARD & HELD
SENATE BILL NO. 44
"An Act requiring the Board of Fisheries to prioritize personal
use fisheries when implementing fishing restrictions to achieve
a management goal."
- HEARD & HELD
PRESENTATION: SUSITNA WATANA HYDROELECTRIC PROJECT
- HEARD
HOUSE BILL NO. 10
"An Act relating to the Funter Bay marine park unit of the state
park system; relating to protection of the social and historical
significance of the Unangax cemetery located in Funter Bay;
providing for the amendment of the management plan for the
Funter Bay marine park unit; and providing for an effective
date."
- PENDING REFERRAL
PREVIOUS COMMITTEE ACTION
BILL: HB 115
SHORT TITLE: AQUATIC FARMING & HATCHERY SITE LEASES
SPONSOR(s): REPRESENTATIVE(s) STORY
02/24/21 (H) READ THE FIRST TIME - REFERRALS
02/24/21 (H) FSH, RES
03/04/21 (H) FSH AT 11:00 AM GRUENBERG 120
03/04/21 (H) Heard & Held
03/04/21 (H) MINUTE(FSH)
03/09/21 (H) FSH AT 11:00 AM GRUENBERG 120
03/09/21 (H) Moved HB 115 Out of Committee
03/09/21 (H) MINUTE(FSH)
03/10/21 (H) FSH RPT 7DP
03/10/21 (H) DP: VANCE, STUTES, STORY, MCCABE,
KREISS-TOMKINS, ORTIZ, TARR
03/19/21 (H) RES AT 1:00 PM BARNES 124
03/19/21 (H) Heard & Held
03/19/21 (H) MINUTE(RES)
03/22/21 (H) RES AT 1:00 PM BARNES 124
03/22/21 (H) Moved HB 115 Out of Committee
03/22/21 (H) MINUTE(RES)
03/24/21 (H) RES RPT 4DP 3NR
03/24/21 (H) DP: SCHRAGE, GILLHAM, HANNAN, PATKOTAK
03/24/21 (H) NR: RAUSCHER, HOPKINS, CRONK
03/31/21 (H) TRANSMITTED TO (S)
03/31/21 (H) VERSION: HB 115 AM
04/07/21 (S) READ THE FIRST TIME - REFERRALS
04/07/21 (S) RES
04/23/21 (S) RES AT 3:30 PM BUTROVICH 205
BILL: SB 44
SHORT TITLE: PERSONAL USE FISHING PRIORITY
SPONSOR(s): SENATOR(s) KAWASAKI
01/25/21 (S) PREFILE RELEASED 1/15/21
01/25/21 (S) READ THE FIRST TIME - REFERRALS
01/25/21 (S) RES, FIN
04/23/21 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
REPRESENTATIVE ANDI STORY
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 115.
GREG SMITH, Staff
Representative Andi Story
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the changes in the Senate
committee substitute for HB 115.
HEATHER MCCARTY, Chair
Alaska Mariculture Task Force (AMTF)
Juneau, Alaska
POSITION STATEMENT: Testified on HB 115 by invitation.
ERIC WYATT, President
Alaska Shellfish Growers Association (ASGA)
Tokeen Cove, Alaska
POSITION STATEMENT: Testified on HB 115 by invitation.
PAUL FUHS, representative
Alaska Long Neck Farms
Anchorage, Alaska
POSITION STATEMENT: Testified on HB 115 by invitation.
CHRISTY COLLES, Chief of Operations
Division of Mining, Land, and Water
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Addressed questions and provided information
related to HB 115.
JOE HAYES, Staff
Senator Scott Kawasaki
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced SB 44 on behalf of the sponsor.
CURTIS THAYER, Executive Director
Alaska Energy Authority (AEA)
Anchorage, Alaska
POSITION STATEMENT: Presented an overview of the Susitna-Watana
Hydroelectric Project.
ACTION NARRATIVE
3:33:51 PM
CHAIR JOSHUA REVAK called the Senate Resources Standing
Committee meeting to order at 3:33 p.m. Present at the call to
order were Senators Micciche, Kiehl, von Imhof, and Chair Revak.
