ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
March 12, 2010
1:04 p.m.
MEMBERS PRESENT
Representative Craig Johnson, Co-Chair
Representative Mark Neuman, Co-Chair
Representative Bryce Edgmon
Representative Kurt Olson
Representative Paul Seaton
Representative Peggy Wilson
Representative David Guttenberg
Representative Scott Kawasaki
Representative Chris Tuck
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Mike Chenault
COMMITTEE CALENDAR
HOUSE BILL NO. 280
"An Act relating to natural gas; relating to a gas storage
facility; relating to the Regulatory Commission of Alaska;
relating to the participation by the attorney general in a
matter involving the approval of a rate or a gas supply
contract; relating to an income tax credit for a gas storage
facility; relating to oil and gas production tax credits;
relating to the powers and duties of the Alaska Oil and Gas
Conservation Commission; relating to production tax credits for
certain losses and expenditures, including exploration
expenditures; relating to the powers and duties of the director
of the division of lands and to lease fees for the storage of
gas on state land; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 306
"An Act declaring a state energy policy."
- MOVED CSHB 306(RES) OUT OF COMMITTEE
HOUSE BILL NO. 229
"An Act amending and extending the exploration and development
incentive tax credit under the Alaska Net Income Tax Act for
operators and working interest owners directly engaged in the
exploration for and development of gas for delivery and sale
from a lease or property in the state; providing for an
effective date by amending the effective date for sec. 2, ch.
61, SLA 2003; and providing for an effective date."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: HB 280
SHORT TITLE: NATURAL GAS
SPONSOR(s): REPRESENTATIVE(s) HAWKER, CHENAULT
01/15/10 (H) PREFILE RELEASED 1/15/10
01/19/10 (H) READ THE FIRST TIME - REFERRALS
01/19/10 (H) L&C, RES, FIN
02/08/10 (H) L&C AT 3:15 PM BARNES 124
02/08/10 (H) Heard & Held
02/08/10 (H) MINUTE(L&C)
02/15/10 (H) L&C AT 3:15 PM BARNES 124
02/15/10 (H) Moved CSHB 280(L&C) Out of Committee
02/15/10 (H) MINUTE(L&C)
02/17/10 (H) L&C RPT CS(L&C) NT 4DP 2NR 1AM
02/17/10 (H) DP: LYNN, NEUMAN, CHENAULT, OLSON
02/17/10 (H) NR: HOLMES, T.WILSON
02/17/10 (H) AM: BUCH
02/19/10 (H) RES AT 1:00 PM BARNES 124
02/19/10 (H) -- MEETING CANCELED --
02/26/10 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/26/10 (H) <Bill Hearing Canceled>
03/12/10 (H) RES AT 1:00 PM BARNES 124
BILL: HB 306
SHORT TITLE: STATE ENERGY POLICY
SPONSOR(s): ENERGY
01/19/10 (H) READ THE FIRST TIME - REFERRALS
01/19/10 (H) ENE, RES
01/26/10 (H) ENE AT 3:00 PM BARNES 124
01/26/10 (H) Heard & Held
01/26/10 (H) MINUTE(ENE)
01/28/10 (H) ENE AT 3:00 PM BARNES 124
01/28/10 (H) Heard & Held
01/28/10 (H) MINUTE(ENE)
02/02/10 (H) ENE AT 3:00 PM BARNES 124
02/02/10 (H) Moved CSHB 306(ENE) Out of Committee
02/02/10 (H) MINUTE(ENE)
02/05/10 (H) ENE RPT CS(ENE) 7DP
02/05/10 (H) DP: RAMRAS, DAHLSTROM, PETERSEN, TUCK,
JOHANSEN, EDGMON, MILLETT
03/08/10 (H) RES AT 1:00 PM BARNES 124
03/08/10 (H) Heard & Held
03/08/10 (H) MINUTE(RES)
03/12/10 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
REPRESENTATIVE MIKE HAWKER
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 280 as the joint prime
sponsor.
LARRY PERSILY, Staff
Representative Mike Hawker
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During the hearing on HB 280, answered
questions and provided information.
REPRESENTATIVE CHARISSE MILLETT
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Discussed HB 306 on behalf of the House
Special Committee on Energy, sponsor.
CHRIS ROSE, Executive Director
Renewable Energy Alaska Project (REAP)
Anchorage, Alaska
POSITION STATEMENT: During the hearing on HB 306, provided a
PowerPoint presentation about the bill.
CAITLIN HIGGINS, Executive Director
Alaska Conservation Alliance and Alaska Conservation Voters
Anchorage, Alaska
POSITION STATEMENT: Supported HB 306.
ACTION NARRATIVE
1:04:52 PM
CO-CHAIR CRAIG JOHNSON called the House Resources Standing
Committee meeting to order at 1:04 p.m. Representatives Seaton,
Tuck, Kawasaki, Edgmon, Olson, P. Wilson, Neuman, and Johnson
were present at the call to order. Representative Guttenberg
arrived as the meeting was in progress.
HB 280-NATURAL GAS
1:05:47 PM
CO-CHAIR JOHNSON announced that the first order of business is
HOUSE BILL NO. 280, "An Act relating to natural gas; relating to
a gas storage facility; relating to the Regulatory Commission of
Alaska; relating to the participation by the attorney general in
a matter involving the approval of a rate or a gas supply
contract; relating to an income tax credit for a gas storage
facility; relating to oil and gas production tax credits;
relating to the powers and duties of the Alaska Oil and Gas
Conservation Commission; relating to production tax credits for
certain losses and expenditures, including exploration
expenditures; relating to the powers and duties of the director
of the division of lands and to lease fees for the storage of
gas on state land; and providing for an effective date."
[Before the committee was CSHB 280(L&C).]
1:06:13 PM
CO-CHAIR NEUMAN moved to adopt the proposed committee substitute
(CS) for HB 280, Version 26-LS1185\C, Bullock, 3/9/10, as a work
draft. There being no objection, Version C was before the
committee.
REPRESENTATIVE SEATON objected for purposes of learning what the
changes are.
1:07:20 PM
REPRESENTATIVE MIKE HAWKER, Alaska State Legislature, joint
prime sponsor of HB 280, directed attention to the one-page
written explanation of the differences between Version C and
CSHB 280(L&C). In response to Co-Chair Johnson, he said HB 280
is intended to help bring back the vitality of the Cook Inlet
basin and increase gas production to meet the needs of
Southcentral Alaska, Anchorage, and the Railbelt. He introduced
his staff members that worked on this bill - Larry Persily,
Janice Levy, and Juli Lucky - and noted that consultants Dan
Dickinson and Roger Marks also assisted with the bill.
1:11:15 PM
REPRESENTATIVE HAWKER explained that HB 280 is a response to the
challenge of keeping the lights and heat on in his community
during the winter. Gas supply in the Cook Inlet basin is
depleting and there is a real probability of being unable to
meet peak winter demands in a very short period of time. He
said the first issue is recognizing there is a problem and
solving it. In solving the problem, HB 280 would also provide
consumer cost relief. The bill has statewide application in
that it would provide the same advantages to the Fairbanks area
as it would the Cook Inlet because gas storage will also be a
necessity for Fairbanks, regardless of the city's source of gas.
