ALASKA STATE LEGISLATURE  HOUSE SPECIAL COMMITTEE ON ENERGY  April 24, 2025 1:03 p.m. MEMBERS PRESENT Representative Ky Holland, Co-Chair Representative Donna Mears, Co-Chair Representative Bryce Edgmon Representative Chuck Kopp Representative Cathy Tilton Representative George Rauscher Representative Mia Costello MEMBERS ABSENT  All members present COMMITTEE CALENDAR  HOUSE BILL NO. 153 "An Act relating to generation of electricity from renewable energy resources; relating to a renewable portfolio standard; relating to power cost equalization; and providing for an effective date." - HEARD & HELD HOUSE BILL NO. 196 "An Act relating to carbon offset revenue; and relating to the renewable energy grant fund." - SCHEDULED BUT NOT HEARD PREVIOUS COMMITTEE ACTION  BILL: HB 153 SHORT TITLE: UTILITIES: RENEWABLE PORTFOLIO STANDARD SPONSOR(s): REPRESENTATIVE(s) HOLLAND 03/24/25 (H) READ THE FIRST TIME - REFERRALS 03/24/25 (H) ENE, RES 03/26/25 (H) FIN REFERRAL ADDED AFTER RES 04/01/25 (H) ENE AT 1:00 PM GRUENBERG 120 04/01/25 (H) Heard & Held 04/01/25 (H) MINUTE(ENE) 04/03/25 (H) ENE AT 1:00 PM GRUENBERG 120 04/03/25 (H) Heard & Held 04/03/25 (H) MINUTE(ENE) 04/10/25 (H) ENE AT 1:00 PM GRUENBERG 120 04/10/25 (H) Heard & Held 04/10/25 (H) MINUTE(ENE) 04/22/25 (H) ENE AT 1:00 PM GRUENBERG 120 04/22/25 (H) -- MEETING CANCELED -- 04/24/25 (H) ENE AT 1:00 PM GRUENBERG 120 WITNESS REGISTER JOHN ESPINDOLA, Commissioner & Chair Regulatory Commission of Alaska Anchorage, Alaska POSITION STATEMENT: Answered committee questions during the hearing on HB 153. ACTION NARRATIVE 1:03:03 PM CO-CHAIR HOLLAND called the House Special Committee on Energy meeting to order at 12:48 p.m. Representatives Mears, Kopp, Tilton, Rauscher, Edgmon, Costello, and Holland were present at the call to order. HB 153-UTILITIES: RENEWABLE PORTFOLIO STANDARD  1:04:09 PM CO-CHAIR HOLLAND announced that the only order of business would be HOUSE BILL NO. 153, "An Act relating to generation of electricity from renewable energy resources; relating to a renewable portfolio standard; relating to power cost equalization; and providing for an effective date." [Co-Chair Holland handed the gavel to Co-Chair Mears.] 1:04:48 PM CO-CHAIR MEARS opened public testimony on HB 153. After ascertaining that there was no one who wished to testify, she closed public testimony. 1:05:41 PM REPRESENTATIVE RAUSCHER moved to adopt Amendment 1 to HB 153, labeled 34-LS0501\G.1, Walsh, 4/11/25, which read: Page 3, lines 20 - 21: Delete "that is subject to the standards of an electric reliability organization under AS 42.05.760" Page 5, lines 3 - 4: Delete "subject to the standards of an electric reliability organization under AS 42.05.760" CO-CHAIR MEARS objected for the purpose of discussion. 1:05:50 PM REPRESENTATIVE RAUSCHER explained that Amendment 1 would expand the effects of HB 153 beyond the Railbelt Region of Alaska to include the entire state by insuring uniform regulatory treatment across the state. This was drawn up concerning the effects of the provisions within HB 153 regarding fines charged if a utility does not meet its renewable transition goals. In past versions of the bill, the fine would go directly to the renewable energy fund (REF) for use within the effected utility or energy co-operative ("co-op"). Under this amendment, the funds could be used on any project regardless of the utility company or energy co-op within the state of Alaska. Representative Rauscher said that he wrote the amendment with the understanding that utility companies would not be able to meet their transition targets and that the fines would be passed on to ratepayers. He also raised concerns over the rise in the cost of living and the effects of tariffs as reasons for his support of the amendment, as these headwinds may lead to delays in initiating renewable energy projects. 