SENATE BILL NO. 202 "An Act relating to the renewable energy grant fund and recommendation program; and providing for an effective date." 9:54:50 AM Co-Chair Bishop relayed that it was the first hearing of SB 202. It was the committee's intention to hear a bill introduction and a Sectional Analysis, and to take public testimony. 9:55:09 AM SENATOR JOSH REVAK, SPONSOR, read from a Sponsor Statement (copy on file): SB 202 extends the authorization of the Renewable Energy Grant Fund and Recommendation Program setting a new sunset date of June 30, 2033. The Renewable Energy Fund (REF) program was originally established in 2008 with the passage of House Bill 152 and later received a ten-year extension in 2012, in both cases receiving a unanimous vote of the legislature. The REF is managed by the Alaska Energy Authority in coordination with a nine-member Renewable Energy Fund Advisory Committee. Senator Revak explained that the program had an open application process and was currently in Round 14. Each submission was considered by its economic and technical feasibility. The Alaska Energy Authority's (AEA) recommendations were sent to the advisory committee, and its final recommendations were then sent to the legislature for approval. He noted that 39 applications were received in the last round. He continued to read from the Sponsor Statement: Since its inception, the Renewable Energy Fund has distributed over $275 million dollars in grant funds for qualifying and competitively selected renewable energy projects across the state. Senator Revak detailed that $34 million had been directed at projects on the road belt, and $248 million had been directed to projects in rural Alaska. He continued that SB 202 amended the 2008 session law as amended in 2012 to extend the sunset date to June 30, 2033, and also set an immediate effective date. The bill had a $1.4 million fiscal note for maintenance of the fund, financial services, and oversight of existing and new grants. The amount reflected what was budgeted for in FY 23. He continued to address the Sponsor Statement: These REF grants have been supplemented by both federal and local funding to the tune of hundreds of millions of dollars. These combined funds help to stabilize and reduce energy costs for consumers by supporting renewable energy projects in both urban and rural communities across Alaska. Senator Revak emphasized that as energy prices climbed, he thought it was important for Alaska to take advantage of all of its available sources of energy and heat, especially in the state's most vulnerable communities. He summarized that the Renewable Energy Grant Fund was an important tool which supported Alaskan communities to meet their energy needs. Senator Revak explained that there was invited testimony available to answer questions, and there was a presentation that had been distributed to members (copy on file). He noted that because of the REF Program, there had been 30 million gallons of diesel saved since 2008. Senator Wilson shared that he was generally supportive of the program and its process for selecting projects. He included that he was currently a member of the Renewable Energy Advisory Committee along with Senator von Imhof. 9:58:51 AM Co-Chair Bishop OPENED public testimony. 9:59:01 AM JERRY MEDINA, INSIDE PASSAGE ELECTRIC COOPERATIVE, JUNEAU (via teleconference), testified in support of the bill. He shared that the Inside Passage Electric Cooperative (IPEC) had received two construction grants from REF. In 2015, IPEC completed a hydroelectric project at Gartina Falls outside of Hoonah. The REF grant amount was $6,694,000, and the remainder was financed with a low-interest loan of $3 million. The project was completed in August 2015. He cited the following figures since the project came online: 542,711 gallons of diesel fuel saved, $1,297,979 of diesel fuel costs replaced, and 7,910,266 kilowatt hours of hydro- generation. Mr. Medina informed that IPEC had also received a grant from REF in the amount $3,920,000, as well as a $3 million USDA Rural Utilities Service grant for construction of the Gunnuk Creek hydro project in Kake. Additionally, IPEC secured a low-interest loan of $1,840,000 for a total project cost of $8,760,000. The project was completed in October 2020. He cited the following figures since the project came online: 70,833 gallons of diesel fuel saved, $165,350 of diesel fuel costs replaced, and 1,003,122 kilowatt hours of hydro-generation. He detailed that there had been several days in Kake with 100 percent hydro- generation, where