Storage was unnecessary when Cook Inlet gas was abundant, but
that is no longer the case and storage is now needed to keep
enough gas on hand to meet the peak winter demand.
1:13:37 PM
REPRESENTATIVE HAWKER related that on February 15, 2010, the
United Kingdom government approved construction of a $1 billion,
50 billion cubic foot natural gas storage facility. That
facility is aimed at correcting years of government and market
failure to build enough backup capacity to keep pace with demand
and to fill unexpected supply disruptions. He said HB 280 would
do the same for Alaska, but rather than a government-invested
solution, it would be a free-market approach to developing the
storage that is needed to provide energy security.
1:14:52 PM
REPRESENTATIVE HAWKER noted that every stakeholder in Cook
Inlet, from the municipalities to the utilities, has publicly
stated that storage is essential to the future energy
infrastructure. Storage will add an additional cost to the
supply chain of gas, resulting in an upward pressure on consumer
prices. An important part of HB 280 is that it would lessen
those costs to consumers.
REPRESENTATIVE HAWKER said HB 280 would also address the need
for regulatory certainty because, at this moment, regulatory
uncertainty is impeding the development and progress on any
storage projects. The Regulatory Commission of Alaska (RCA)
recently sent a message to the legislature asking for
clarification of its regulatory responsibility with regard to
gas storage activities in Alaska, and HB 280 would answer that.
1:16:25 PM
REPRESENTATIVE HAWKER, in response to Co-Chair Johnson, began a
review of the changes that would be made by Version C. He said
changes to Section 2 are changes around the parameters of what
type of facility would qualify for the incentive tax credit for
the development. Version C would tighten this up and "right
size" the bill to mitigate any potential gaming. He noted that
gas can be stored in pipelines, called packing; Version C
changes Section 2 so that pipeline packing is eliminated from
being considered storage. Changes to Section 8 clarify the
boundaries and facilities of a gas storage facility that would
be subject to regulation by the RCA. It specifies that RCA
regulation extends only to gas storage facilities operated
exclusively or primarily for delivery of gas to consumers and
not to the world market.
1:18:35 PM
REPRESENTATIVE SEATON understood that Version C would not extend
RCA regulation. He asked whether the credit would be extended.
REPRESENTATIVE HAWKER responded no, the credit was not extended
in the first version and is not extended in Version C.
REPRESENTATIVE SEATON presumed it would be underground storage
that is covered by Version C. He inquired whether tank storage
would also qualify.
REPRESENTATIVE HAWKER replied that Version C provides
requirements for both physical size and deliverability.
Realistically, it would be underground storage because to
qualify an aboveground tank would have to accommodate 100
million cubic feet annual injection or withdrawal and be large
enough to hold 500 million cubic feet of gas.
1:20:02 PM
REPRESENTATIVE TUCK asked whether the RCA would have authority
over new proprietary gas storage that is not necessarily third
party.
REPRESENTATIVE HAWKER answered Version C goes strictly to
providing third-party storage of gas for delivery to consumers.
At the moment, it is unclear as to the extent the RCA may wish
to apply that regulatory authority beyond the clearly stated
responsibility in the bill.
REPRESENTATIVE HAWKER continued his discussion of the changes.
In Sections 10, 17, and 19, Version C changes the transferable
tax credit to a refundable tax credit. This change was at the
request of the Department of Revenue to ease the accounting and
management activities that would be involved in monitoring the
credits. He said Section 10 relates to "right-sizing" the bill
by cutting in half the maximum tax credit available for a gas
storage facility.
1:21:43 PM
REPRESENTATIVE SEATON inquired whether the refundable tax
credits would be limited to gas storage credits or would apply
to both oil and gas credits.
REPRESENTATIVE HAWKER responded that Version C makes no changes
to the transferable or refundable nature of any existing credits
in statute. It would apply only to the development credit for
gas storage facilities that originate in HB 280.
REPRESENTATIVE SEATON removed his objection to Version C. There
being no further objection, Version C was before the committee.
REPRESENTATIVE HAWKER reiterated that Version C addresses the
RCA request for clarification of its responsibility to regulate
storage facilities, and it clarifies what would be allowable
from the standpoint of inventory management within a
contemplated storage facility.
1:23:08 PM
CO-CHAIR NEUMAN asked whether HB 280 relates just to Cook Inlet
and whether the sponsor statement still applies to Version C
given the changes that have been made.
REPRESENTATIVE HAWKER replied the provisions related to
investment tax credits for the development of storage would be
applicable statewide. The bill was brought forward because of
the immediate, impending problem within the Cook Inlet basin
that is the result of the production decline inside that area.
Motivation for the bill came while he was flying over the Kenai
Peninsula and saw shuttered buildings where once stood a vibrant
economic zone. The underlying business conducted there - oil
and gas development in Cook Inlet - is the foundation for the
entire energy security of Southcentral Alaska. This decline in
productivity in Cook Inlet is putting the Southcentral region at
risk of an impending winter disaster when there is not enough
gas to keep the lights, heat, and electricity on.
REPRESENTATIVE EDGMON observed that this is a statewide issue in
that rural Alaska is also very much dependent upon inexpensive,
or at least stable, fuel costs in the Southcentral region; it is
a symbiotic relationship. Work is continuing to get stable fuel
to Bush Alaska as well.
1:26:54 PM
CO-CHAIR NEUMAN noted that in Prudhoe Bay the natural gas
liquids (NGLs) are re-injected into the well to make it easier
to pump the oil. He inquired whether the intent is to consider
that as gas storage and include that process in HB 280.
REPRESENTATIVE HAWKER answered no.
CO-CHAIR JOHNSON understood Cook Inlet gas is a much drier gas.
REPRESENTATIVE SEATON noted that gas is sold to North Slope
entities in addition to re-injection in the Prudhoe Bay fields.
He asked whether this could be considered a gas storage field,
given that he believes over 100 million cubic feet of gas per
year is being sold.
REPRESENTATIVE HAWKER responded the practical answer is no
because those are active wells, not storage wells or storage
leases. The bill would require certification of gas storage
facility capacity by the Alaska Oil and Gas Conservation
Commission (AOGCC), and it is very clearly not the intent to
take an operating well and somehow be able to call it a storage
facility.
1:29:27 PM
REPRESENTATIVE HAWKER resumed highlighting the provisions of HB
280, Version C. He said the bill would provide clarification to
potential owners and developers of storage facilities about the
difference between storing gas and producing gas. When gas is
produced, royalty and production taxes must be paid. Storing
gas is an inventorying activity and the bill would offer an
investment tax credit for qualified storage facilities. The
Department of Revenue, the Department of Natural Resources, and
others participated in developing the bill to ensure tight
definitions that prevent gaming. The bill would provide the
regulatory certainty that is being asked for by saying that RCA
regulates gas storage.
