HB 31-NET ENERGY METERING 4:12:08 PM CO-CHAIR MILLETT announced that the final order of business would be HOUSE BILL NO. 31, "An Act relating to net energy metering for retail electricity suppliers and customers; and providing for an effective date." 4:12:30 PM REPRESENTATIVE KURT OLSON, Alaska State Legislature, informed the committee that HB 31 was a rewrite of a bill that died during the 25th legislative session. 4:13:07 PM JENNIFER SENETTE, Staff to Representative Kurt Olson, Alaska State Legislature, informed the committee net metering is a method of metering energy consumed and produced at a home or business that has its own source of renewable energy. In its simplest form, net metering employs a standard electrical meter that records power going back from a household or business onto the electrical grid, and going from the electrical grid to the household or business. Thus, when excess power is being generated by the household facility the excess power goes to the utility, the meter runs backward, and credits are earned for the consumer. At other times, power runs to the household and the meter runs normally. She continued to explain that at the end of the billing period, the customer pays for the net consumption of power. The proposed legislation is an arrangement whereby customers can offset part of the cost of their consumption of power. In addition, excess energy is flowing to the grid. Ms. Senette pointed out that the bill eliminates the need for the consumer to purchase a new meter, as the existing meters can be used, and also eliminates the need for storage batteries. These two factors are important in order to keep the installation of a household renewable system economic. She reviewed the key points of HB 31; Part (b) addresses the rates of the credits generated when a consumer puts excess energy back out onto the grid, and Part (c) addresses the rates at which the consumer can sell credits back to the retailer. In addition, Part (d) specifies that retailers organized as a cooperative are exempt, but can "opt in." She explained that the fiscal note reflects the cost of the addition of one more position at the Regulatory Commission of Alaska (RCA). Ms. Senette further explained that although 44 states allow net metering, each state has a different policy; thus the RCA declined to adopt federal net metering standards because the other systems are inappropriate for Alaska. The biggest difference between legislation in other states is how each state credits the excess energy that is put back onto the grid. She concluded that HB 31 encourages Alaskans to invest in small scale renewable energy systems by allowing them to generate credits. 4:20:43 PM REPRESENTATIVE OLSON observed that this bill is a pre-file: in fact, the RCA has opened two dockets on this subject thus he requested that the committee hold the bill until the RCA issues its decisions. 4:21:38 PM REPRESENTATIVE RAMRAS noted his conflict of interest, as he is an alternate energy producer. 4:21:57 PM REPRESENTATIVE JOHANSEN asked whether a municipal utility enjoys the opt-in provision available to cooperatives. 4:22:30 PM MS. SENETTE was unsure. 4:22:39 PM ERIC MUEHLING informed the committee he produces solar electric power by a 10.5 kilowatt solar array that is connected to the local utility grid and that prevents the release of 1,000 pounds of CO2 gas into the atmosphere each month. Mr. Muehling pointed out that his local utility, GVEA, burns coal for much of the electricity used in Fairbanks. He said he strongly supports net metering; in fact, the legislation for net metering in most states allows the utility to pay the retail price for power and this is a powerful incentive for renewable power generation. This incentive serves the public good and is a public service as it avoids putting CO2 gas into the atmosphere. He acknowledged there will be opposition to net metering from public utilities, who now pay only one-half of the value of the power. The present system is a disincentive to conservation, discouraging to solar producers, and "plain wrong." Mr. Muehling opined the net effect of net metering on an electric utility is similar to the effect of electric energy conservation; for example, utilities encourage the use of fluorescent light bulbs, but reward customers that use higher levels of kilowatt hours. He stated that he strongly supported net metering; however, he asked whether HB 31 was for residential alternative producers only and how the legislation will determine intent. Also, he suggested the proposed Sec. 42.45.047 (a)(5) should allow cooperatives to "opt out" instead of "opt in." 4:27:05 PM MARK MASTELLER stated he was a resident of Mat-Su where there are abundant sources of renewable energy. He stated his support for net metering legislation because it will improve energy security and stimulate economic development; in fact, he opined there will be an increase in local economic development after stable net metering is established. Regarding HB 31, he stated he was glad there was not an aggregate limit on the amount of net metering allowed, and he also supported the aspect of an annual accounting period. He suggested the maximum kilowatt size should be increased from 25 kilowatts to 100 kilowatts and that electric cooperatives and those that already use renewable sources should not be exempted. 4:29:53 PM JIM ADAMS expressed his belief that this bill is an incentive for alternate power sources and he supported any incentive to reduce the dependence on diesel powered fuel generation. 