HB 164-NET METERING PROGRAM & FUND  1:11:20 PM CO-CHAIR MEARS announced that the only order of business would be HOUSE BILL NO. 164 "An Act relating to a net metering program; relating to reduced rates in the form of credits for consumer-generators; establishing a net metering reimbursement fund; and providing for an effective date." 1:12:03 PM ANNA LATHAM, Deputy Commissioner, Department of Commerce, Community & Economic Development, gave introductory remarks on HB 164 on behalf of Governor Dunleavy, prime sponsor. She said that the Alaska State Legislature (ASL) and the Department of Commerce, Community & Economic Development (DCCED) have worked together to provide renewable energy to the state and said that the Alaska Energy Authority (AEA) has a Renewable Energy Credit (REC). She touched on past legislation related to HB 164. 1:14:42 PM CURTIS THAYER, Executive Director, Alaska Energy Authority, gave invited testimony on HB 164. He began his testimony by explaining that the AEA was a state authorized corporation whose board of directors was appointed by the governor. He said that the genesis of HB 164 came from a recommendation by the Governor's Energy Task Force. He explained that the proposed legislation would establish a new net-metering program for Railbelt utilities and integrate new customers. He said that consumer generators would receive monthly credit under the proposed program and emphasized that HB 164 would allow utilities flexibility in how they establish metering rates, such as seasonally varying rates. 1:18:12 PM CONNER ERICKSON, Director of Planning, Alaska Energy Authority, gave invited testimony on HB 164. He read the sectional analysis to HB 164 [included in the committee packet], which read as follows [original punctuation provided]: Section 1 Amends subsection (a) of AS 42.05.391 (Discrimination in rates) to expressly exclude new section AS 42.05.395 from the existing statutory prohibition that public utilities may not grant an unreasonable preference or advantage to a customer or subject a customer to an unreasonable preference or disadvantage. Section 2 Adds a new section (AS 42.05.395, Net metering) to require electric utilities served by an electric reliability organization and that have total calendar-year retail sales exceeding 5,000,000 kilowatt-hours to provide a net metering service that provides monthly bill credits at the prevailing retail rate and allows the accrual of account credits on an annual cycle ending March 31 of each year, with all unused credits expiring after that date. Other provisions of AS 42.05.395: (1) provide customers with existing self-generation facilities to opt to receive net metering service under the utility tariff in effect at the time the generation facility was installed; (2) preclude electric utilities required to provide net metering service under AS 42.05.395 from limiting participation in its net metering service offering unless the Regulatory Commission of Alaska (RCA) finds such limitation is necessary to protect system reliability or prevent rates for non-net metering customers from being unjust and unreasonable; (3) allow utilities required to provide net metering service under AS 42.05.395 to seek recovery of revenue losses attributable to the provision of net metering service; and (4) require the RCA to adopt regulations that establish standards and procedures for calculating the eligible revenue losses of an electric utility required to provide net metering service under AS 42.05.395. Section 3 Adds a new section (AS 42.45.015, Net metering reimbursement fund) establishing a separate net metering reimbursement fund, consisting of money appropriated by the legislature and other sources, within the Alaska Energy Authority (AEA) to provide payments to electric utilities for recoverable costs under AS 42.05.395 and RCA regulations implementing AS 42.05.395. Section 4 Provides for a July 1, 2025 effective date. 1:21:58 PM REPRESENTATIVE RAUSCHER asked Mr. Erickson to define the term "discrimination rates." MR. ERICKSON explained that the tern "discrimination rates" referred to a the obligation that a public utility had to be transparent in the rates they apply to their services. 1:24:59 PM REPRESENTATIVE KOPP asked if there was enough labor to keep up with the demands of HB 64. MR. ERICKSON replied that he could not speak directly to the labor availability in the state and said that he was aware of a general increase in skilled laborers in the state. 1:28:03 PM CO-CHAIR HOLLAND asked for clarification with regard to the flexibility of seasonal use rates that a utility might apply. MR. ERICKSON pointed to Section 2 of the proposed legislation to answer Representative Holland's question. 1:29:22 PM REPRESENTATIVE RAUSCHER asked if it was fair to call HB 164 the "No man Left Behind Bill." MR. ERICKSON agreed that Representative Rauscher's nickname for HB 164 was a fair one. 1:30:14 PM REPRESENTATIVE COSTELLO asked about the timing of the processes that would be put into motion by HB 164. 1:31:20 PM JOHN ESPINDOLA, Commissioner, Regulatory Commission of Alaska, answered committee questions on HB 164. He said that it would be up to the respective utilities to update their tariffs and submit them to the Regulatory Commission of Alaska (RCA) within 45 days. 1:32:40 PM MR. ERICKSON spoke to slide 6 of a PowerPoint presentation for HB 164 [hardcopy included in the committee packet], which read as follows [original punctuation provided]: The AESTF, established under Administrative Order 345, is a diverse group of stakeholders tasked with developing a comprehensive statewide energy plan for Alaska, with energy affordability, energy reliability, and energy security and resilience being paramount to the plan. Priority strategy B-2: Alaska Policy Recommendations, seeks to "enhance Alaska's departmental and regulatory policies to spur and sustain renewable energy and transmission development to cut