SB 91-NUYAKUK RIVER: HYDROELECTRIC SITE  1:03:27 PM CO-CHAIR TARR announced that the first order of business would be CS FOR SENATE BILL NO. 91(FIN), "An Act relating to the development and operation of a hydroelectric site at the Nuyakuk River Falls; providing for the amendment of the management plan for the Wood-Tikchik State Park; and providing for an effective date." CO-CHAIR TARR opened invited testimony on CSSB 91(FIN). 1:04:03 PM ROBERT HIMSCHOOT, CEO/General Manager, Nushagak Cooperative, provided a PowerPoint presentation titled "Nuyakuk Hydroelectric, Hydropower for Bristol Bay." Turning to slide 2, he said the [proposed] location offers some natural advantages for hydroelectric production. He noted that the glacial moraine that creates the lake systems of the Tikchik drains all five lakes across that glacial moraine. He explained that the lake is a natural sediment sink, that there is about 40 feet of head across 2500 feet of river for a diversion project, and that the 2500 feet of river is in an oxbow configuration, which allows for running a 1500-foot penstock. MR. HIMSCHOOT moved to slide 3 and stated that since 1953 the U.S. Geological Survey (USGS) has had a flow-monitoring gauge on the river just above the proposed hydro site. He reported that evaluation of these 60 years of flow data shows that 4.5 megawatts of power could still be made during the low three months of the low three years, using less than 25 percent of the flow; and during the summer considerably greater than 10 megawatts could be made. He further reported that the power curve from this projected production matches the load dynamics in Bristol Bay very well. Loads considerably peak in the summer with salmon production, he explained, so being able to use a consistent amount of the flow using the same dynamics would produce power when it is needed the most as well as produce enough power in the winter. He said the projection from this curve is that the diesels can be turned off 24/7/365 in the communities of Dillingham, Aleknagik, Koliganek, Stuyahok, Ekwok, and Levelock. Other than during maintenance periods or outages, he added, diesel power production would be completely replaced by hydropower. He further pointed out that if the actual study confirms the current projections, there is the potential to also include Naknek, South Naknek, and King Salmon. He specified that the diesel displacement projection for the first subset of communities is 1.5 million gallons a year and if the second subset is able to be included it will be 2.9 million gallons a year. MR. HIMSCHOOT displayed slide 4 and described how the power plant facility would look on the river. He said 1,500 feet of penstock would divert a portion of the flow across 2,500 feet of river, so only 2,500 feet would be affected. He offered the cooperative's belief that this project can be done with very minimal impact to the viewshed and stated the studies will show how much impact there would be to the natural environment. He stated that while there is a considerable amount of data, modern geographical information system (GIS) data would help quite a bit in evaluation. The process requires that a considerable amount of studying be done to be able to get an operating license, he explained, and that is the point at which the cooperative is right now. He said the cooperative has gone as far as it can without getting in there and doing the physical studies that will actually define whether the project is feasible. 1:09:31 PM REPRESENTATIVE TUCK observed the statement on slide 4, "Affected water flow 3000 feet from the top of the falls to the bottom". He inquired whether this is referring to a vertical or diagonal drop of 3,000 feet. MR. HIMSCHOOT replied that until there is the actual design [the estimate is] 3,000 feet or 2,500 feet of longitudinal, not vertical. That is the actual river flow, he clarified, and the penstock, the pipeline that is put in there, is expected to be closer to 1,500 feet. 1:10:13 PM REPRESENTATIVE HOPKINS asked how many miles of transmission line would need to be built to get power to the different villages. MR. HIMSCHOOT responded it would be 130-150 [miles], depending on whether Naknek, South Naknek, and King Salmon are able to benefit from the project as well. 1:10:44 PM REPRESENTATIVE TUCK asked how many people would be covered by the project. MR. HIMSCHOOT answered it would be between 3,500 and 4,500 people, depending on the scope of the project. 1:11:05 PM REPRESENTATIVE HANNAN noted the bill just gives the Department of Natural Resources (DNR) and the Alaska Department of Fish and Game (ADF&G) the authority to amend the management plan for Wood-Tikchik State Park so that the appropriate permitting can go forward. She asked how much the project is going to cost and how long it will take to construct. MR. HIMSCHOOT replied that the Federal Energy Regulatory Commission (FERC) is the permitting authority for anything over five megawatts on an operating license. He stated this would just allow the cooperative to get in there and follow the FERC procedures and do the studies that will be necessary to that process. The estimate right now, he continued, is $120-$150 million to construct the project. He said much of that would be defined by the studies and if the studies show it is a viable project, then the design that follows the studies if the cooperative can acquire an operating permit. REPRESENTATIVE HANNAN inquired how long the FERC process is anticipated to take to get to a project that can be permitted. MR. HIMSCHOOT responded that the studies themselves are expected to take three years. He said the FERC process allows a three- year window, which the cooperative is one year into right now. As long as progress is being made, he continued, the FERC process also allows a two-year extension. He related that the cooperative expects it will need that extension and that sometime between now and four years from now the study will be completed. Once the studies are completed, he stated, there is roughly one year for engineering and design and then hopefully a two-year build process to bring this into production. So, he added, if everything goes according to plan it is about a six- year process from here. 1:13:38 PM MR. HIMSCHOOT related that the Nushagak Cooperative started this process in late 2017 and since then the cooperative has done more than 70 meetings and presentations to build the social license and support for the project that the cooperative knows it will need in the region. Even though Nushagak Cooperative is the entity that will be doing the studies here, he