REPRESENTATIVE HAWKER said HB 280 would specifically require
Last In, First Out (LIFO) accounting of the gas inventory - the
last gas pumped into the facility is the first gas pumped out by
volumetric measurement. These underground pressure vessels are
former gas production facilities and leases that may already
have recoverable gas in them, but that gas would be used as the
cushion gas or the spring to push the injected gas back out. It
would be considered production if more gas is taken out than is
put in, and taxes would then have to be paid.
1:31:51 PM
REPRESENTATIVE HAWKER pointed out that just the ability to store
gas is not enough to solve the impending problem. More gas is
needed as well. Therefore, HB 280 would encourage additional
exploration through provisions that make Cook Inlet investment
more attractive to both new producers and existing stakeholders
in the inlet. Current production is out of five major gas
domes, but now it is at the point of where the geology amounts
to chasing small bubbles of gas in a three-dimensional space.
The bill would encourage new exploration by expanding some
access to existing tax credits through the crossing of
limitation borders and minimally enhancing some of those
credits. He emphasized that in HB 280 these issues are
addressed only for the Cook Inlet; other bills are currently in
the legislature that would apply the same provisions to the
entire state. He said he did not want to touch the North Slope
in this regard because it is too sensitive of an issue; he is
looking to build legislative alignment and support for the
immediate issues within the Cook Inlet.
1:34:27 PM
REPRESENTATIVE HAWKER concluded by stating that HB 280 is a very
simple bill that would provide gas to keep on the lights and
heat during cold winter days in Anchorage. The bill would also
protect consumers by mitigating the inevitable cost increases
resulting from the development of storage facilities. The bill
would answer a current unknown by imposing regulation on the
emerging energy storage industry. Further, HB 280 would provide
operating clarity for the developers of the emerging energy
storage industry so they clearly know the difference between gas
storage and gas production.
1:36:01 PM
CO-CHAIR NEUMAN inquired whether any work is ongoing to renew
the "Nikiski export facility". He surmised a storage facility
would benefit this export facility.
REPRESENTATIVE HAWKER replied that through this point in time,
the ability to export Cook Inlet gas is exactly what has made
the Cook Inlet gas economy and process work. He explained that
gas wells operate best by keeping production at a fairly stable
level. However, consumer demand is not stable and varies
radically between the colder winter days and warmer summer days,
and on those low demand days something must be done with the
surplus gas. Since the mid-1960s, the export facility has taken
that surplus on low demand days and exported it. Likewise,
there was a time when production levels were so high that the
surplus was also taken by the "Agrium plant". Closure of the
Agrium plant was the first casualty of Cook Inlet's declining
gas production. There is now risk that the export facility will
be lost through not being re-licensed for export. If that
occurred today, it would force underproduction of the existing
wells and there would not be enough gas produced to meet
consumer demand on winter days. He noted that time is drawing
short to protect the people of Southcentral Alaska because the
current export license expires on March 31, 2011.
1:40:20 PM
REPRESENTATIVE SEATON observed that the reason for the tax
credit is to keep consumer prices low. However, producers have
stated over the past that the price is so low the value is not
there to engage in exploration and development in the Cook
Inlet. He asked whether trying to keep consumer prices low
defeats the initiative for exploration and development.
REPRESENTATIVE HAWKER answered there are two issues. The issue
of storage is the mission-critical component of ensuring there
is enough gas available for delivery on peak-demand days. The
bill would require that every penny of the investment tax credit
for storage capacity development be passed on to the consumer,
and this provision is why HB 280 is a bill to minimize
consumers' exposure to the necessarily increasing costs. In
exchange for this benefit to consumers, the bill would provide
regulatory certainty on how to operate storage that does not
currently exist, as regulatory uncertainty is impeding
development of storage. Encouraging exploration and production
of the stratigraphic gas traps in Cook Inlet is an entirely
separate matter than the consumer-oriented storage facilities.
He reiterated that both storage and exploration need to be
encouraged. The State of Alaska currently requires amortization
of exploration incentive credits over a period of two years; HB
280 would drop that to one year, which would improve a company's
cash flow and make Alaska more competitive with the rest of the
world.
1:44:34 PM
REPRESENTATIVE SEATON inquired whether HB 280 would allow a
producer to use its Cook Inlet credits to offset its North Slope
production instead of having to reinvest in Cook Inlet. He
noted that when production taxes were designed they were
specifically set apart because the Cook Inlet tax regime is so
different at basically no tax.
REPRESENTATIVE HAWKER, to provide an understanding of the
question asked, explained that when production taxes were
changed on a statewide basis in previous legislative sessions,
the Cook Inlet was ring-fenced and allowed to operate under the
rules of the previous economic limit factor (ELF) rather than
going to the profit-sharing taxes. This kept the production
taxes in Cook Inlet from going up. Beneficial credits were
added for exploration and development in the profit-sharing tax
bills. It was recognized that a company operating in both the
Cook Inlet and other parts of the state could take an investment
credit based in Cook Inlet, where its taxes were lower already,
and file a single tax return on a statewide basis that used
those credits to offset higher taxes in the other regions. For
purposes of utilizing tax credits, the original bill said that a
company generating a tax credit in the Cook Inlet must first
figure out what its taxes would have been in the Cook Inlet
without the ring-fencing under ELF and then discount its tax
credit by the amount it would have had to use to offset the
differential between the production tax under the profit-sharing
method and the lower taxes in the Cook Inlet.
1:47:01 PM
REPRESENTATIVE HAWKER said his own take is that production needs
to be encouraged all across the state; however, in Cook Inlet it
is critical that production be increased. While he appreciates
the argument that companies are not paying as much tax in Cook
Inlet and so should not be allowed to utilize the credits, that
is telling people not to bother with the Cook Inlet and to
instead invest where there are higher tax credits. He said he
thinks that may have had unintended detrimental consequences in
discouraging investment in the Cook Inlet. The single thing
most needed from investment in the state is additional
exploration and production. He said he therefore thinks it is
appropriate to bring forward a change and a compromise of the
limitation that was provided for in the earlier legislation.
1:49:05 PM
REPRESENTATIVE HAWKER, in response to Representative Guttenberg,
explained that HB 280 contains a tax recovery provision, meaning
that if a credit is received for starting a gas storage facility
and then that facility ceases operation, the state will receive
the credit back from the operator. The notice provision in HB
280 means the operator has the affirmative responsibility to
tell the state if it ceases to comply with that requirement and
that it triggers recapture of the credit the operator has been
given. So, the notice requirement means an operator cannot
suddenly stop operations and hope the state does not catch it.
1:51:35 PM
REPRESENTATIVE GUTTENBERG asked what would happen if an operator
failed to meet the bill's requirement to cycle [100 million
cubic feet of gas per year] for reasons beyond the operator's
control.
REPRESENTATIVE HAWKER deferred to Larry Persily.
