HOUSE BILL NO. 307 "An Act relating to the financing and issuance of bonds for a liquefied natural gas production system and natural gas distribution system; and providing for an effective date." 3:12:18 PM REPRESENTATIVE GRIER HOPKINS, SPONSOR, introduced the legislation. He read from a prepared statement: I'm pleased to offer HB 307 - a simple bill that is part of a long-term, comprehensive, and paradigm- shifting solution to a difficult problem. In 2009, the U.S. Environmental Protection Agency (EPA) designated portions of the Fairbanks North Star Borough (FNSB) as a nonattainment area for air quality related to PM2.5. Since that time, the communities of Fairbanks and North Pole, State of Alaska, AIDEA and the Interior Gas Utility have been actively engaged in expanding the availability and use of natural gas through the Interior Energy Project, a project designed to bring lower-cost energy to as many Interior residents and businesses as possible, as quickly as possible. A critical component of the Interior Energy Project or IEP is financing for the development of a unified public gas utility with competitive rates. SB 23 was passed by the 28th Alaska Legislature in 2013 giving the Alaska Industrial Development Authority (AIDEA) the ability to provide financing tools for the development of the IEP, including the ability to issue up to $150 million in conduit revenue bonds to help develop an integrated natural gas supply chain, including expansion of natural gas liquefaction facilities in the Matanuska-Susitna Borough and expansion of natural gas mains and service lines in Fairbanks and North Pole. Authorization for issuing these bonds was originally scheduled to expire June 30, 2018. Through the efforts led by Rep. Thompson and former Senator Pete Kelly - the Alaska Legislature extended access to AIDEA bonding an additional five years to June 30, 2023. Given market conditions and turmoil related to the COVID-19 pandemic, IGU has paused the final investment decision on its Titan liquid natural gas (LNG) plant expansion project located in the Mat-Su Borough, which will necessitate access to AIDEA bonds. Bonds of $136 million of the original $150 million authorized may be issued to provide up to the $275 million financing cap authorized under SB23. HB 307 extends the authorization for AIDEA to issue IEP-related bonds for an additional five years to June 30, 2028. Members will find in their packets letters of support for HB 307 from AIDEA as well as the Fairbanks North Star Borough and the January 2022 quarterly report from AIDEA to the legislature on the progress of the IEP. JOE HARDENBROOK, STAFF, REPRESENTATIVE GRIER HOPKINS, provided a sectional analysis on the bill (copy on file): Section 1: Amends the uncodified law of the State of Alaska enacted in 2013 to replace the expiration date of the authority of AIDEA to issue bonds in support of the project from June 30, 2023, to June 30, 2028. Section 2: Contains an immediate effective date. Representative Carpenter wondered how the current announcement of a natural gas pipeline from the North Slope to the Interior of Alaska impacted the IEP. Representative Hopkins replied that the IEP project expanded natural gas lines throughout the Fairbanks area. He emphasized that the Fairbanks area needed to be ready for the time the gas line was completed. He explained that when more affordable gas was supplied from the North Slope customers would pay a lower interest rate through their utility bill by extending the bonding authority and expanding the infrastructure. Co-Chair Merrick moved to invited testimony. ELENA SUDDUTH, MANAGER, CUSTOMER SERVICE AND MARKETING, INTERIOR GAS UTILITY, FAIRBANKS (via teleconference), was in favor of HB 307. She related that AIDEA and the Interior Gas Utility (IGU) had been working closely on all aspects of the IEP that included liquefaction, transportation, storage, regasification, and distribution of natural gas. She listed the ways both entities had advanced the project. Fairbanks Natural Gas and IGU had consolidated into one natural gas utility to extend the availability of lower cost energy to as many businesses and residences as possible. She delineated that approximately 215 miles of natural gas distribution lines had been installed to the core non-attainment areas of Fairbanks and the North Pole. In Fairbanks, 1,550 residential and commercial customers were using natural gas. The natural gas utility could serve 8,500 properties if everyone with access to natural gas mains converted. The North Pole distribution lines served 125 customers with the main lines reaching 3,000 commercial and residential properties. She furthered that AIDEA and IGU had been working on two storage projects. There was a 5.25 million gallon Liquified Natural Gas (LNG) storage and gasification facility that was completed in Fairbanks in late 2019 and a separate 150,000 gallon LNG storage and gasification facility completed in the North Pole in 2021. The IGU's customer base had increased about 40 percent since the storage facilities were completed and it anticipated 600 more customers converting to natural gas for heating in 2022. She noted that AIDEA bonding was critical to the continuing success of the project. As the customer base grew, IGU would need to utilize further AIDEA bonding to add approximately 100,000 gallons per day of LNG capacity to the present output of the Titon Liquefaction Facility located in the Mat-Su Borough. The existing plant had a capacity of about 50,000 gallons per day. The utility planned to utilize AIDEA bonding to expand more natural gas mains into more neighborhoods in the Fairbanks and North Pole communities. The bonding authority was not fully utilized due to the COVID-19 pandemic, resulting oil price drop, and economic uncertainty. She anticipated needing the bonding over the following few years. The bill provided additional time for the IEP to progress and realize the project's goal of affordable natural gas to as many customers as possible. 3:22:12 PM Co-Chair Merrick set an amendment deadline for HB 307 for Wednesday, April 13, 2022, at noon. Representative Hopkins thanked the committee for hearing the bill. HB 307 was HEARD and HELD in committee for further consideration.