At ease 3:35-3:36
HB 115-AQUATIC FARMING & HATCHERY SITE LEASES
3:36:55 PM
CHAIR REVAK announced the consideration of HOUSE BILL NO. 115 am
"An Act relating to aquatic farming and hatchery site leases;
and requiring the director of the division of lands to provide
the legislature with an annual report relating to aquatic
farming and hatchery site leases."
3:37:11 PM
REPRESENTATIVE ANDI STORY, Alaska State Legislature, Juneau,
Alaska, sponsor of HB 115, introduced the legislation
paraphrasing the following sponsor statement:
[Original punctuation provided.]
House Bill 115 simplifies the Department of Natural
Resources (DNR) lease renewal process for aquatic
farms to support Alaska's aquaculture sector while
reducing administrative overhead. Examples of aquatic
farm products include oysters, kelp, and other
shellfish. HB115 makes the aquatic farm lease renewal
process consistent with the renewal process for other
DNR leases such as agricultural grazing, cabins and
lodges, fish processing docks, and hydroelectric
facilities. HB 115 does not affect salmon hatchery
leases.
If enacted, HB115 would expedite the lease renewal
process lowering the risk for businesses investment
and reducing the workload of an overstretched state
agency.
Current statute requires DNR to approve both initial
and renewal aquatic farm leases using the same
process, called a "945 authorization" (referring to
the adjudication process found in AS 38.05.945), which
takes around 200 days. HB115 would allow aquatic farm
or hatchery renewals to be renewed in the same manner
as most DNR leases like those listed above. This
optional process allows the Director of the Division
of Mining, Land and Water to renew a lease for a
business in good standing and takes around 90 days.
Applied to aquatic businesses, this option
significantly shortens the renewal process while
continuing appropriate regulatory oversight and public
engagement.
HB115 also requires DNR to submit an initial report on
the backlog of pending aquatic farm and hatchery site
lease applications, estimate economic impacts of
pending leases, and provide recommendations for
streamlining the lease approval process. Subsequent
annual reports would detail the application backlog
and list the number of leases renewals that underwent
the time-intensive lease renewal process.
This bill makes clear ecotourism and educational use
of sites is allowed, and explicitly prohibits DNR from
charging additional fees for persons using, or
traversing, land leased for aquatic farms and hatchery
sites.
I respectfully ask for your support in the passage of
HB115
REPRESENTATIVE STORY advised that the House floor amendment
specified that the required reports must be delivered
electronically. She expressed appreciation for the efficient and
cost-saving measure. She highlighted that DNR brought forward
two issues after the bill passed the House, both of which are
addressed in the proposed Senate committee substitute. She said
her staff would present the proposed changes.
3:41:08 PM
GREG SMITH, Staff, Representative Andi Story, Alaska State
Legislature, Juneau, Alaska, explained that the issues DNR
brought forward have to do with the term "ecotourism" and the
prohibition of fees in subsection (h). Because ecotourism is not
defined in statute the plain meaning is used, and that includes
"tourism directed towards exotic or threatened natural
environments." The concern was that aquatic farm sites may not
be considered exotic or threatened and therefore the allowance
in subsection (h) would not stick.
The second change appears in the prohibition of fees section.
The concern was that the previous language was too broad and
would have prevented the department from charging fees for
several things they currently charge for, including amendments
or changes to leases, subleases, or transfers of leases. The CS
narrows the prohibition on fees that the department can charge
to not allowing fees for tourism enterprises or educational
purposes. The sponsor understood that was the original intent
when it was added in Senate Finance last year. He offered his
understanding that people in the industry do not object to the
proposed changes in version O.
CHAIR REVAK asked for a motion to adopt the Senate CS.
3:43:12 PM
SENATOR MICCICHE moved to adopt the work draft [Senate] CS for
HB 115, work order 32-LS0299\O.