LARRY PERSILY, Staff, Representative Mike Hawker, Alaska State
Legislature, responded that the sponsors tried to set a limit by
requiring that a facility be in operation in return for
receiving the incentives and certainty provided by HB 280. The
sponsors did not want to take the chance that someone could take
an old depleted reservoir with a well, claim storage, take a
credit, and then not do much with it. The 100 million cubic
feet is an arbitrary number and a pretty low threshold, given
that a couple of existing storage operations proprietary right
now in Cook Inlet have capacity for 1 billion or 5-6 billion
cubic feet. He therefore cannot conceive that someone could say
the reason for not operating is because of a warm winter. The
sponsors tried to pick a number that is reasonable but not so
high that ceased operations would be declared when they really
have not. Should an operation cease, the state would pro-rate
and take back the credit.
1:53:52 PM
REPRESENTATIVE HAWKER allowed that Representative Guttenberg may
have brought up a point that is not actually addressed by the
bill, which is the possibility of something like a natural event
that is beyond the control of the owner/operator of the storage
facility. The bill, as written, may not provide a safety valve
that would allow the commissioner to overlook a violation of the
statute. He said that is something to take a look at.
REPRESENTATIVE GUTTENBERG suggested this could be put into the
regulations because HB 280 gives the director a lot of leeway.
1:54:47 PM
REPRESENTATIVE GUTTENBERG requested Representative Hawker to
expand on the provisions of Section 20, Version C.
REPRESENTATIVE HAWKER replied many folks would argue that Cook
Inlet is over-regulated and that the Regulatory Commission of
Alaska has made decisions that were not of benefit to the
community and may have exacerbated the problems. As a result of
having no clear guidance, the RCA did not approve some contracts
for long-term gas supply, and had those contracts been approved,
industry would be scrambling hard today to bring gas up. The
sponsors of HB 280 are trying to include some tooth that says
the regulatory authorities should be encouraged to approve long-
term supply contracts without trying to set any empirical
measure by which to tell them to do it. For example, Mr.
Pickett of the RCA has pointed out that there is nothing telling
the RCA that it must consider what would happen if it does not
approve a contract. Section 20 and Section 5, Version C, add
this new philosophic guidance that the RCA must consider the
consequences of saying no.
1:58:37 PM
REPRESENTATIVE TUCK understood HB 280 has two parts: one that
would pave the way for third party storage and the other to
incentivize exploration in the Cook Inlet region. He inquired
whether there is the potential that third party storage may not
be necessary should HB 280 be passed and exploration is
incentivized, but the LNG export license is not renewed.
REPRESENTATIVE HAWKER answered there is unanimous concurrence
among the stakeholders in the inlet that storage is an absolute
necessity, even if LNG export stops. Gas will still be needed
to meet those peak requirements and to do that there needs to be
increased capacity to pull gas out of the ground, which takes
storage. If the export facility continues to operate, a buffer
of gas storage will still be needed for those days of excess gas
production and days of insufficient gas production.
2:00:43 PM
CO-CHAIR JOHNSON held over HB 280. He noted that this is a key
issue for his community, so the committee will be returning to
the bill as quickly as possible.
HB 306-STATE ENERGY POLICY
2:01:41 PM
CO-CHAIR JOHNSON announced that the next order of business is
HOUSE BILL NO. 306, "An Act declaring a state energy policy."
[Before the committee was CSHB 306(ENE).]
2:03:25 PM
REPRESENTATIVE EDGMON noted that he and Representative Millett
provided the history behind HB 306 on [3/8/10] and today's
presentation will provide details of the bill itself.
REPRESENTATIVE CHARISSE MILLETT, Alaska State Legislature,
pointed out that the policy was drafted by both the resource
development/consumer side and the conservation/environmental
side.
2:04:44 PM
CHRIS ROSE, Executive Director, Renewable Energy Alaska Project
(REAP), began his PowerPoint presentation by noting that he was
one of 15 stakeholders working with the House Special Committee
on Energy from July through December 2009 to develop this state
energy policy. To show the diversity of the people working on
this issue, he listed the other members of the Stakeholder
Advisory Panel [slide 2]: Gwen Holdman, Alaska Center for
Energy & Power; Robert Venables, Southeast Conference; Scott
Goldsmith, Institute of Social and Economic Research (ISER);
Jason Brune, Resource Development Council, John Davies, Alaska
Cold Climate Housing Research Center; Ralph Andersen, Bristol
Bay Native Association; Bill Popp, Anchorage Economic
Development Corporation (AEDC); Bob Pawlowski and Denali
Daniels, Denali Commission; Caitlin Higgins, Alaska Conservation
Alliance; Stacy Shubert, Municipality of Anchorage; Marilyn
Leland, Alaska Power Authority; Meera Kohler, Alaska Village
Electric Cooperative; Ron Miller, Energy Consultant; [and Kathy
Wasserman, Alaska Municipal League (AMA)].
2:06:24 PM
MR. ROSE pointed out that most states have an energy policy, but
Alaska does not [slide 3]. An energy policy is important for
setting guidelines and sidebars on what goals Alaska wants to
have for energy. The policy, as written, starts out with
legislative intent language which is essentially five of the
goals that the group decided, by consensus, could be included.
The goals would be up to the legislature to promulgate. A part
of the goals is recognizing that Alaska must first have a policy
that sets a long-term vision to address its energy needs. The
bill is also an attempt to align that policy with all the
different units of government so that all of the units of
government in the State of Alaska are working toward the same
end. After the goals are set up, plans and projects can be
implemented to reach those goals.
MR. ROSE emphasized the hierarchy of what the stakeholder group
saw as important [slide 4]. First is to establish an energy
policy, second is to develop the strategic goals, third is to
create the plan to achieve the goals, and fourth is to implement
the projects. He noted there are currently a number of
organizations and regions in the state that are all crafting
energy plans. However, that planning is without the benefit of
a statewide vision and HB 306 is the attempt to provide that
statewide vision for everyone to work toward.
2:08:09 PM
MR. ROSE said the guiding principle of the process the
Stakeholder Advisory Panel worked on was that energy is the
lifeblood of any economy - without energy security there is no
economic security [slide 5]. The stakeholder group wanted to
talk about energy as it applied to residential, commercial, and
industrial users. Whether this should apply beyond electricity
and heat to include transportation was discussed, and
transportation is something the legislature may decide to
include. The group also wanted a statement in the policy that
anticipates what the group believes will be future reality.
Some of that reality is that fossil fuel prices will continue to
trend upward due to supply and demand and because there may be
some kind of carbon regulation that will make it more expensive
to use fossil fuels in the future. The group wanted to ensure
this is taken into consideration as energy decisions are made
and the state moves forward.
MR. ROSE explained the starting point of this statewide policy
was an energy policy that was put together by the Tri-Borough
Commission, a commission established a few years ago by the
mayors of the Kenai Peninsula and Matanuska-Susitna boroughs and
the Municipality of Anchorage [slide 6]. Mr. Popp of AEDC
staffed that effort for which the strategy included developing a
policy first, and which is the same thing that is being said now
for the state policy. When the effort with the House Special
Committee on Energy was started last summer, the decision was
made to not reinvent the wheel and to use elements of the Tri-
Borough Commission energy policy as the starting point.
