HOUSE BILL NO. 44 "An Act relating to investments applicable to energy; authorizing the Alaska Permanent Fund Corporation to make in-state energy project investments; and authorizing certain public corporations to issue bonds for energy projects." REPRESENTATIVE MIKE CHENAULT, SPONSOR, mentioned that the Committee has heard the bill and has made no changes yet. The proposed amendment would not let the bonds be written without approval from Legislative Budget and Audit. This would ensure a legislative review process. Representative Chenault emphasized that it was time to make a move forward on in-state gas. He named TransCanada and the Denali Project as potential projects that, at the earliest, could be ready in 2020. He voiced concern about the Railbelt's energy needs in the next 5 years with the possibility of a gas shortage. He thought the legislature should enlist every opportunity possible to make sure Alaskans have a long-term energy supply. 2:02:22 PM Representative Joule asked if there has been any analysis of the cost benefit of bringing gas from the North Slope rather than importing it from somewhere else. Representative Chenault did not have the numbers, but was sure there were studies which showed which method was more cost effective. He related that the amount of gas produced in Cook Inlet is enough to heat Alaska homes and businesses during the summer; however, the crunch time happens in winter. He was not sure which would be the cheapest, but pointed to the unlimited gas supply available in Alaska, which could benefit the Railbelt and rural areas. 2:05:28 PM Co-Chair Stoltze Moved to adopt Amendment 1: Page 3, line 6: Delete "The" Insert "Subject to (b) of this section, the" Page 3, following line 17: Insert a new subsection to read: "(b) Bonds may not be issued under (a) of this section without the prior written approval of the Legislative Budget and Audit Committee." Reletter the following subsection accordingly. Co-Chair Hawker OBJECTED for discussion purposes. Co-Chair Hawker read (b) and asked if the Legislative Budget and Audit Committee has the authority as written. TOM WRIGHT, STAFF, REPRESENTATIVE MIKE CHENAULT, referred to a legal opinion in the members' packets which addresses that question. He noted that it is questionable. The LB&A Committee is being allowed veto authorization that might be improper. He pointed out that, in this case, it is a pre- authorization. The involvement of LB&A is another step in the process of approval. Co-Chair Hawker did not agree with that opinion. 2:07:24 PM Representative Gara explained that currently the bonds can be issued, but the bill would require legislative approval. Mr. Wright agreed. Representative Gara concluded that a bonding bill can be passed which requires no legislative approval; therefore, a bonding bill can be passed which requires approval from a committee. He maintained that delegating it to Legislative Council is not a problem and Amendment 1 does not make the bill more challengeable. 2:09:04 PM Co-Chair Hawker concurred with the concerns raised in the legal opinion and agreed that it could become a matter of litigation. Mr. Wright agreed it was challengeable. He emphasized that the bill authorizes pre-authorization for the bonds. He thought an argument could be made on other side. Co-Chair Hawker WITHDREW his OBJECTION. There being NO OBJECTION, Amendment 1 was adopted. Representative Kelly commented on past interactions with Alaska Natural Gas Pipeline Development Authority (ANGDA). He questioned ANGDA's usefulness. He wanted assurance regarding ANGDA's role. 2:11:21 PM Representative Chenault reported that there was some indifference with the process and with the relationship with ANGDA. He shared that when ANGDA was put up for public vote, he voted against it due to their view of using only one route, which might have made economic sense at the time. Over time, and through the legislative process, things have been added to the ANGDA scope, such as a spur line to the Cook Inlet. Representative Chenault stated that his first choice was for private business to build the line. As a board, ANGDA has put together some good programs, but has strayed from its original scope sometimes. However, it is the entity out there trying to get gas to communities in Alaska at a reasonable cost. They are not the only choice, but the legislature needs to step up and look at all options. This does not give ANGDA permission to go forward regardless of cost. It does not preclude ANGDA from joining a private company on this project. 2:14:29 PM Representative Kelly asked if Representative Chenault was comfortable with LB&A's role. Representative Chenault observed that he was more comfortable with LB&A's involvement, rather than having no legislative control once the bonds were issued. HB 44 was HEARD and HELD in Committee for further consideration. 2:16:45 PM