1:09:10 PM CO-CHAIR HOLLAND, as prime sponsor, presented HB 153. He said that the purpose of the renewable portfolio standard (RPS) is to help larger utilities integrate renewable energy production into their power grids. Therefore, Co-Chair Holland said that Amendment 1 would add a requirement that would burden smaller utilities with a task they cannot accomplish. This is largely because such utilities are not connected to a larger grid as opposed to how larger utility companies and co-ops are. Thus, Amendment 1 would, Co-Chair Holland argued, be counter to the intent of HB 153, as the REF wasn't meant to be a source for building new renewable energy projects. Rather, the REF was set up because larger utilities along the Railbelt were uncomfortable with fines being awarded to the unrestricted general fund (UGF) and preferred that such funds "stay within the sphere of doing good for our energy ecosystem." REPRESENTATIVE RAUSCHER responded that he wasn't quite sure of what the definition of a "small utility" was, as some large utilities are not within the Railbelt Region, while some small utilities are. He then questioned the purpose of the RPS provision within HB 153. CO-CHAIR HOLLAND said that the purpose of the RPS provision was to help utilities along the Railbelt transition to more renewable energy production within their integrated grid. Therefore, placing fines on smaller, disconnected grids would, according to Co-Chair Holland, not be consistent with the intent of HB 153. He further stated that utilities outside of the Railbelt Region, particularly in Southeast Alaska and Kodiak, were far beyond the benchmarks outlined in HB 153. 1:12:46 PM REPRESENTATIVE KOPP opined that the RPS provision within HB 153 should not be applied to smaller utility companies. These utility companies, according to Representative Kopp, serve small towns and villages and have a limited technical capacity to change their power generation. While he said that he appreciated the equity that Representative Rauscher was seeking in introducing this amendment, Representative Kopp elaborated that he had reservations on applying the RPS standard to Railbelt Utilities and had even more when it came to smaller "off-grid" utilities, as such entities were "realistically going to be on diesel for a very long time." 1:14:01 PM A roll call vote was taken. Representatives Costello, Tilton, and Rauscher voted in favor of Amendment 1. Representatives Kopp, Edgmon, Mears, and Holland voted against it. Therefore, Amendment 1 failed by a vote of 3-4. 1:14:30 PM REPRESENTATIVE RAUSCHER moved to adopt Amendment 2 to HB 153, labeled 34-LS0501\G.2, Walsh, 4/11/25, which read: Page 4, following line 3: Insert a new subsection to read: "(d) A load-serving entity may not recover costs to comply with the renewable portfolio standard by increasing customer rates or imposing additional surcharges or other charges on customers." Page 5, lines 27 - 28: Delete "shall itemize the effect of a noncompliance fine on the entity's monthly customer bills" Insert "may not increase customer rates or impose additional surcharges or other charges on customers to satisfy a noncompliance remittance requirement" CO-CHAIR MEARS objected for the purpose of discussion. 1:14:38 PM REPRESENTATIVE RAUSCHER explained that Amendment 2 would require utilities that do not meet their renewable energy transition requisite not to push the cost of associated fines onto ratepayers. He said that due to the dominance of large energy co-ops within the Railbelt grid, there would be a high risk that such costs would be passed directly to ratepayers. He continued to express doubts about the ability of utilities to meet the standards for renewable energy transition within HB 153, adding, "So I can almost assure myself that I'm going to have to start to chip in on the cost of the fines." Therefore, such a provision, according to Representative Rauscher, was necessary to make utilities "try very hard," not to pass on fines to ratepayers if they do not meet the renewable energy transition goals set out in HB 153. 1:15:36 PM CO-CHAIR HOLLAND said that the issue of the rate payers paying the cost of attaining an RPS standard was considered, yet "the reality is that ratepayers pay all of the costs of all of the increases." He pointed to current rate increases due to gas prices as an example of this phenomenon. Thus, such a provision would be treating renewable energy costs as different from other sources of energy and would be contrary to the intent of HB 153. He continued: We're trying to create a leveler playing field, when all this is done, for renewables to advance, and having renewables be carved out so that ratepayers are not ... expected to pay the cost of renewables, and yet we expect them to pay all of the other rate increases isn't creating a level playing field for that. CO-CHAIR HOLLAND therefore opposed Amendment 2 on the grounds that such a measure would unnecessarily differentiate the cost increases for renewable energy production as opposed to conventional sources. 