2:10:58 PM
MR. ROSE stated that the fundamentals of the policy in HB 306,
pages 2-3, Section 44.99.115, are to institute a comprehensive
and coordinated approach of supporting energy efficiency and
conservation [slide 7]. Everybody in the group agreed that
investment in energy efficiency must happen first because it is
always cheaper to save a unit of energy than to generate it.
This investment would save the economy money and re-circulate
those dollars in the state's economy rather than exporting them
to purchase fuels.
MR. ROSE said the second fundamental of the policy is to
encourage economic development by promoting the development of
both renewable and nonrenewable energy resources. One of the
goals in the legislative intent language is that Alaska remains
a leader in petroleum and natural gas production, as well as to
become a leader in renewable energy development. Another
fundamental is to support energy research, education, and
workforce development, which are items addressed in HB 305 and
SB 220, the House and Senate energy omnibus bills.
Additionally, those bills would create an emerging energy
technology fund. The last fundamental of the policy is to
support coordination of governmental functions. Right now there
are governmental functions on energy in many different
departments around the state, but there is not necessarily any
coordination on those.
2:12:40 PM
MR. ROSE summarized that this diverse group of stakeholders, by
consensus, agreed Alaska must have energy policy first, then
have goals, plans, and projects in that descending order to get
to where it is going [slide 8]. To provide an idea of how the
consensus process worked, he explained that at one point the
bill was about seven pages long because each stakeholder wanted
to include his or her group's pet goal. However, a decision was
made to tighten things up by agreeing on only a few goals that
would be sent to the legislature for passage and use as a vision
to coordinate the goals that the legislature might consider most
important.
2:14:08 PM
REPRESENTATIVE MILLETT pointed out that this would be a
statewide policy and the House Special Committee on Energy
tasked the stakeholders group to make a policy that would
overarch the entire state and apply to both rural and urban
residents. It required a lot of compromise between stakeholders
that have parallel lines, but much different philosophies on
energy, to come up with a policy that serves a purpose in every
corner of the state. She noted that the stakeholder group had
long debates about many of the topics that are in the amendments
she is aware will be proposed.
2:15:31 PM
REPRESENTATIVE SEATON inquired whether the promotion of energy
efficiency for transportation was intentionally omitted from the
bill.
REPRESENTATIVE MILLETT responded yes, because one community's
version of transportation may be much different than another's.
For example, bicycles and public bus systems may be appropriate
forms of transportation in Anchorage, but not in Dillingham or
Aleganek. The group had a long discussion about there being no
such thing as energy efficient airplanes and most of the
transportation in rural Alaska is by airplane. The stakeholders
wanted to be aware of the fundamental differences between rural
and urban when it comes to transportation, and they were
passionate about ensuring nothing be put in state policy that
would negate a community or be unattainable by a community.
2:18:49 PM
REPRESENTATIVE EDGMON added that it can be seen from looking at
the policy that the major themes are conservation, efficiency,
economic development, education, and training. During committee
discussions with the stakeholder group, it was felt that
transportation might better serve as a subset of those major
themes that would go into statute. There were a number of other
items that could have also been included in the policy to
provide more detail, and at one point this two-and-a-half-page
bill ballooned to seven pages. It was felt that decisions
needed to be made to make the bill short and concise with
appropriate emphasis. The stakeholder group decided that
transportation, and the unfunded mandate that might be carried
with it, would be better served by the strategic work products
that will follow once the policy is put in place.
2:20:20 PM
REPRESENTATIVE SEATON commented that, on an energy policy basis,
it seems a large chunk of policy is being left out by omitting
transportation.
CO-CHAIR JOHNSON encouraged Representatives Edgmon and Millett
to continue working on transportation issues.
2:22:03 PM
REPRESENTATIVE TUCK related that the House Special Committee on
Energy discussed not wanting to strap the state and ensuring
that the overall energy policy is a fit for all communities. A
big part of conservation, efficiency, and economic development
is infrastructure, whether that is power, gas, or transportation
infrastructure. He said he is a proponent of electromagnetic
trains as one of the best ways of conserving and protecting the
environment. He asked whether Representatives Edgmon and
Millett see how potential transportation systems could be a part
of building conservation, efficiency, and economic development
in communities by having some fit-for-all direction to work
towards, but not necessarily policy plans that would be
implemented now. For example, building efficiency is included
as an overall statement of goal, but it is not defined.
2:24:05 PM
REPRESENTATIVE EDGMON replied this is a policy call that
committee members will likely want to consider as there is an
amendment that speaks to this somewhat. He directed attention
to page 2, lines 29-31, which state, "working to identify and
assist with development of the most cost-effective, long-term
sources of energy for each community statewide". He said his
recollection of stakeholder discussion about including a
transportation element in the policy is that there is room in
this language for any community to develop its own
transportation policy or plan. There was great concern that by
putting it into the overall policy, some of the smaller
communities could be disenfranchised. It is a policy call, and
he and Representative Millett are simply reporting to members
what the very diverse stakeholder group came up with.
2:25:50 PM
CO-CHAIR NEUMAN, in regard to the goals listed on page 1, lines
5-15, inquired whether action items with dates for reaching
those goals were developed to act as measuring sticks.
REPRESENTATIVE MILLETT answered that that is exactly what was
done. The group started out with these goals in the legislative
intent; Alaska has already reached 24 percent of its electric
generation from the renewable energy source of hydropower, so it
has 26 percent to go. The House Special Committee on Energy
debated whether to raise that renewable energy goal from 50
percent to 75 percent; however, she said she was comfortable
with the goal of 50 percent, knowing that it was attainable.
When applying for grants or loans from the state, these goals
let folks know that this is a priority.
2:27:48 PM
CO-CHAIR JOHNSON noted that under federal guidelines hydropower
is not considered renewable. He asked whether hydropower is
considered renewable by the State of Alaska.
REPRESENTATIVE MILLETT responded that hydropower is defined as
renewable on page 2, line 22, as are hydrokinetic and tidal.
The intent is to go around the federal government and continue
considering hydropower as renewable energy.
REPRESENTATIVE TUCK, in response to Co-Chair Johnson, pointed
out that nuclear energy is included under efficient development
of nonrenewable resources on page 2, lines 26-28.
REPRESENTATIVE MILLETT added that nuclear energy was a point of
contention with the stakeholder group, as was coal. She said
she must give the conservation community credit for
understanding that nuclear is a possibility and that coal is a
necessary resource for serving as a bridge while Alaska moves
forward to renewable and alternative energy sources.
CO-CHAIR JOHNSON offered his belief that nuclear energy may be a
viable alternative in the not-too-distant future.
2:30:00 PM
REPRESENTATIVE GUTTENBERG observed that however a person feels
about nuclear, it is appropriate for nuclear to be in the
document as something to be considered under this broad policy.
CO-CHAIR JOHNSON said he is a supporter of each community being
able to determine on its own what it wants.
REPRESENTATIVE SEATON noted that his district includes the only
nuclear-free city in Alaska and the only city that is currently
working on a nuclear plant, those cities being Homer and Seward,
respectively.