3:43:26 PM
CHAIR REVAK found no objection and the Senate committee
substitute, version O, was adopted.
CHAIR REVAK announced invited testimony.
3:43:48 PM
HEATHER MCCARTY, Chair, Alaska Mariculture Task Force (AMTF),
Juneau, Alaska, stated strong support for the [Senate] CS for HB
115. She said AMTF believes this legislation is an important
part of the larger plan to fully develop the mariculture
industry in Alaska. AMTF also believes this industry can play an
important role in Alaska's economic recovery from COVID-19, and
HB 115 is central to realize that potential.
MS. MCCARTY related that when the task force was created in
2016, Governor Walker appointed a wide range of stakeholders as
members. In 2018 the task force completed the comprehensive
Alaska Mariculture Development Plan that specifically focused
on: education and outreach, science and research, marketing and
processing, and regulatory and statutory changes that might be
necessary to remove obstacles to the development of mariculture.
Several DNR issues were identified in the process and HB 115 is
the result of some of the findings in the strategic plan. By the
end of 2019, the task force released a five-year action plan and
that too recognized the need for both regulatory and statutory
changes to remove obstacles to the development of mariculture.
She highlighted that Governor Dunleavy continued the task force
when he was elected because he shares the vision of the
important role mariculture could play in the state.
3:47:02 PM
MS. MCCARTY informed the committee that HB 115, including the
[Senate] committee substitute, has broad stakeholder support as
an important step in developing the mariculture industry. In
summary, the bill will align the lease renewal process for
aquatic farms and hatcheries to the renewal process for most
other types of state leases. This will simplify and shorten the
current process, reduce the workload on DNR staff, and provide
added certainty for mariculture/aquaculture businesses. The
simpler reporting requirements for DNR will allow the
legislature to better track and understand the industry, and it
establishes in statute that tourism and educational activities
are allowed on aquatic farm and hatchery sites.
CHAIR REVAK thanked her and requested her testimony in writing.
MS. MCCARTY agreed to provide it.
3:48:45 PM
ERIC WYATT, President, Alaska Shellfish Growers Association
(ASGA), Tokeen Cove, Alaska, stated ASGA is primarily made up of
oyster farms from Homer to Ketchikan. He related he was a
longtime member of the Alaska Mariculture Task Force and the
director of Oceans Alaska Science Center Shellfish Hatchery in
Ketchikan. He has been aquatic farming for nearly 20 years, and
as such has been involved in lease renewals, initial leases, and
all types of lease modification.
MR. WYATT described HB 115 as a worthwhile means to responsibly
improve the aquatic farming lease program. On behalf of ASGA he
stated support for HB 115 and encouraged the committee to pass
it.
CHAIR REVAK requested he submit his testimony in writing to
sres@akleg.gov.
3:51:04 PM
PAUL FUHS, representative, Alaska Long Neck Farms, Anchorage,
Alaska, stated that for the last 15 years he has been a
commercial diver in the Geoduck mariculture industry, and he
holds a lease site near Ketchikan. He said HB 115 is a good
bill, but it would be very helpful to the Geoduck industry if it
were amended to accommodate the specific nature of the biology
of geoducks. He explained that this large clam grows to a
kilogram in size, reaches maturity approximately seven years
after it is planted, and can sell for $20-$30 apiece, primarily
in the Chinese markets. The issue is that once the lease is
issued, DNR requires the commercial entity to sell $15,000 worth
of product a year. This is not possible in the first seven years
for Geoduck farms, and in later years there are a number of
reasons a Geoduck would not be harvested. Some of these reasons
are the farm may have paralytic shellfish poisoning, there may
be a trade war with China, and COVID-19. Fortunately, the
biology of geoducks does not require annual harvesting. If a
geoduck is not harvested one year, it is left in the ground to
get larger. He noted these large clams live up to 150 years.
MR. FUHS said the DNR lease requirement is a major impediment to
investment because failure to sell $15,000 of product a year is
grounds for lease revocation. The department has said this
requirement would be selectively enforced, but that is not
sufficient assurance for some investors. He said Alaska Long
Neck Farms requests the committee amend HB 115 to say proof of
the use of the lease is the planting of the Geoduck seed, not
the arbitrary dollar amount of sales.