1:17:02 PM REPRESENTATIVE KOPP said that he would like to hear the opinion of the utilities on the proposed amendment. He asked if ratepayers would still be responsible for the recovery of a utilities fine cost regardless of whether Amendment 2 were to be passed or not. He referenced AARP leaflets urging representatives not to allow rate increases to continue, and many of the constituents represented by that organization living on fixed incomes as a source of his concern. Representative Kopp said that he saw this issue as putting the utility companies in a difficult position. 1:20:10 PM JOHN ESPINDOLA, Commissioner & Chair, Regulatory Commission of Alaska, responded that since HB 153 as written would apply to Railbelt utilities and co-ops, if fines could not be recovered through rate increases, utilities would still somehow have to assume those costs. However, because many utilities along the Railbelt are co-ops, the costs would ultimately be passed on to ratepayers. REPRESENTATIVE KOPP asked Mr. Espindola if ratepayers would have to recover the costs of fines associated with the RPS provision under HB 153 by other means whether or not Amendment was adopted. MR. ESPINDOLA answered that it would make the recovery of such fines less transparent, but utilities on the Railbelt could not remain solvent without passing such expenses on to ratepayers. His main caveat was he wished not to speak for the utilities. 1:22:12 PM REPRESENTATIVE EDGMON stated that in essence, Amendment 2 was "really not material" because these costs could be recovered in an indirect manner. He said, "It's almost like it's embedded in the bill no matter what we would do with amendments." 1:22:50 PM REPRESENTATIVE COSTELLO added that she thought the Amendment 2 "kind of gets to the heart of the conundrum here, which is that it will all be passed on to the rate payer; ... the cost of the underlying bill." 1:23:22 PM CO-CHAIR HOLLAND said that there was no question that having a fee associated with the RPS provision within HB 153 is going to be paid by somebody, most likely the ratepayers in the case of Railbelt co-op utilities. However, he said that members of his staff were working very hard to ensure that no fines would be charged. Rather, the fine provisions for the RPS within HB 153 were an accountability standard, much like for air and water pollution, safety standards, building insulation standards, and so forth. He pointed out that several Railbelt utilities have already increased their rates, so such fines would be in line with recent events. But the provisions with HB 153, Co-Chair Holland argued, were aimed at controlling the rate of increase for ratepayers. To illustrate his point, Co-Chair Holland cited a comment made by one of the utilities saying that if no action was taken on the transition to renewables, rates would increase by 4 percent by 2032 and 7 percent by 2035, less than current rate rises within the Railbelt Region of Alaska. Therefore, the fines proposed under HB 153 were important to Co-Chair Holland for the sake of accountability for utilities' transition to renewable energy. 1:25:30 PM REPRESENTATIVE KOPP posited that while a measure that requires a utility not to recover the costs of a fine through rate increases may sound attractive, residents living off the road system may have the most to lose from its implementation. He added that the measure would unfairly put "utilities in a bind" but should the amendment serve as a "messaging amendment," he would support it. 1:26:40 PM REPRESENTATIVE RAUSCHER asked Co-Chair Holland if he could say with authority which utility company gave him the 7 percent rate increase estimate he cited earlier. CO-CHAIR HOLLAND answered that he could not at this point, because he and his staff had been working with all four major Railbelt utilities for them to understand the bill and it's unintended consequences and to put its provisions more in line with the utilities' previous actions on renewable energy. He said that he would rather have the utilities speak for themselves on the rate increases they estimate. He mentioned the "seven percent" rate increase figure to illustrate the magnitude of the effect of such inaction. REPRESENTATIVE RAUSCHER asked if members of the committee would be able to hear from the utility companies about rate increases before the bill moves from committee. CO-CHAIR HOLLAND said that they were still meeting to discuss HB 153 and to change the bill to best address their needs for renewable energy. Co-Chair Holland then said that it was his hope to get HB 153 into the House Resources Standing Committee and have the utilities testify there after various changes were made to HB 153, where there would be a more "clean bill" presented. 