REPRESENTATIVE GUTTENBERG pointed out his district has the only
non-city that is a nuclear-free zone and there was once a plan
to put a nuclear plant there.
2:31:57 PM
REPRESENTATIVE SEATON asked where the sponsors think it would be
most appropriate to insert something about encouraging energy
efficiency for transportation.
REPRESENTATIVE MILLETT replied that transportation needs are
included under the declaration of state energy policy on page 2.
Lines 4-5 talk about taking a broad approach to transportation
needs, but it is not specified in the body of the bill exactly
what that means. She said she thinks the transportation portion
is covered, and the bill was put together with the idea that
transportation is included. She added that it is Representative
Seaton's call on the policy, but she wanted to point out that
the bill already addresses the transportation question in the
declaration.
2:33:53 PM
REPRESENTATIVE EDGMON, in further response to Representative
Seaton, said it seems to him the most appropriate location for a
transportation amendment would be somewhere in Section 2 on page
2, should the committee decide to put transportation into the
policy.
CO-CHAIR JOHNSON offered his opinion that the intent language
might be a more appropriate location than the statute itself.
2:36:35 PM
REPRESENTATIVE GUTTENBERG moved to adopt Amendment 1, labeled
26-LS1049\T.1, Kane, 2/18/10, and written as follows [original
punctuation provided]:
Page 3, following line 2:
Insert a new subparagraph to read:
"(E) making available to affected
communities residential solid fuel burning device
change out programs that meet Environmental Protection
Agency emission requirements and implement energy
efficiency standards that conserve the use of the
state's timber resources used in space heating;"
CO-CHAIR JOHNSON objected.
REPRESENTATIVE GUTTENBERG explained that his intention is not to
persuade members to adopt the amendment, but to persuade members
to do larger things. He said his community clearly needs to
address emission standards through the more efficient burning of
solid wood. He withdrew Amendment 1 in the spirit of the work
done by the House Special Committee on Energy to remain focused
on overall state energy policy, even though it would be more
efficient for his community to have Amendment 1 in policy now.
If members keep adding things on to this policy it would likely
not survive by sheer weight.
CO-CHAIR NEUMAN pointed out that wood pellet stoves are very
efficient and pellets could be shipped to Western Alaska where
fuel costs are very high.
REPRESENTATIVE GUTTENBERG said his point is that Amendment 1 is
a specific program as compared with an overall energy policy.
2:39:03 PM
REPRESENTATIVE TUCK moved to adopt Amendment 2, labeled 26-
LS1049\T.3, Kane, 3/5/10, and written as follows [original
punctuation provided]:
Page 2, line 16:
Delete the second occurrence of "and"
Page 2, line 20, following "efficiency;":
Insert "and
(D) encouraging and empowering communities
to adopt community-appropriate measures to reduce
motor vehicle fuel use and other energy use, including
measures encouraging the use of public transportation,
if appropriate for the community;"
CO-CHAIR JOHNSON objected for discussion purposes.
2:39:39 PM
REPRESENTATIVE TUCK explained the House Special Committee on
Energy discussed an amendment that would have assisted
communities in developing public transportation options.
However, the committee did not want the state to play such an
in-depth role in communities and was unsure of the definition of
assisting. In taking this amendment back for a re-draft, he
wanted to ensure it met the criteria under the declaration of
state energy policy. He further noted that Amendment 2 is not
just about transportation within a community, but also
transportation that would link communities in the most energy
efficient ways.
2:43:30 PM
REPRESENTATIVE EDGMON said he supports the intent of the
amendment, but it gives him pause because the diverse group of
stakeholders felt it would be better to address this after the
policy's adoption. The word empowering on line 6 carries more
connotation than what the policy itself would want to carry, the
amendment has more detail than the stakeholders envisioned for
HB 306, and each community already has ability to adopt vehicle
emission ordinances. The stakeholder group put a lot of effort
into winnowing the policy down to a generic energy policy that
addresses all the components of a resource development state.
CO-CHAIR JOHNSON maintained his objection to Amendment 2.
2:45:52 PM
REPRESENTATIVE TUCK moved Amendment 1 to Amendment 2 as follows:
Line 6:
Delete "and empowering"
Line 8, following "energy":
Insert "transportation"
Lines 8-9:
Delete "including measures encouraging the use of
public transportation, if appropriate for the
community"
Thus, lines 6-9 of Amendment 2 would read:
(D) encouraging communities to adopt community-
appropriate measures to reduce motor vehicle fuel use
and other energy transportation use;
CO-CHAIR JOHNSON objected for discussion purposes.
2:48:25 PM
REPRESENTATIVE SEATON inquired what "other energy transportation
use" means.
REPRESENTATIVE TUCK responded he wants the focus to specifically
be on energy transportation uses and not all the energy uses
that are out there.
REPRESENTATIVE GUTTENBERG said he would recognize an amendment
that adds something that cannot be read into the policy. The
amendment is unnecessary because this can already be read inside
the policy as currently written.
2:50:06 PM
REPRESENTATIVE KAWASAKI asked whether public transportation is
included under "other energy transportation use".
REPRESENTATIVE TUCK answered yes.
REPRESENTATIVE OLSON commented that Amendment 2 would give one
of the stakeholders another bite at the apple, so it would then
be necessary to open it up to everyone. He will therefore vote
no on the amendment even though he is not opposed to the intent.
CO-CHAIR JOHNSON inquired whether Amendment 2 was brought up in
the House Special Committee on Energy.
REPRESENTATIVE MILLETT responded yes. While she understood the
maker's intent, she said it is covered in the broad policy and
is a second bite at the apple.
CO-CHAIR JOHNSON maintained his objection.
REPRESENTATIVE TUCK withdrew Amendment 2 and offered his
appreciation for the hard work of the stakeholders.
2:52:17 PM
REPRESENTATIVE SEATON moved Conceptual Amendment 3, written as
follows [original punctuation provided]:
Page 2, line 27 move reference to "coal"
to
Page 2, line 28 after "nuclear energy," insert "and
coal if utilized with carbon capture technology,"
Thus, page 2, lines 26-28, of CSHB 306(ENE) would read:
(B) promoting the development, transport, and
efficient use of nonrenewable energy resources,
including natural gas, oil, gas hydrates, heavy oil,
and nuclear energy, and coal if utilized with carbon
capture technology, for use by Alaskans and for
export;
CO-CHAIR JOHNSON objected for discussion purposes.
2:53:47 PM
REPRESENTATIVE SEATON, in response to Co-Chair Johnson,
explained that with carbon capture technology the carbon dioxide
would be captured when the coal is burned. In further response,
he agreed that it is a form of carbon sequestration.
CO-CHAIR NEUMAN offered his belief that Alaska has a 300-year
supply of coal and said he thinks the use of carbon capture
technology is already covered under the current language.
2:55:09 PM
REPRESENTATIVE P. WILSON pointed out that the word "coal" should
be deleted from line 27, not moved.