3:55:11 PM
MR. FUHS described a separate issue that leases can only be
renewed once, and again requested the committee amend the bill
as he previously described.
CHAIR REVAK asked Ms. Colles to respond to Mr. Fuhs' request for
an amendment to bind the lease to planting the Geoduck seed.
3:57:22 PM
CHRISTY COLLES, Chief of Operations, Division of Mining, Land,
and Water, Department of Natural Resources, Anchorage, Alaska,
acknowledged the regulations were out of date and said, "It is
something that we recognize needs to be addressed when we redo
our regulations." She noted both that current regulations allow
the department to account for factors that might cause a farmer
to fail to sell their product, and that the department has not
denied or revoked any leases based on the inability to meet the
commercial use requirement.
3:58:41 PM
SENATOR VON IMHOF asked when the department expects to review
those regulations.
MS. COLLES estimated it would be another year before the
department started to work on aquatic farm regulations.
SENATOR VON IMHOF asked if the regulations address the issue of
just one lease renewal.
MS. COLLES replied, HB 115 would allow renewal for an additional
term without repeating the initial process that involves a best
interest finding, public comment, and a decision. After that, a
second decision process would be necessary.
SENATOR VON IMHOF summarized her understanding of what the bill
would provide in terms of a lease renewal and that after 20
years Mr. Fuhs would need make a new application and potentially
pay $40,000. She asked if that was correct.
MS. COLLES answered no; Mr. Fuhs would not need to do the survey
or appraisal unless he wanted to pursue a lease with a term
longer than 10 years. The statute allows the department to issue
leases for up to 55 years, but after 10 years an appraisal is
required for that lease. She added, "He would have to reapply
after he got another renewal; we would have to adjudicate and if
he wanted to remain at a 10-year lease he would not be required
to get a survey or an appraisal."
4:01:31 PM
SENATOR VON IMHOF asked if a leaseholder could be fairly
confident they could get three 10-year lease renewals in a row,
thereby avoiding the need for an appraisal and the other
requirements.
MS. COLLES answered that is correct; the leaseholder can
continue to request the lease be renewed after 10 years and they
would not be required to pay the fees. Furthermore, as long as
the leaseholder is not in default and the lease is found to be
in the best interest of the state, the department could renew
the lease for any number of terms. There is a decision process
at the end of the first renewal of similar term to allow the
public to comment and perhaps cause the department to decide to
go in a different direction. However, she said that has not
happened in the 15 years she has been in her current position.
4:02:46 PM
SENATOR VON IMHOF asked if the department allows bidding wars.
MS. COLLES answered no. There could be a competing application,
but that has not happened for an aquatic farm.
4:03:18 PM
SENATOR KIEHL noted that Section 4 removes the ability for the
commissioner to deny an application to renew a lease for good
cause. He asked if the department retains that ability elsewhere
in the statute.
MS. COLLES answered yes; the department has the ability to
review the lease and case file to ensure it is in good standing,
and a renewal may be denied for good cause. DNR may also choose
to not renew a lease through the expedited process if there is
reason to believe a full review and decision process is
necessary. At the end of this process there is always the
ability for the farmer or public to appeal.
4:05:00 PM
CHAIR REVAK asked Mr. Fuhs to work with the sponsor. He
announced he would hold HB 115 in committee.
SB 44-PERSONAL USE FISHING PRIORITY
4:05:11 PM
CHAIR REVAK announced the consideration of SENATE BILL NO. 44
"An Act requiring the Board of Fisheries to prioritize personal
use fisheries when implementing fishing restrictions to achieve
a management goal."
4:05:42 PM
JOE HAYES, Staff, Senator Scott Kawasaki, Alaska State
Legislature, Juneau, Alaska, introduced SB 44 reading the
sponsor statement into the record:
Excluding the priority already in statute for
subsistence, SB 44 directs the Board of Fisheries to
place restrictions on sport and commercial fisheries
before putting restrictions on personal use fisheries
when the harvest is limited to achieve a management
goal.