energy costs and advance economic prosperity for Alaska." To assist in achieving these objectives, priority action item B-2.2 was recommended to "strengthen  Alaska's Net Metering energy framework, tariffs, and regulations for Alaska's diverse stakeholders to promote net metering renewable energy investments." This bill is advanced in direct support of this priority action item. 1:34:41 PM CO-CHAIR HOLLAND asked why a utility's fixed costs would not be covered under the proposed policies of HB 164 and asked if there were any alternative methods considered. MR. ERICKSON reminded Co-Chair Holland that current statute had already allowed for rate changes and spoke to the difference in energy demand, usage, and storage over a year's time. 1:39:46 PM REPRESENTATIVE RAUSCHER asked for a model of the application of the proposed renewable energy standard. He stressed his opinion that he would need a better idea of cost disparity across the entire Railbelt region. MR. ERICKSON reported that the AEA was under path to launch a program that would essentially allow for at least a partial reimbursement of ratepayers of a utility. 1:42:24 PM CO-CHAIR MEARS asked how many customers would be eligible for the said reimbursement. MR. ERICKSON answered that 3300 net metering participants would be eligible for the aforementioned reimbursements. 1:43:43 PM REPRESENTATIVE KOPP asked if there were any federal grants available to fund the entire renewable energy standard. MR. THAYER shared his understanding that federal grants were no longer available to utilities on the Railbelt. 1:45:17 PM REPRESENTATIVE TILTON asked what level of input Railbelt utilities had on the current draft of the proposed legislation. MR. THAYER responded that the engagement with utilities was based on the size of the program they were proposing. He spoke to the Matanuska Electric Association (MEA)'s efforts to provide data and information to the legislature in drafting programs like the ones proposed in HB 164 and said that more information from more communities would be needed to gather an accurate idea of energy use across the state. 1:46:55 PM CO-CHAIR HOLLAND asked what the average or target size of customer was for utilities along the Railbelt. MR. ERICKSON shared his belief that there was no target size of customer along the Railbelt and said that there was a size restriction to the program that the HB 164 was proposing. 1:48:31 PM REPRESENTATIVE TILTON shared her concern that funds could be used for something beside their intended purpose. MR. THAYER said that the state would "know rather quickly if the program was successful or not" and spoke to the proposed legislation's "novel approach" in working to offset known energy shortages along the Railbelt. He detailed the ways that HB 164 would encourage and work to establish energy independence and security for individuals along the Railbelt. 1:50:57 PM CO-CHAIR MEARS asked if the proposed legislation contained any sections that were critical for the state to be aware of in the implementation of its policies. MR. THAYER offered his belief that a key component of bill could be problematic to implement in the way that it was currently written. 1:52:02 PM REPRESENTATIVE RAUSCHER asked if the scale of disparity was reflected only within the MEA or across the entire Railbelt. He spoke to the general desire of people along the Railbelt wanting to develop renewable energy. MR. ERICKSON offered his understanding that the disparity would mainly affect individual utilities who were filing an application for the recovery of costs. He said that the decision on whether or not to install solar panels would be up to the individual ratepayer. He said that the intent of the proposed legislation was to avoid fiscal harm to the individual ratepayer. 1:55:07 PM CO-CHAIR HOLLAND shared his understanding that the proposed legislation would carry a real fiscal note and asked for clarification on the possible costs of HB 164. MR. THAYER said that the AEA did anticipate a real cost to HB 164 and said that the zero fiscal note was reflected in the idea that the AEA could absorb the policies of the proposed legislation into its existing workload. 1:57:51 PM CO-CHAIR MEARS asked how HB 164 could compel utilities to start net-metering. She asked if the policies of HB 164 could apply to utilities off of the Railbelt. MR. THAYER emphasized the regulatory process as a means to compel utilities to begin net-metering. He said that the AEA did not want to underestimate the possible effects of net- metering. He said that utilities away from the Railbelt were subject to more individual expenses and would need to rely on more collective sources of energy like wind turbines or hydropower. He said that there were 197 communities not on the Railbelt aside from Juneau, Ketchikan, and Sitka, many of which did not display a pressing need for new renewable energy sources or policies. 2:02:48 PM REPRESENTATIVE RAUSCHER asked if the proposed legislation would affect people who were currently net-metering. MR. ERICKSON answered that HB 164 would "somewhat" address individuals who were net-metering and said that the net-metering fund could be used to offset existing revenue loss. 2:04:01 PM CO-CHAIR HOLLAND requested information regarding the difference between utilities and their rate structures. He said that he was "looking for consistencies" between utilities and shared an anecdote about his family cabin. 2:05:05 PM CO-CHAIR MEARS commented that the RCA could provide the information that Co-Chair Holland had requested. 2:05:20 PM MR. ESPINDOLA said that he would work to provide the committee the requested information. CO-CHAIR HOLLAND clarified that the information he had requested was most concerned with the comparison of utilities rate structure and base costs. He said that he was looking for a scope on Railbelt utilities. 2:07:36 PM CO-CHAIR MEARS announced that HB 164 would be held over.