REPRESENTATIVE SEATON said the intent is to move the reference
to coal from line 27 to line 28. He added that the first "and"
on line 28 should be deleted.
REPRESENTATIVE GUTTENBERG recalled Representative Joule stating
that one of his communities has coal nearby and use of that coal
would be more efficient and affordable than flying in diesel.
2:56:53 PM
CO-CHAIR JOHNSON maintained his objection, saying he fears that
putting carbon capture technology into statute could result in a
community being unable to use its coal even if that was the most
efficient source of energy available to the community.
CO-CHAIR NEUMAN objected to Conceptual Amendment 3 because much
work is being done at the Healy plant.
REPRESENTATIVE SEATON contended the amendment is not restrictive
and is a policy that would encourage economic development by
promoting development. He said he does not think the export of
coal should be promoted without using clean coal technology or
carbon capture technology. He clarified it is not his intent to
close a generation facility.
A roll call vote was taken. Representatives Seaton, Edgmon, and
P. Wilson voted in favor of Conceptual Amendment 3.
Representatives Olson, Guttenberg, Kawasaki, Neuman, and Johnson
voted against it. Therefore, Conceptual Amendment 3 failed by a
vote of 3-5.
2:59:51 PM
CO-CHAIR JOHNSON moved to adopt Amendment 4, written as follows
[original punctuation provided]:
Page 2, line 12, following "by"
Delete lines 13, 14
Renumber section accordingly
CO-CHAIR NEUMAN objected for discussion purposes.
CO-CHAIR JOHNSON explained he does not want to codify the
creation and establishing of efficiency codes for new and
renovated residential, commercial, and public buildings because
the codes might cause problems, increase costs, and stymie
development. He is not prepared to have the administration
develop energy efficiency codes until further down the line.
3:01:13 PM
REPRESENTATIVE P. WILSON supported the state having efficiency
codes because while living in Tok she saw houses that were just
being thrown together. Given the state is currently paying to
winterize [existing] homes, there should be some kind of a basis
for new construction so the state is not paying for something
that could have been done to begin with. Therefore, she said
she would like to leave this provision in the bill.
3:02:33 PM
REPRESENTATIVE EDGMON agreed with Representative Wilson. He
said this is a very important part of the overall policy, which
is reflected in omnibus legislation that is making its way
through both the House and Senate. He pointed out that there
are over 1,000 public facility buildings in the state with each
agency using a different energy efficiency code for its
buildings. Energy efficiency is the best and quickest way to
reduce the consumption of energy. The legislature has put
almost $400 million into the weatherization program, with much
of that designed to go after sub-standard private sector homes.
Under HB 296 the governor is proposing to use $18 million of
Alaska's $30 million in federal stimulus monies to allow for
performance contracting for public facilities. Thus, including
efficiency codes in the energy policy is only appropriate.
3:04:12 PM
REPRESENTATIVE GUTTENBERG AHFC noted that the Alaska Housing
Finance Corporation (AHFC) already has codes for weatherization
and energy efficiencies and is going to great length to ensure
the money is being used to meet certain standards. Banks want
codes so they know what they are loaning on. So, in many ways
the state is already there. The bill does not say adopt codes,
it just says establish energy efficiency codes. If the state
does not establish codes for itself, someone else might, such as
an insurance agency requiring that certain building standards be
met before it will provide insurance. However, he added, codes
should not apply to the cabin in the middle of the woods.
3:06:27 PM
CO-CHAIR NEUMAN supported Amendment 4 for all the aforementioned
reasons because he sees the word establishing as meaning it will
become mandated building code statewide. Many people need to
build their own home because there are no contractors in their
area, codes would also increase the cost of construction.
Promoting the most efficient way is hard to do because the most
efficient fuel for a home, such as natural gas, may not be
available in all areas of the state. He said his biggest issue
is that this would mean state government is telling local
governments and citizens what to do when it should instead be
encouraged at the local level.
The committee took an at-ease from 3:09 p.m. to 3:10 p.m.
The meeting was recessed at 3:10 p.m. to a call of the chair.
6:02:03 PM
CO-CHAIR JOHNSON called the meeting back to order at 6:02 p.m.
Present at the call back to order were Representatives Seaton,
P. Wilson, Edgmon, Tuck, and Johnson. Representatives Olson,
Guttenberg, Kawasaki, and Neuman arrived as the meeting was in
progress. Discussion resumed on Amendment 4.
6:02:39 PM
REPRESENTATIVE EDGMON moved to adopt Conceptual Amendment 1 to
Amendment 4 as follows: page 2, re-insert lines 13 and 14; line
13 replace "establishing" with "encouraging". Thus, page 2,
lines 13-14, would read:
(A) encouraging statewide energy efficiency codes
for new and renovated residential, commercial, and
public buildings;
REPRESENTATIVE EDGMON explained that encouraging would better
fit the intent of the overall policy statement and would not be
a mandate that requires something.
6:05:25 PM
REPRESENTATIVE TUCK objected. He pointed out that the AHFC is
currently using the 1998 international building code, and
although that code has been updated the AHFC is still using the
1998 version. Should the AHFC ever be challenged, he feared
that it would be required to use the revised international
codes, which is something the State of Alaska would not like to
do. It is important that Alaska have its own codes that meet
its needs rather than an international code. Alaskans could use
the state's code as a guideline even if it is not implemented.
He related that the [Cold Climate Housing Research Center] in
Fairbanks is looking for the best method of construction in
Alaska and learning what does and does not work so the state can
have proper codes to meet its needs.
6:07:02 PM
REPRESENTATIVE EDGMON responded that establishing has a stronger
meaning to it and is a mandate that could mean there will not be
enough support for the policy. Encouraging accomplishes the
same result by providing basically the same direction in that
energy efficiency codes are coming Alaska's way, whether through
the marketplace, federal designation, or lenders.
REPRESENTATIVE MILLETT added that the word encouraging better
fits the document because the policy's recommendations were
drafted to be guidelines, not mandates. She said she is
comfortable with the amendment to the amendment and in
continuing forward with the theme of the policy, which is
encouraging the state to do certain things and one is to adopt
some energy efficiency codes.
6:09:03 PM
REPRESENTATIVE GUTTENBERG pointed out that regardless of which
word is used, no codes are being adopted by this bill. The AHFC
is already doing quite a bit of this and there are already codes
or guidelines. While encouraging is not quite as good to him as
establishing, it is acceptable and will work for getting the
policy through the legislature.
REPRESENTATIVE TUCK withdrew his objection. He offered his
appreciation for Representative Guttenberg's comments and said
it will be up to local communities whether to adopt any codes
that are established.
There being no further objection, Conceptual Amendment 1 to
Amendment 4 was passed. There being no objection, Amendment 4,
as amended, was passed.
6:11:02 PM
CO-CHAIR JOHNSON withdrew Amendment 5 without offering it.
REPRESENTATIVE SEATON moved to adopt Conceptual Amendment 6,
written as follows [original punctuation provided]:
Page 3, line 3,
Insert:
"(E) promoting energy efficiency utilized for
transportation"
REPRESENTATIVE GUTTENBERG objected.
