SB 69-EXEMPT RENEWABLE ENERGY ELECTRIC PLANTS  4:39:29 PM CO-CHAIR FIELDS announced that the next order of business would be SENATE BILL NO. 69, "An Act extending an exemption from regulation as a public utility for plants and facilities generating electricity entirely from renewable energy resources; and providing for an effective date." 4:39:52 PM DIRK CRAFT, Staff, Senator Josh Revak, Alaska State Legislature, presented SB 69 on behalf of Senator Revak, prime sponsor. He explained that the proposed legislation would extend the exemption from July 1, 2021, to July 1, 2028, for power plants that utilize renewable resources. He noted Alaska is experiencing increasing private investment in the development of renewable energy and that since 2010 Alaska has exempted certain independent power producers (IPPs) from regulation under the Regulatory Commission of Alaska (RCA), which is responsible for certifying utilities, regulating rates, resolving disputes, and protecting customers. Exemptions were available to IPPs that meet four criteria: they generate electricity entirely from renewable energy, the facility is under 65 megawatts, they sell power only to a regulated public utility, and the project doesn't receive state tax credits or grants. The extra layer of regulation can prevent IPPs from providing investment while adding to the cost of government; exempting IPPs under such narrow conditions ensures that there isn't costly duplicative regulation. He said that consumers are protected due RCA consideration of the public purchase agreements between IPPs and public utilities; therefore, he said, the exemption through SB 69 would continue state oversight in power purchase agreements and consumer protection. MR. CRAFT pointed out that an amendment from the Senate Floor made two small changes in the text of SB 69. He said that an additional reference to the electrical reliability organization (ERO) statute was made to clarify that the regulatory exemption under AS 42.05.711(r) does not apply to the applicable ERO- related regulations under AS 42.05.760 to AS 42.05.790, which were authorized under Senate Bill 123 during the Thirty-First Alaska State Legislature. He also noted that the sunset date was reduced to seven years. 4:42:10 PM JENN MILLER, Chief Executive Officer, Renewable Independent Power Producers ("Renewable IPP"), testified in support of SB 69. She said Renewable IPP is an Alaskan small business that develops, builds, and operates utility-scale solar farms like the Willow Solar Farm. She explained that an IPP is a private entity that owns and operates a power generation site such as a solar or wind farm; the IPP connects to the power grid and sells power to the utilities at wholesale prices. For example, she said, the Willow Solar Farm sells power to the Matanuska Electric Association (MEA) for 8 cents per kilowatt hour while the retail rate is approximately 18 cents per kilowatt hour. She noted that MEA operates the infrastructure of the power grid. She said the IPP model allows private investment to fund projects, thereby allowing investors to take on the risk of the project and subsequently introduce competition to the cooperative model of power generation. She said that the Houston Solar Farm is approximately seven times larger than the Willow Solar Farm and with the addition of the Houston project, the solar capacity of the state will almost double. She said the Houston project commenced by identifying the location and then approached MEA to work on technical studies regarding infrastructure and the feasibility of being able to tie in to the grid. The IPP worked with MEA on a power purchase agreement and when MEA and the IPP agreed on a pricing model, she said, the contract went to the Regulatory Commission of Alaska (RCA) for review and approval. She pointed out that the function of RCA is to ensure fairness and public interest. Upon RCA approval, she said, the project may be built and start generating power. 4:46:59 PM MS. MILLER said that SB 69 would remove a layer of additional oversight; in the absence of the exemption under the proposed legislation the IPP would be required to file a quarterly report with RCA, which would require additional legal and professional staff to support the filings. She pointed out that the reason why the absence of exemption equates to duplicative regulation is that RCA already approved the contract between the IPP and the utility, MEA; the utility already files a quarterly report on the amount of energy produced by the IPP and how much the utility paid for it. Duplicative regulation increases the overhead of IPP projects and costs money for RCA. She said that private investors look at opportunities across the country; as Alaska's requirement for such oversight is unique in the U.S., the exemption would put Alaska's IPPs on a level playing field with other power producers across the country when it comes to attracting private investment. She pointed out that wind and solar installation are two of the fastest-growing occupations in Alaska and an exemption under SB 69 would increase economic opportunities. 4:49:45 PM CO-CHAIR FIELDS commented that battery storage is used in smaller communities, and he asked whether the economics of such storage are becoming more favorable for larger communities. MS. MILLER replied that the cost of battery storage is decreasing each year. 4:50:49 PM REPRESENTATIVE MCCARTY asked whether the proposed legislation is fair to large companies. MR. CRAFT explained that when the proposed legislation was first introduced during the Twenty-Sixth Alaska State Legislature, the intention was to identify newer sources of renewable energy; large projects are usually generated by utilities, while small IPPs are not classified as utilities but are selling power wholesale to the public utilities. The intention of SB 69, he said, is to create certainty in the regulatory environment to attract private investment. REPRESENTATIVE MCCARTY asked how selling energy to utilities at a lower wholesale price translates to savings for consumers. MR. CRAFT said he would send price information. 4:53:04 PM CO-CHAIR FIELDS asked Ms. Miller to talk about the cost per kilowatt hour for the IPP versus the cost a homeowner may experience with a rooftop solar power installation. MS. MILLER replied that solar power is currently sold for 7.8 cents per kilowatt hour, and future projects should have lower prices. Residential solar panel owners are allowed to offset their electricity bills by their solar power production at the full retail rate of 18 cents per kilowatt hour, she said, and the payback time for residential solar systems is approximately 10 years. 4:55:05 PM REPRESENTATIVE NELSON asked what the worst case scenario would be if SB 69 fails to pass. MR. CRAFT replied that Ms. Miller's small IPP would have to start hiring staff, at substantial cost, to prepare for the quarterly filings to RCA. REPRESENTATIVE NELSON asked, "So it would start closing up some of the smaller shops around Alaska and give more regulations?" MR. CRAFT responded yes, the regulations would go into effect and IPPs would need to plan to make quarterly filings and evaluate the cost and how it could affect the financing of a power project. [SB 69 was held over.]