said, the cooperative understands fully that this is a regional impact and regional benefit and is doing everything it can to involve the region. He pointed out that the substitute language seen in the bill was part of that process. He explained that as the bill entered the legislative process, the cooperative found some local opposition to language in the bill. But, he continued, the cooperative was able to bring everybody together through a series of meetings and to come up with some additional language that continues to build that needed local support and does not materially affect the cooperative's ability to do the studies that are needed. MR. HIMSCHOOT addressed the [$20,000] fiscal note accompanying the bill. He stated the cooperative has agreed to reimburse DNR for its actual costs, estimated to be $20,000, to update the management plan should the bill pass. That has several benefits for the project as well as the bill, he added, which is why the cooperative engaged in that process. 1:15:21 PM CO-CHAIR TARR pointed out that before the committee is the Senate-passed version, CSSB 91(FIN). She noted that the House companion bill, HB 99, has the same original language as the original Senate bill. She explained the original bill version only added the Nuyakuk River Falls into existing statute as an area where this activity could take place. She said more specific restrictions would be added into statute by the amended version, [CSSB 91 (FIN), page 1, lines 6-12], which read: (e) The development and operation of a hydroelectric site at the Nuyakuk River Falls is a compatible use if the development and operation (1) does not include a dam that full spans a river; (2) maintains at least 70 percent of the daily upstream water flow of an affected river along the natural course of the river; and (3) after July 1, 2024, is licensed by the Federal Energy Regulatory Commission. 1:17:00 PM CO-CHAIR TARR opened public testimony on CSSB 91(FIN). 1:17:13 PM CORY WARNOCK, Senior Licensing and Regulatory Consultant, McMillen Jacobs Associates, testified he is representing the Nushagak Cooperative regarding the regulatory side of things. He related that in the past concern has been raised about this bill somehow expediting the overall licensing process associated with this project. Responding to Co-Chair Tarr, he provided more details related to the FERC regulatory process. He said it isn't a unique issue for park plans to be inconsistent with, or incompatible with, the use of a hydroelectric project. What is unique, he continued, is some of the concern that has been raised. But, he stated, the reality is that the FERC regulatory process is going to drive this overall licensing. All this bill will allow, he advised, is for the Nushagak Cooperative to actually conduct the requisite natural resource and engineering studies required to determine whether this project is actually feasible to construct and operate. The federal process will trump anything else, he added, and if in four or five years the natural resource and engineering studies show that this project can't be built because of fish impacts, or flow impacts, or other issues, Nushagak Cooperative has no intention of pushing it through, nor could it. Things are at the infancy of this overall federal process, he explained, and this is just the light switch to allow that process to continue. 1:19:26 PM CHRISTINE O'CONNOR, Executive Director, Alaska Telecom Association (ATA), stated her personal support for CSSB 91(FIN) and noted she is a former board member and a current customer of Nushagak Cooperative. Speaking as a long-time former resident of the region, she said the high cost of energy is a significant economic drag on quality of life and therefore this project is very exciting. MS. O'CONNOR testified that ATA supports the bill because it has a broadband component. She explained that, should the studies prove it feasible to go forward, the infrastructure that would eventually accompany the project would allow broadband fiber to be deployed, which would also be a benefit to the region. 1:20:48 PM CO-CHAIR TARR closed public testimony on CSSB 91(FIN) after ascertaining that no one else wished to testify. CO-CHAIR TARR requested Mr. Gease of the Division of Parks & Outdoor Recreation to confirm that DNR anticipates entering into a funding agreement with the project proponent under which DNR would collect approximately $20,000 in receipts from the proponent to cover costs incurred to revise the park management plan and department regulations using the division's existing receipt authority. 1:21:29 PM RICKY GEASE, Director, Division of Parks & Outdoor Recreation, Department of Natural Resources (DNR), confirmed Co-Chair Tarr's statement is correct and accurate. He said the division would follow that process moving forward. 1:21:51 PM REPRESENTATIVE HANNAN noted that the original version of the bill listed two lakes, but now [the bill as amended] only considers a project that would be on the Nuyakuk River Falls. She inquired whether Lake Elva and Grant Lake are both in Wood- Tikchik State Park. MR. GEASE offered his belief that hydro studies were done on those lakes in the past, but that they proved to be not feasible "and so this would be including this area to be a not incompatible use with park purposes." CO-CHAIR TARR stated, "They had previously tried and so the original bill was just going to add the new location so that they were all in that same section, but then I guess from the community input, have further revised that." REPRESENTATIVE HANNAN explained she is looking to see whether those lakes were removed because of engineering infeasibility or because of community response that a project was not wanted in those lakes. 1:22:55 PM MR. HIMSCHOOT responded that Nushagak Cooperative was granted funding in 2009 to study Lake Elva and Grant Lake and the studies were completed in 2012. There was potential for hydro production, he said, but the amount that could be produced for the cost of the project didn't allow the project to move forward as it wasn't responsible financially to move it forward. At that point, he continued, Nushagak Cooperative declared the two projects not feasible, returned the remainder of the grant funding to Alaska Energy Authority (AEA), and even though the lakes remain in the statutory language the study results are in the park management plan as far as feasibility is concerned. 1:24:16 PM CO-CHAIR LINCOLN moved to report CSSB 91(FIN) out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSSB 91(FIN) was reported out of the House Resources Standing Committee.