The committee took an at-ease from 6:11 p.m. to 6:12 p.m.
REPRESENTATIVE GUTTENBERG removed his objection.
CO-CHAIR JOHNSON objected.
6:13:25 PM
REPRESENTATIVE SEATON explained that the energy policy outlines
what is wanted to take place throughout the state. Conceptual
Amendment 6 would promote economic development by promoting
energy efficiency utilized for transportation and, as suggested
by Representatives Edgmon and Millett, would be inserted under
Section 2 which promotes economic development.
REPRESENTATIVE MILLETT stated the amendment is a good compromise
for putting in transportation without mandating anything and she
does not think it would alienate any of the rural communities.
REPRESENTATIVE EDGMON said he is fine with the amendment and
noted it would accomplish what the earlier amendment had wanted
to accomplish.
CO-CHAIR JOHNSON removed his objection. There being no further
objection, Conceptual Amendment 6 was passed.
6:14:51 PM
CO-CHAIR NEUMAN moved to adopt Conceptual Amendment 7 as
follows:
Page 1, line 15, after "renewable":
Insert "and alternative"
CO-CHAIR NEUMAN explained he would like to include this language
because alternative fuel sources can be created from methane, a
clean fuel that would provide a great opportunity for Alaska.
The amendment would tie in with the other parts of the policy,
such as page 2, line 26. He added that alternative energy would
also provide jobs.
6:17:43 PM
CO-CHAIR JOHNSON objected for discussion purposes. He inquired
whether alternative is defined in the bill.
CO-CHAIR NEUMAN stated that alternative energy can be gas-to-
liquids, coal-to-liquids, or biomass to liquids. Alternative
fuels are an evolving culture as far as what will be the fuels
of the future.
CO-CHAIR JOHNSON understood, but said his question is whether
alternative is defined.
REPRESENTATIVE MILLETT said she believes alternative is defined
in the omnibus bill, but she is unsure whether it is defined in
the policy bill. She offered her belief that alternative energy
is a defined term in statute so a definition may not be needed.
6:19:17 PM
REPRESENTATIVE TUCK stated that an inventory book published by
the Alaska Energy Authority includes nuclear as alternative
energy, and he therefore thinks alternative energy is anything
that is not defined under renewable and that is not currently
being utilized.
CO-CHAIR JOHNSON noted he is not opposed to including the
alternative language, but he wants to be clear that at some
point coal is not considered alternative. Additionally, he
wants to ensure that what the bill is trying to accomplish is
clearly defined.
REPRESENTATIVE SEATON recalled that a year or so ago the title
for the renewable energy fund was changed at the last minute
from renewable to alternative, which would have meant that the
funds could have been spent on coal gasification. Thus, he
understands the point of needing clarity. However, this policy
deals with all the energies and the amendment would not mean
that alternative energy would be defined as renewable, thus he
does not have a problem with the amendment.
CO-CHAIR JOHNSON agreed.
6:21:24 PM
REPRESENTATIVE TUCK pointed out that page 2, lines 22-25,
promote the development of renewable energy resources, and page
2, lines 26-28, promote the development of nonrenewable energy
resources. He agreed that "and alternative" would apply because
it would help to emphasize lines 26-28.
CO-CHAIR JOHNSON removed his objection.
REPRESENTATIVE GUTTENBERG objected. He inquired whether this
amendment would require that another section be added to the
bill to define what is renewable, nonrenewable, and alternative.
REPRESENTATIVE MILLETT said she thinks that including
alternative is forward thinking. While it might be thought that
energy sources can be defined, new sources of energy may come up
that may not be defined; thus, alternative might provide a broad
enough scope. While she thinks that gas-to-liquids would be
covered under fossil fuel and hydrates, she said she is not
opposed to alternative because every energy is encompassed that
can be defined at this point in time.
6:24:08 PM
CO-CHAIR JOHNSON supported adding alternative. He noted that
fish waste is being changed into diesel, something that is not
technically covered in the bill; however, alternative would
bring that in.
REPRESENTATIVE TUCK added that alternative would cover all the
bases because Alaska's definition of renewable might not be the
federal government's definition, hydropower being one example.
6:24:50 PM
REPRESENTATIVE EDGMON agreed with adding the word alternative to
the intent section and suggested that it also be included in the
codified section. He moved Amendment 1 to Amendment 7 as
follows:
Page 2, line 27, after "nonrenewable":
Insert "and alternative"
There being no objection, Amendment 1 to Amendment 7 was passed.
REPRESENTATIVE GUTTENBERG removed his objection to Amendment 7.
There being no further objection, Amendment 7, as amended, was
passed.
6:26:21 PM
CO-CHAIR JOHNSON opened public testimony.
CAITLIN HIGGINS, Executive Director, Alaska Conservation
Alliance and Alaska Conservation Voters, supported HB 306 and
urged its passage on behalf of her organization's 40 member
groups. She thanked Representatives Edgmon and Millett and
stated it was a pleasure to work as part of the stakeholders
group. She said HB 306 is a policy that creates the first step
in reaching a longer-term vision of the energy goals that the
state wants to achieve. The energy policy would put Alaska on
an economically viable, sustainable, stable energy path that
supports energy efficiency first and foremost. Further, the
energy policy would support renewable energy development,
workforce training, and coordinating efforts among government
entities focused on energy. The Alaska Conservation Alliance
has identified energy efficiency as a priority issue for this
legislative session and supports the policy to encourage the
establishment of statewide energy efficiency codes, decrease
energy use in public buildings through efficiency, and educate
the public about becoming more energy efficient. The bill sets
Alaska on a path to a cleaner, brighter, and more economically
stable future.
CO-CHAIR JOHNSON closed public testimony after ascertaining no
one else wished to testify.
6:28:51 PM
REPRESENTATIVE TUCK thanked the House Special Committee on
Energy co-chairs for partnering with the stakeholders and giving
all of them the opportunity to weigh in and refine the bill. It
is a good piece of legislation with buy-in from all parties and
is a great example of government bodies reaching out to the
public to come up with policies that benefit both the people and
the state.
CO-CHAIR JOHNSON also recognized the hard work done by the co-
chairs of the House Special Committee on Energy. He related
that the Obama Administration stated in a meeting that natural
gas is the bridge to the future, although it might take 100
years to cross that bridge to renewable energy. He said it will
therefore be important to continue to develop fossil fuels in
the immediate future.
6:31:26 PM
REPRESENTATIVE EDGMON stated that HB 306 is a remarkable piece
of legislation because it truly is the work of an ad-hoc group
of Alaskans representing every sector of the energy industry and
advocacy.
CO-CHAIR JOHNSON said he is looking for the same type of
cooperation from the people and user groups that put the policy
together to help develop Alaska's fossil fuels.
REPRESENTATIVE EDGMON moved to report CSHB 306(ENE), as amended,
out of committee with individual recommendations and the
accompanying fiscal notes. There being no objection, CSHB
306(RES) was reported from the House Resources Standing
Committee.
6:32:53 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 6:33 p.m.