HJR 8-FEDS ALLOW STATE TO MAKE ENERGY CHOICES  11:02:04 AM CO-CHAIR COLVER announced that the next order of business would be HOUSE JOINT RESOLUTION NO. 8, Urging the federal government to empower the state to protect the state's access to affordable and reliable electrical generation. 11:03:19 AM JOSHUA BANKS, Staff, Representative Dave Talerico, Alaska State Legislature, introduced HJR 8 on behalf of Representative Talerico, sponsor. Mr. Banks explained that the U.S. Environmental Protection Agency (EPA) Clean Power Plan applies to all fossil fuel power plant generation - including coal, gas, oil, and naphtha - by plants that produce power in excess of 25 megawatts (MW), with the exception of power plants at military bases in Alaska and at the University of Alaska (UA). Although well-intentioned, the plan would likely lead to much higher electricity costs as indicated by a study [entitled, "Energy Market Impacts of Recent Federal Regulations on the Electric Power Sector," and dated 11/14] provided within the committee packet. He said the study states that nationwide there could be an increase in electrical costs as high as 37 percent. The Clean Power Plan is based on inaccurate assumptions; for instance, that the largest source of carbon emissions in Alaska is from power plants. In fact, power plants in Alaska account for about 25 percent of carbon emissions. The remaining 75 percent of stationary source carbon in Alaska is from operations on the North Slope. Another assumption is that lower cost natural gas and renewable energy sources are available; however, in the near-term these sources are not available in the Interior. In fact, even if natural gas were available in Fairbanks, the current projected cost is $20.00 per million Btu (MMBTU). The final purpose of HJR 8 would be to protect Alaska's sovereignty. The Tenth Amendment to the U.S. Constitution states: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." Mr. Bates opined the powers of Congress or the executive branch do not include the power to regulate carbon emissions in America. Therefore, this is the states' responsibility. He expressed his belief that the State of Alaska has the means to make effective decisions to deal with the problems of climate change, and to do so without hurting Alaskans. The resolution urges the federal government to leave decisions in regulating energy production at the state and local level in order to protect access to affordable and reliable electrical generation. Mr. Banks said he expected some changes would be made to HJR 8 as it was currently written. 11:07:25 AM REPRESENTATIVE NAGEAK directed attention to the bill on page 1, lines 9-10, which read: WHEREAS the Regulatory Commission of Alaska should be empowered to make decisions with methodology based on the lowest production costs for electrical generation; REPRESENTATIVE NAGEAK asked whether the rationale of the resolution was to get more coal generation. 11:08:14 AM REPRESENTATIVE TALERICO was unsure about the intent to generate more coal-fired power, but the intent was to maintain what is in production at this time. In the Interior, the most affordable power is from coal. Although power production is available from other areas of the state, the "bottleneck" is the lack of transmission lines at the electrical intertie. He recalled the committee's previous discussion of "pancake" rate tariffs. Currently in the Interior, coal-fired power costs 4.9 cents per kilowatt hour (kWh), and hydroelectric (hydro) power costs 5.8 cents per kWh due to the pancake tariff rates. Representative Talerico said his concern was for the cost to customers in Fairbanks which is then passed along to surrounding remote communities. REPRESENTATIVE NAGEAK referred to testimony last year that the cost of power generation in rural Alaska could be reduced by the use of microgrids to connect nearby communities. He suggested considering the idea proposed by the Alaska Village Electric Cooperative, Incorporated (AVEC). He then asked for an explanation of the benefits of placing a 1.5 percent cap on electricity rate increases. REPRESENTATIVE TALERICO said the issue of a cap was being discussed with state agencies, the Regulatory Commission of Alaska (RCA), and the utilities. He said he asked the co-chairs to hold the resolution in order to gather more information and create a better document; furthermore, various agencies would be bringing recommendations to the bill sponsors. REPRESENTATIVE NAGEAK directed attention to page 1, lines 14-15 which read: WHEREAS utilities, communities, residents, and commercial entities should be protected from any attempts to close a coal-fired power plant in the state; and REPRESENTATIVE NAGEAK asked for examples of coal-fired plants that would be closed. REPRESENTATIVE TALERICO referred to an [unidentified] EPA document provided in the committee packet, noting it is 300 pages long. His interpretation of the document - and his primary concern - was that the plan calls for reducing carbon pollution by focusing on the power producing industry. In Alaska, most of the carbon produced is not from power plants, unlike in the Lower 48. Coal power plants are the cheapest sources of energy in the Interior, and if they become "a target" the price of energy would rise without an impact on Alaska's carbon emissions. 11:14:17 AM MR. BANKS directed attention to page 23 of a study provided in the committee packet entitled, "Energy Market Impacts of Recent Federal Regulations on the Electric Power Sector" and dated 11/14. Energy Ventures Analysis estimated a reduction in the generation of coal from 31 percent in 2012, to 20 percent in 2020, likely requiring the closure of coal-fired plants throughout the country. REPRESENTATIVE NAGEAK observed his district has the cleanest- burning coal in the world and he supports generating power with coal using the best technology; however, the industry needs to be proven. Coal-fired plants should not be closed, but improved for the benefit of the environment and consumers, and the federal government should help pay. CO-CHAIR VAZQUEZ informed the committee it would hear an upcoming presentation regarding microgrids. 11:17:18 AM CO-CHAIR COLVER opened public testimony on HJR 8. After ascertaining no one wished to testify, public testimony was left open. CO-CHAIR VAZQUEZ stressed the importance of reliable and affordable energy to the well-being and economic success of the state. REPRESENTATIVE WOOL directed attention to the bill on page 2, line 2, which read: WHEREAS the loss of other traditional electrical generation methods may cause natural gas plants to be overused or used in ways that exceed their engineered design; and REPRESENTATIVE WOOL inquired as to whether natural gas is a traditional method of electrical generation, and if natural gas plants have been shown to be exceeding their engineered design. REPRESENTATIVE TALERICO advised that coal-fired generators have been around in the Interior since before World War II; this method is a traditional source along with diesel and naphtha. In the event 25 MW of daily production were shut down in Healy, and another 20 MW in Fairbanks, it would be difficult - if not impossible - to energize the grid. He expressed his willingness to make additions or deletions to the language of the resolution. REPRESENTATIVE WOOL asked if the proposed improvements to the electrical grid would change the priorities of HJR 8. 11:23:30 AM REPRESENTATIVE TALERICO opined improvements to the grid are critical to the economy; however, affordability is still important. The cost of oil and natural gas fluctuates, but the coal market remains more stable. He stressed the value of many diversified sources of energy production coming together to provide stability in energy costs. REPRESENTATIVE NAGEAK expressed his passion about lowering energy costs. During the previous legislative session, the committee discussed biomass, natural gas, coal, hydropower, tidal, and geothermal sources of energy that are available on a regional basis; in fact, most regions have different sources on a local basis, like biomass, run-in-the-river, and coal generation. He encouraged the committee to focus on developing resources that are available in each region. CO-CHAIR VAZQUEZ will request related testimony from the Alaska Power Association. She urged for research on the use of coal. 11:29:52 AM HJR 8 was held over.