Fisheries that are restricted to residents only are
intended to enable Alaskans to access their fisheries
resources for their personal use and consumption.
Ensuring that residents have access to these fisheries
resources is vitally important as we continue to grow
as a state. All Alaskans can agree that residents
should be prioritized for harvest of our fisheries
resources before users from elsewhere in the country
and the world.
Currently, there are 41 personal use fisheries
throughout the state. Harvested species include
salmon, whitefish, shrimp, clams, crab, scallop,
herring, smelt, abalone, sea cucumber, halibut and
more. Nearly 50,000 Alaskans rely on personal use
fisheries every year to put food on their family
dinner table. Personal use fisheries provide food
security, contribute to the economy and support the
Alaskan traditions of independence, self-determination
and resourcefulness.
I ask for your consideration and support of SB 44 so
Alaskans can be assured that they will continue to
have access to their fisheries resources to the
benefit of themselves and their families.
4:08:00 PM
MR. HAYES presented the following sectional analysis for SB 44:
Section 1: Amends AS 16.05.251 to read that the Board
of Fisheries will restrict all other
fisheries before personal use fisheries
when implementing restrictions to achieve
the escapement of the number of the stock
that will sustain the fishery.
MR. HAYES presented a PowerPoint on SB 44. He started by reading
slides 2, 3, and 4:
Intent of SB 44
In an effort to increase food security for the state
of Alaska, SB 44 ensures that all Alaskans have
priority access to our state's rich abundance of
nutritious seafood.
Bill Overview
Senate Bill 44 provides for the prioritization of
personal use fisheries in the event of a closure
ensuring a management goal s met.
Value to Alaskans
Personal use fisheries provide an extremely valuable
food source to Alaskans. In 2019, 21,479 personal use
permit holders caught 457,002 sockeye salmon from Cook
Inlet personal use fisheries. To buy the equivalent
amount of sockeye salmon from a Fred Meyer in
Fairbanks, Juneau, or Anchorage would cost an average
of $1,962.80 per permit holder. A report* from a
family who dipnetted in 2019 shows that they paid
$2.64/lbs for 80.6 lbs of fillets they ate throughout
the year. At a retail value of $805.19 this is a
$592.42 cost savings on 80.6 lbs of sockeye salmon.
This is a significant cost savings that helps Alaskans
have easier access to high quality food.
*https://northernexpenditure.com/dipnetting-2019-i-
got-a-triple/
4:10:11 PM
MR. HAYES directed attention to the graph on slide 5 that shows
the difference between the Prince William Sound commercial
harvests from 2009 through 2019 versus the Kenai dipnet harvests
over the same period. He described the difference as marked.
MR. HAYES concluded the presentation stating:
SB 44 provides for a common sense measure ensuring
that all Alaskans are able to have access to our
state's abundance of nutrient rich seafood.
4:11:02 PM
CHAIR REVAK announced public testimony would be noticed for a
later hearing. He asked the individuals waiting to testify to
submit their testimony to sres@akleg.gov.
[SB 44 was held in committee.]
4:11:53 PM
At ease
^PRESENTATION: Susitna Watana Hydroelectric Project
PRESENTATION: Susitna-Watana Hydroelectric Project
4:12:45 PM
CHAIR REVAK reconvened the meeting and announced the committee
would hear a presentation on the Susitna-Watana Hydroelectric
Project.
4:13:18 PM
CURTIS THAYER, Executive Director, Alaska Energy Authority
(AEA), Anchorage, Alaska, presented an overview of the Susitna-
Watana Hydroelectric Project. He displayed the pie charts on
slide 2 that shows that Alaska currently receives 27 percent of
its energy from hydroelectric whereas the US receives just 2
percent of its energy from hydroelectric; and Alaska receives 2
percent of its energy from renewables whereas the US receives 8
percent from renewables. He said the chart on the right shows
estimates of Alaska's energy profile if Susitna-Watana were
built. The caveat is that the data in the presentation is from
2014-2015 so it only provides an idea of what Alaska's energy
profile could be. The goal was to have 50 percent of the energy
in the state come from renewable. With the Susitna-Watana
project, renewable energy would be close to 60 percent.