4:30:57 PM PETER MCKAY stated he is an advocate for distributed generation, homeowner-generated energy, and the homeowner's easy interconnection with their retail electrical supplier via a single bi-directional meter. Mr. McKay has been an active participant in RCA docket R 06-005 since 2006, and he opined the time for net metering in Alaska is now: however, it will require coordination between the legislative and regulatory branches of the state government. He stated that one of his concerns about HB 31 is the treatment of surplus energy by negotiated purchase power rates; for example, a contract with an utility that specifies both a time and an amount. There is also the option of a nonfirm rate that is a contract for an unspecified time and amount, and an "avoided cost" rate that is basically the cost of fuel. The bill proposes a firm power rate; however, he expressed his preference for "a retail credit that's rolled over to a full year, and then ... [the customer will] pay that price at the end of the annual settling-up period." The RCA proposed to essentially give "avoided cost" for a credit; therefore, there must be reconciliation between the RCA and the proposed legislation. Mr. McKay then pointed out the exemption of electrical cooperatives in HB 31 clearly discriminates against customers who buy power from the Homer Electric Association (HEA). He suggested that everyone should have the same opportunity to put home-generated electricity back onto the grid. In addition, the 25 kilowatt limit will discourage future power generation by larger industrial or small commercial customers, and he encouraged expanding the limit to 100 kilowatts. 4:38:01 PM REPRESENTATIVE RAMRAS related GVEA is a cooperative and has an obligation to provide the cheapest rates to users; thus it is adamant that it not pass the cost of hooking up net metering onto its rate payers. Secondly, he suggested Mr. McKay should look at the Sustainable Natural Alternative Power (SNAP) program in effect at GVEA and in Chelan County, Washington. 4:39:41 PM MIKE O'MEARA stated he represented the Homer Electric Association Members Forum (HEA Members Forum), an ad hoc group of 350 HEA members who support movement away from fossil fuels and toward renewable fuels. The HEA Members Forum advocates for net metering standards that can provide savings on energy costs, reduce the demand for power from the utility, create jobs, and supply clean energy to the grid. Regarding HB 31, the Members Forum supports an annual accounting period over a monthly accounting period due to variances in weather patterns. The Members Forum opposes the exemption of electrical cooperatives and crediting based on the negotiated firm power rate; in fact, it prefers crediting in kilowatt hours. Further, the Members Forum supports an increase in the limit on participation by kilowatt hours from 25 to 100 kilowatt hours, and encourages final language that will establish true net metering for all Railbelt utilities in a timely manner. Mr. O'Meara acknowledged that HEA is attempting to initiate a SNAP program; however, SNAP programs over time do not provide the dependable payback that net metering will thus are not an adequate replacement for net metering. 4:44:35 PM MARGARET ADSIT, Energy Coordinator, Alaska Center for the Environment (ACE), informed the committee ACE is a not-for- profit environmental educational advocacy organization founded in 1971. Her organization has 6,000 members and its energy vision is to inspire individuals, businesses, and government entities to think about renewable energy, energy efficiency, and energy conservation. The ACE supports establishing statewide net energy standards; however, she recommended removing the provision in HB 31 that exempts cooperatives from participation. Ms. Adsit said this provision will waste time and undermine the net metering work underway at the RCA. She concluded that ACE supports the development of net metering in the state, provided that it occurs in a timely fashion that allows for an even application of net metering across the Railbelt. 4:47:31 PM DAVE GARDNER, Vice President, Marketing & Member Services, GVEA, informed the committee GVEA has successfully encouraged power producers' participation through the SNAP program. This program meets the needs of the cooperative and its members better than net metering. Because SNAP is voluntary and self-supporting, it does not "cross-subsidize" costs for producers by other members. In addition, SNAP producers share the funds collected from SNAP contributors, thus GVEA's program compensates SNAP producers at a higher rate than they would receive through net metering programs. Mr. Gardner observed that GVEA is participating in RCA's net metering and interconnection standards workshops and believes that if the state were to adopt net metering and interconnection standards legislation, the RCA should be the agency tasked with oversight and administration of the programs. Moreover, GVEA encourages a delay in passage of HB 31 while the RCA is investigating these issues. 4:49:15 PM ROBERT REAGAN, Rates & Tariffs Supervisor, Anchorage Municipal Light & Power (ML&P), Municipality of Anchorage, stated that ML&P believes that net metering is potentially a very large subsidy paid by rate payers to fellow customers. Therefore, HB 31 is a violation of the cost-causer/cost-payer principle. He urged the committee to consider that the RCA has more expertise and information on this subject than the legislature, thus the legislature should not preempt a decision by the RCA. Furthermore, any exemptions in legislation should apply to all utilities equally, unless there is a compelling reason. 4:51:28 PM DEAN THOMPSON, Attorney-at-Law, Kemppel, Huffman & Ellis, stated he was representing the Alaska Power Association (APA) that is a statewide trade group representing almost 40 municipal, cooperative, and other electric utilities. The APA encourages the committee to wait on any relevant legislation until the RCA completes its work that was begun in 2006. At that time the RCA opened a docket to consider federal requirements regarding a federal net metering standard, and it now has two dockets open to consider a specific Alaskan net metering standard and a specific Alaskan interconnection standard. He called attention to a technical workshop attended by industry representatives and net metering proponents that began to bridge the gap between the two sides. Mr. Thompson urged the committee to allow the RCA to make its decision in the best interest of all of the parties. Finally, he emphasized the APA and its members are not opposed to renewable generation or to customers who wish to offset their energy load; in fact, federal and state law gives the consumer- generator the right to sell power to an electric utility. Mr. Thompson opined the dispute is based on the price. 4:55:04 PM HB 31 was held over for further public testimony.