1:28:03 PM CO-CHAIR MEARS noted that compliance fines for the RPS provisions within HB 153 were a "last ditch" measure for compliance with renewable energy transition targets within HB 153. Other provisions towards the same goal were opportunities for application of renewable energy technology and improvement of infrastructure within the utility. Further, she said that the "driving force" behind HB 153 was to reduce costs and increasing stability in pricing for utilities within the Railbelt region. CO-CHAIR HOLLAND commented that the RCA implements fines as it relates to their rules; however, the language within HB 153 has been changed to place a greater emphasis on fees than in previous drafts. Therefore, with the language for HB 153, the compliance fee was not intended to function as a "fine" as it would be understood in the context of RCA, rather that this would function as a fee that would go into an account for the effected utility which could be used for future projects. The fine would be charged only years past the transition goals date, which would then be awarded to the REF. 1:29:24 PM REPRESENTATIVE TILTON asked which exact entity within the legislature was working with the utilities in crafting HB 153, particularly so that utilities would avoid paying fines. CO-CHAIR HOLLAND said that is was mostly his office doing so at this point. He said that he and his staff were trying to determine how utilities would be impacted and benefit under HB 153, as well as how they would be addressing concerns about renewable energy transition. REPRESENTATIVE TILTON expressed appreciation for the work Co- Chair Holland and his staff are doing with the utilities companies crafting HB 153. She then stated that because the deadline for energy transition was set for 2035 and 2040, perhaps members of the legislature would no longer be present to see HB 153 provisions fully implemented. She also stated that Amendment 2 would effect all the utilities and rate payers. Members of the committee were trying to ensure that utilities and ratepayers were not in a position to pay fines associated with not hitting transition targets, and she was concerned that she did not have an opportunity to meet with anyone from the utilities in a public manner. Therefore, Co-Chair Holland's extensive work with utilities on HB 153 and his desire to see a more complete version of HB 153 be transferred to the House Resources Committee did not address the concerns that she would have about HB 153. CO-CHAIR HOLLAND said that Representative Tilton's comments were appropriate, because members of the committee should consider the provisions of HB 153 carefully and that the legislative process was "not just pushing agendas forward." He did say though that the RPS provision within HB 153 was "not new" and that the idea was introduced by former Governors Sarah Palin and Frank Murkowski during their respective tenures, in addition to an attempt to pass legislation similar to HB 153 during the previous legislature. The version of the RPS provision within HB 153 was simply the latest version of an older idea and would incorporate measures from past legislative sessions to enact the best version of HB 153 as could be expected. 1:32:43 PM REPRESENTATIVE KOPP concurred with Representative Tilton's comments, as he did want to hear from the utility companies on HB 153. Though he has worked closely with them on various projects in the past, as a member of the House Special Committee on Energy, it was his desire to hear from utilities on a bill that would impact their business operations so greatly. 1:33:35 PM A roll call vote was taken. Representatives Costello, Tilton, Kopp, and Rauscher voted in favor of Amendment 2. Representatives Edgmon, Holland, and Mears voted against it. Therefore, Amendment 2 was adopted by a vote of 4-3. 1:34:00 PM The committee took an at-ease from 1:34 p.m. to 1:41 p.m. 1:41:20 PM CO-CHAIR MEARS announced that HB 153 was held over. 1:42:22 PM ADJOURNMENT  There being no further business before the committee, the House Special Committee on Energy meeting was adjourned at 1:42 p.m.