MR. THAYER stated that the maps on slide 3 show existing
hydropower facilities in the Lower 48 and Alaska. He noted that
48 states have hydro projects. In Alaska, AEA owns the Bradly
Lake Hydroelectric Project at the head of Kachemak Bay. It is
the largest hydro project in the state, and it produces about
120 megawatts of power or about 10 percent of the power in the
Railbelt. The Battle Creek diversion project increases the
capacity to bring power to the Railbelt from Homer to Fairbanks.
He noted that Fairbanks receives about 17 percent of the power
coming from Bradley Lake. He noted that when complete, the
Susitna-Watana dam would be one of the larger hydroelectric dams
in the US.
He related that work on Susitna-Watana was put into abeyance in
2014 under Administrative Order 271. That order was rescinded in
2019 when Governor Dunleavy issued Administrative Order 309, but
no funds were spent on the project in FY2020 and that continues
to be the case, he said.
4:16:56 PM
MR. THAYER paraphrased the state energy policy that reads as
follows:
In 2010, the Legislature unanimously passed HB 306,
which set an aspirational goal to generate 50 percent
of the state's electricity from renewable and
alternative energy sources by 2025.
He said the pie charts on slide 7 shows that energy production
from hydro and alternative sources has increased from 21.1
percent in 2011 to 29.5 percent in 2019. He described that as
progress, but far from the 50 percent aspirational goal that was
the hope 11 years ago.
MR. THAYER reviewed the statute that granted AEA the authority
to develop the Susitna-Watana project. Slide 8 read as follows:
AS 44.83.080 POWERS OF THE AUTHORITY
• (18) to acquire a Susitna River power project, whether by
construction, purchase, gift, or lease, including the
acquisition of property rights and interests by eminent
domain under AS 09;
• (19) to perform feasibility studies and engineering and
design with respect to power projects.
MR. THAYER advised that this work was completed in the early
part of the last decade, and the state spent $93 million towards
the FERC license. To the question of why Susitna-Watana, he said
it is estimated to increase the supply of Railbelt energy by 50
percent; it is expected to provide long-term stable rates for
well over 100 years; and the cost savings to Railbelt consumers
in 2014 dollars was estimated to be $11.2 billion over the first
50 years. An added benefit is that this project is expected to
reduce carbon dioxide emissions by 1.3 million tons a year
because it is displacing reliance on coal and natural gas
generation. This is roughly equivalent to removing 250,000 cars
from the road.
4:18:57 PM
MR. THAYER reviewed the project history depicted on slide 10. He
recounted that the US Bureau of Reclamation conducted the first
studies in the 1950s; the state studied the project in detail in
the 1980s, but the project was shelved due to oil prices; in
2010 the state established the aspirational goal of 50 percent
renewable energy by 2025; in 2011 the legislature unanimously
authorized the Alaska Energy Authority to pursue the Susitna-
Watana Hydroelectric Project; studies began in 2012; the license
and project was put into abeyance in 2017; and the project was
revived in 2019.
4:19:38 PM
MR. THAYER directed attention to the topography map on slide 11
of the Susitna River area. The lower Susitna that feeds into
Cook Inlet is colored yellow, the middle Susitna is blue, and
the upper Susitna is colored red. The star reflects the location
of the dam where the upper Susitna meets the middle. He
paraphrased the particulars of the project bulleted on slide 12,
which read as follows:
PROJECT AT-A-GLANCE
• Dam Height 705 feet
• Dam Elevation 2,065 Feet
• Reservoir Length ~42 miles
• Reservoir Width ~1.25 miles
• Installed Capacity 618 MW
• Annual Energy 2,800,000 MWh
• Cost ~$5.6 billion (2014$)
MR. THAYER noted the utilities' estimated Railbelt energy needs
in 2014 was 400-450 MW. The hope in 2014 was that the excess
capacity and low cost of energy would attract new business to
the region. He recounted that the current cost of energy from
Bradley Lake is about $0.04 to $0.045 per kilowatt and natural
gas in Cook Inlet is $0.07 to $0.09 per kilowatt. He
acknowledged that the 2014 cost estimate for Susitna of $0.06 to
$0.065 per kilowatt and the overall cost estimate for the
project needed to be updated in order to move the project
forward. He pointed out that technology advances may make the
project less expensive and financing costs are less expensive
than in 2014.
