HB 196-ALTERNATIVE ENERGY REVOLVING LOAN FUND CO-CHAIR EDGMON announced that the first order of business would be HOUSE BILL NO. 196, "An Act relating to the alternative energy revolving loan fund; and providing for an effective date." 3:04:10 PM ADAM BERG, Staff to Representative Bryce Edgmon, Alaska State Legislature, presented HB 196 on behalf of the House Special Committee on Energy. Mr. Berg stated HB 196 takes the Alternative Energy Revolving Loan Fund, established in 1978, and makes changes to the existing statute by eliminating the "sweep" provision; changing the loan rates; and repealing the transfer or sale of mortgages and notes. Further, the bill adds language to take advantage of capitalization opportunities and adds high efficiency wood pellet stoves to the definition of alternative energy systems. Mr. Berg noted that the fund has been inactive since the 1990s when the balance of the fund was transferred to the general fund (GF). 3:05:36 PM CO-CHAIR EDGMON added that HB 196 is House Special Committee on Energy proposed legislation. The bill was crafted after hearings in rural communities where the committee discovered a need for low interest rate loans to individuals for improvements to energy [efficiency] infrastructure. 3:06:08 PM REPRESENTATIVE PETERSEN asked for the existing balance in the fund. MR. BERG said there is a zero balance in the fund as any payments due the fund are swept into the GF at the end of each fiscal year. REPRESENTATIVE PETERSEN surmised then that the plan is to create a revolving fund. MR. BERG replied yes. 3:07:20 PM GREG WINEGAR, Director, Division of Investments, Department of Commerce, Community, & Economic Development (DCCED), informed the committee his agency administered the program from the late 1970s until 1987. During that time, 2,900 loans were made until the changes by the legislature in 1990; in fact, there is a small balance in the account now, but no new loans have been made since 1987. Mr. Winegar opined HB 196 would allow the program to operate again with the aforementioned changes. In response to Co-Chair Edgmon, Mr. Winegar said the proposed interest rate would be prime plus 1 percent, with a floor 5 percent and a ceiling of 8 percent. As the prime rate changes the fixed rate would change between the cap and the floor. The requirements for collateral are a deed of trust against the residence receiving the improvements. He explained that one of the amendments proposes the deletion of the requirement for a first deed of trust; he suggested the program should continue with a lien against the property, but not necessarily a first lien. 3:10:43 PM CO-CHAIR EDGMON identified Mr. Winegar's description of the amendment as conceptual Amendment 1, that deletes "first" from page 1, line 12, of the bill. He then offered the amendment for the purpose of discussion. 3:11:35 PM MR. WINEGAR stated conceptual Amendment 2 would amend AS 45.88.020(a) such that the energy systems must be located in the state. 3:12:19 PM REPRESENTATIVE JOHANSEN called attention to page 2, line 4, of the bill and asked whether it was appropriate to specify the Wall Street Journal in the statute. MR. WINEGAR said the language is patterned after existing statutory language; however, he agreed with Representative Johansen's point. 3:13:07 PM REPRESENTATIVE JOHANSEN then asked about the addition of high efficiency wood pellet stoves and for the definition of "unprocessed wood." MR. BERG explained that the addition of high efficiency wood pellet stoves denotes that a normal wood stove does not qualify for the program. He was unsure of the reason for the change from "wood" to "unprocessed wood". REPRESENTATIVE JOHANSEN asked Mr. Berg to investigate this change because his constituents are providing firewood from timber sales; in fact, he will require more specific definitions at later hearings. CO-CHAIR EDGMON offered to have his staff investigate. 3:15:45 PM REPRESENTATIVE TUCK recalled demonstrations of a soapstone stove and a wood-fired furnace in Dillingham. He asked whether the proposed provision would exclude these projects. CO-CHAIR EDGMON opined the Dillingham projects would not be excluded. MR. BERG said he was unsure. CO-CHAIR EDGMON expressed the intent of the sponsors to use the term wood; however, the drafter used the term unprocessed wood. 3:17:13 PM REPRESENTATIVE JOHANSEN called attention to page 2, lines 19-22, of the bill and noted the reference to wood stoves with catalytic converters, and steam, hot water, or ducted hot air central heating system that uses wood or coal for fuel. He opined these were the devices viewed in Dillingham, and restated his interest in the legal definition of the term unprocessed wood. 3:17:52 PM REPRESENTATIVE TUCK stressed the inclusion of the soapstone stove. 3:18:18 PM CO-CHAIR MILLETT opined the soapstone stove is covered under the language referring to a ducted hot air central heating system. REPRESENTATIVE TUCK confirmed the intention of the proposed legislation to exclude "just any old wood stove" from qualifying. MR. BERG agreed. 3:19:17 PM CO-CHAIR MILLETT moved Amendment 1, labeled 26-LS0754\R.1, Kane, 3/31/09, which read: Page 1, line 12: Delete "first" REPRESENTATIVE PETERSEN objected for discussion purposes, and related his understanding of Amendment 1. MR. WINEGAR restated Amendment 1 allows for a second deed of trust. 3:20:34 PM REPRESENTATIVE PETERSEN withdrew his objection. There being no further objection, Amendment 1 was adopted. 3:20:40 PM CO-CHAIR MILLETT moved Amendment 2, labeled 26-LS0754\R.2, Kane, 3/31/09, which read: Page 1, following line 9: Insert a new bill section to read: "*Sec. 2. AS 45.88.020(a) is amended to read: (a) The department may (1) make loans for the purchase, construction, and installation of alternative energy systems that are located in   the state; (2) adopt regulations necessary to carry out the provisions of AS 45.88.010 - 45.88.090, including regulations to establish reasonable fees for services provided and charges for collecting the fees; (3) collect the fees and collection charges established under this subsection." Renumber the following bill sections accordingly. CO-CHAIR EDGMON objected. MR. WINEGAR restated that Amendment 2 clarifies that the projects are located in Alaska. CO-CHAIR EDGMON withdrew his objection. There being no further objection, Amendment 2 was adopted. 3:21:36 PM CO-CHAIR MILLETT moved to report HB 196, 26-LS0754\R, as amended, out of committee with individual recommendations and the accompanying zero fiscal notes. There being no objection, CSHB 196(ENE) was reported from the House Special Committee on Energy. 3:22:17 PM The committee took an at-ease from 3:23 p.m. to 3:25 p.m. 3:25:38 PM