CS FOR HOUSE BILL NO. 297(FIN) "An Act recognizing the Alaska Housing Finance Corporation as the authorizing agency to approve home energy rating systems for the state; and providing for an effective date." 9:10:15 AM Senator Bishop MOVED to ADOPT the proposed committee substitute for HB 279, Work Draft 28-LS1307\C (Nauman, 4/14/14) as working document. There being NO OBJECTION, it was so ordered. 9:10:49 AM DIRK CRAFT, STAFF, REPRESENTATIVE LANCE PRUITT, presented the changes in the new CS found in Section 2 and brought to the sponsor by Senator Stedman. He reported that the changes added approval language from the Power Project Loan Fund for the Alaska Energy Authority (AEA) to approve loans for the Blue Lake Hydroelectric Project; he added that the sponsor was in support of the changes. Senator Dunleavy inquired about the intent of the bill. Mr. Craft replied that the original purpose of HB 297 was to recognize the Alaska Housing Finance Corporation (AHFC) as the state's Home Energy Rating System (HERS) authorizing agency for the purpose of approving HERS use in Alaska. The bill would help to protect the investment the state has made by AHFC in developing its own rating system, AkWarm, as well as the over $560 million Alaskans invested in the highly successful home energy rebate and weatherization programs. He reported that AkWarm's system and software had been in use and continuously updated since 1996, specifically designed for Alaska and recognized by the Alaska building, real estate, and home loan industries. It was directly tied to AHFC programs such as the home energy rebate and weatherization programs, interest rate reductions for home loans, and Alaska building energy efficiency standards. Senator Dunleavy noted the CS having made an addition to a loan program and requested an explanation of that section. Mr. Craft deferred the question to Senator Stedman. Vice-Chair Fairclough asked if it was a fair assessment that the title of the bill allowed for a "hitchhiker" to be easily attached to it as it came before a committee. Mr. Craft responded in the affirmative. Vice-Chair Fairclough noted that two bills had been rolled into one. 9:13:11 AM Senator Dunleavy inquired how the addition to the bill affected the overall fund and the ability to dedicate or expend funds to the weatherization program. Mr. Craft did not think the new addition would have an impact. SENATOR BERT STEDMAN, explained that there was a hydroelectric expansion project in progress in Sitka in which a dam face was being raised 83 feet. The dam was originally constructed in the late 1950s to facilitate the construction and the development of a pulp mill, which was no longer in existence. He explained that the electrical demands of the community of Sitka were such that the dam needed to be raised to the design height to bank additional water. The penstock was being redone, a new powerhouse was being built, and the turbines were being updated. Things were more expensive than anticipated and the community needed an additional $40 million to complete the project. The state historically had discussed contributing a 50 percent match for hydro projects. The state had about $49.5 million invested in the project at present. The community was required to supply the remainder of the funding, approximately $40 million. The legislature was unable to make an appropriation of $18.6 million to match the funding of 50 percent on the hydro project due to the fiscal shape of the state. Sitka was looking at other alternatives, one of which was to go to AEA to borrow the funds, if available. Sitka tried to put a package together; however, there was not the ability to do a cash infusion for the appropriation. By attaching language to the bill before the committee, it gave AEA authorization to lend the funds, however, there were no funds to lend. He reported the existence of another project on the southern end of Southeast that might not go forward due to ongoing discussions with AEA. The community was in a peculiar position, as legislators are aware that Fairbanks was at $0.23 a kilowatt hour and most community members heated with oil. Sitka was not far behind Fairbanks in terms of rates. The landing authorization, if executed, would help with the kilowatt charges to the customer and residents of the community. Senator Stedman had hoped the project would be a part of the capital budget, with an appropriation. However, that did not appear to be happening. 9:17:37 AM Vice-Chair Fairclough noted that Senator Hoffman and Co- Chair Kelly had joined the committee in progress. Senator Olson noted that the goal was to reduce the cost of electricity in Sitka to the upper teens per kilowatt hour and inquired what the rates were currently. Senator Stedman replied that currently the rate per kilowatt hour (kWh) was $0.12. He anticipated a rate increase to $0.16 or $0.17 per kWh. The community was working on keeping the lower kilowatt consumption users' rates down and balancing efforts with the commercial sector. Senator Olson noted that the project had a local contribution to it and inquired if the community of Sitka was in favor of the project. Senator Stedman responded that the community was in full support and that the project was currently under construction. He opined that the community was in a position that it had to expand its hydro power. It did not have any other reasonable alternatives. He indicated that the project was approximately two-thirds completed. Vice-Chair Fairclough CLOSED public testimony. 9:20:39 AM Vice-Chair Fairclough discussed a forthcoming zero fiscal note from AEA. Senator Bishop MOVED to REPORT SCS CSHB 297(FIN), version C, out of committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. SCS CSHB 297(FIN) was REPORTED out of committee with "no recommendation" and with a previously published zero fiscal note: FN1(REV) and forthcoming zero fiscal note from the Alaska Energy Authority. 9:21:51 AM AT EASE 9:22:42 AM RECONVENED