4:22:51 PM
MR. THAYER reviewed the engineering for the Susitna-Watana
project outlined on slide 13 that read as follows:
ENGINEERING
• Size and generation optimized
• Design reviewed by International Board of
Consultants
• Designed to withstand:
• 10,000-year flood
• Maximum credible earthquake of a magnitude 8.0
• 2014 Engineering Feasibility Report
4:23:15 PM
MR. THAYER briefly touched on the economics of the project
outlined on slide 13 that read as follows:
ECONOMICS
• Benefit-Cost and Economic Impact Analyses
completed in 2015
• Based on 2014 projection of natural gas prices:
• Benefit-cost ratio of 2.39 from energy
savings alone
• $11.2 billion (2014$) in energy savings over
first 50 years
• $4.7 billion (2014$) in capital and O&M
costs over first 50 years
MR. THAYER discussed the employment opportunities. He said the
2014 estimate was for more than 32,000 direct and indirect jobs
running from preconstruction employment through construction to
operation of the plant. Most of the employment will be during
the 9-11 year construction phase.
MR. THAYER paraphrased the licensing status on slide 16 that
read as follows:
LICENSING STATUS
• Integrated Licensing Process
• 2/3 of the way done
• 58 FERC-approved studies:
• Implemented 2012-2017
• 19 studies completed
• 39 significant progress made
• Initial Study Report filed with FERC
He said AEA estimated it would cost in the neighborhood of $100
million to complete the FERC application; about one-third more
time and money is needed for completion.
MR. THAYER highlighted the following points of the FERC study:
FERC STUDY PLAN DETERMINATION OUTCOME
• Confirmed adequacy • Confirmed data
of environmental studies gathered thus far is
representative of
baselines
• Validated quality • Rejected requests
of work completed to for additional studies
date
• Rejected nearly all • Licensing activity
study modification currently in abeyance
requests
• Rejected requests
for additional years of
study
MR. THAYER said the outcome of the FERC study provides a way to
look towards what needs to be completed in the future.
4:25:22 PM
CHAIR REVAK summarized that the licensing process was two-thirds
complete and the state had spent about $200 million on the
license to date, and the expectation was it could cost another
$100 million to complete. He asked what it means to have the
FERC license.
MR. THAYER agreed with the summary and described the FERC
license as the federal stamp of approval to move ahead to look
for investors and start construction on the dam.
CHAIR REVAK observed that the license would represent something
of value to the state but lacking that approval, the state has
$200 million in sunk costs.
MR. THAYER answered that is correct, but the license has value.
Somebody could buy the license, or it could be leveraged through
a public/private partnership to reduce the cost of the dam for
the consumer. Financing is fairly cheap right now and there is
interest by multiple parties in financing a FERC licensed
project and earning a 4-6 percent return for the next 50 years.
He related that AEA anticipates that it would take two years to
get a FERC license once the studies are completed. The next step
would be the project execution phase. The expectation is that
construction would take 9-11 years before the dam was
operational. In total, he estimated it would take about 15
years.
4:28:12 PM
CHAIR REVAK asked if he said the estimated cost per kilowatt was
$0.06.
MR. THAYER confirmed the estimate is $0.06 to $0.065 per
kilowatt. He reiterated that the cost of energy from Bradley
Lake is $0.04 to $0.045 per kilowatt and power generation on the
Railbelt from natural gas is about $0.7 to $0.09 per kilowatt.
CHAIR REVAK asked if the cost per kilowatt would decrease over
time after the loan is paid off.
CHAIR REVAK replied it would be more accurate to say the price
won't increase, which is different than for natural gas
generation that continues to increase.
SENATOR KIEHL offered his understanding that the private
developer that wants to build a hydroelectric project in his
district paid the costs of the FERC license. He asked why the
state is paying the cost of the FERC license for the Susitna-
Watana project if there are interested private partners.
MR. THAYER replied it was a policy call by the legislature and
the governor in 2014-2015 to pursue the FERC license. He
acknowledged that this legislature and governor could make a
different policy call on how to move forward. He noted that the
dam Senator Kiehl mentioned is for 19 megawatts, whereas
Susitna-Watana is 600 megawatts.
4:31:20 PM
SENATOR KIEHL asked if the 2014 estimate of $5.6 billion is the
total cost of the project or just the cost to construct the dam.
MR. THAYER answered it is the estimated cost to construct just
the dam, but whether Susitna-Watana is built or not, the
transmission lines need to be upgraded. The utilities are
working cooperatively to do those upgrades. He noted that
Bradley Lake has similar constraints; it is a 120 megawatt plant
and the transmission lines to it are 75 megawatts.
SENATOR KIEHL suggested the committee look a little deeper into
those costs because they could be surprising for either the
state or an independent producer.
CHAIR REVAK asked Mr. Thayer if there were any cost estimates
for transmission.
4:33:23 PM
MR. THAYER answered the approximate cost of all the upgrades to
the transmission lines is $900 million to $1 billion.
4:33:37 PM
SENATOR VON IMHOF commented that while the Biden administration
is excited about alternative energy projects, the federal
bureaucracy of permitting and FERC licensing is still an
extremely slow process. She asked what his experience has been
the last several years, particularly the last several months,
with the federal permitting processes.
MR. THAYER answered that federal legislation passed several
years ago that intended to streamline and shorten the deadlines
in the FERC process and lengthen the time a license may be held
before a project is built. He acknowledged that AEA had not had
the opportunity to test whether or not the new process was more
efficient, but that was the intent.
CHAIR REVAK asked him to finish the presentation.
4:35:48 PM
MR. THAYER paraphrased slide 19 that read as follows:
GOVERNOR AND LEGISLATURE DECIDE NEXT STEPS
If greenlighted?
• Determine licensing status
• Update cost estimate to obtain license
• Update benefit-cost and economic impact analyses
• Review data to assure it remains reflective of
current conditions
• Consult with FERC, landowners, and other
stakeholders
He related that the utilities, all of which have mandated a
reduction in carbon footprint, are interested in pursuing
Susitna-Watana. This one project would achieve all the
utilities' mandates regarding renewable energy. He clarified
that this would be a staged gate approach, and many things need
to be done before AEA could make a final decision and
recommendation to the governor and legislature about the next
step.
4:38:28 PM
CHAIR REVAK asked if the administration or anybody in AEA was
looking into the tasks bulleted on slide 19.
MR. THAYER answered the tasks fall to AEA to perform but the
policy of whether or not to move forward rests with the governor
and the legislature.
4:39:15 PM
SENATOR VON IMHOF asked if AEA needed the policy or the $100
million.
MR. THAYER answered both.
SENATOR MICCICHE mentioned both the Biden and Dunleavy
administrations and asked who needed to be on point to get the
project moving again.
MR. THAYER answered Governor Dunleavy took the project out of
abeyance, and AEA has had discussions about Susitna-Watana with
both the congressional delegation and the Biden administration.
They champion the project but the first step is for the governor
and legislature to set the policy.
CHAIR REVAK mused about where the state would be in terms of
energy production and cost if it had built the project 50 years
ago. He thanked Mr. Thayer for the presentation.
4:43:26 PM
There being no further business to come before the committee,
Chair Revak adjourned the Senate Resources Standing Committee
meeting at 4:43 p.m.