diesel generators had been off. Mr. Medina continued his testimony. He cited the following figures resulting from a combination of the projects at Gartina Falls and Gunnuk Creek: 613,544 gallons of diesel fuel saved, resulting in $1,463,329 in savings to customers. He summarized that REF had been instrumental in completing two successful clean renewable energy projects for IPEC customers. He shared that IPEC had "skin in the game" for both projects. He emphasized that the success of the projects would not have been possible without REF. 10:01:37 AM Co-Chair Stedman thought there were several ways of measuring the REF Program, one of which was fuel savings. He wanted to know if the meter rate for the communities of Kake and Hoonah had gone down or up since the hydro projects had been operational. Mr. Medina explained that IPEC had the same rate for all four of its service areas. He discussed the fuel savings, which was reflected in the Cost of Power Adjustment (COPA), which was a fuel surcharge that was currently just over .15 cents per kilowatt hour. He explained that as fuel prices fluctuated, the COPA fluctuated in the same direction. He recalled that the latest invoice from the fuel barge reflected $4.22 per gallon after recently being at a price of just over $3 per gallon. He hoped that there would be a significantly wet year to generate as much hydropower as possible. Co-Chair Stedman understood that the meter rate in Kake had gone up after the hydro-project. Mr. Medina thought Co-Chair Stedman had incorrect information. Co-Chair Stedman shared that his information came from community leaders in Kake, including from city hall. He asked Mr. Medina to get back to the committee with more detailed information regarding historical meter rates charged to citizens. He shared concerns regarding losing sight of the goal of lowered rates as the state worked towards renewable energy and moving away from the use of diesel. Mr. Medina reiterated that all customers paid the same amount. He thought all of IPEC's customers benefitted from the hydro projects. Co-Chair Bishop asked Mr. Medina to provide the committee with the information requested by Co-Chair Stedman. 10:04:42 AM MICHAEL ROVITO, DEPUTY DIRECTOR, ALASKA POWER ASSOCIATION, ANCHORAGE (via teleconference), spoke in support of the bill. He explained that the Alaska Power Association (APA) was a statewide trade association for electric utilities in Alaska. He relayed that APA was in full support of the bill and of extending the REF. He strongly urged passage of the bill and thanked the sponsor. He asserted that many members had received crucial funding from REF since its inception. He continued that the funds had supported the addition of renewable energy projects that had lowered reliance on diesel fuel, stabilized rates, and decreased the carbon footprint of electric generation. Mr. Rovito continued his testimony. He cited 244 REF grants totaling $275 million, and over 95 operating projects that had been built using the funds to save more than 30 million gallons of diesel each year. He asserted that REF was an extremely valuable program that had proven itself. He referenced numerous projects under consideration for future rounds of grant funding through REF. 10:06:35 AM JOMO STEWART, PRESIDENT AND CEO, FAIRBANKS ECONOMIC DEVELOPMENT CORPORATION, FAIRBANKS (via teleconference), testified in support of the bill. He asserted that the Fairbanks Economic Development Corporation (FEDC) had long supported the REF Program and any state efforts to help communities to diversity their energy base and drive down costs. He mentioned that much of FEDC's work pertained to energy and the attempt to diversify energy. He though a nice complement to the REF Program would be to identify funding to help reactivate the Home Energy Rebate Program that had been operated by the Alaska Housing Finance Corporation (AHFC). Co-Chair Bishop thanked Mr. Stewart and affirmed that the committee was looking into the topic of the Home Energy Rebate Program as of two weeks previously. 10:08:04 AM Co-Chair Bishop CLOSED public testimony. 10:08:06 AM AT EASE 10:09:17 AM RECONVENED Senator Wielechowski asked if Mr. Thayer had a sense of how many successful REF projects there were as compared to the number of abandoned projects. CURTIS THAYER, EXECUTIVE DIRECTOR, ALASKA ENERGY AUTHORITY, ANCHORAGE (via teleconference), cited that there were 99 operational projects, with 38 in development and 240 total. There had been a little less than 100 projects that had not gone forward, part of which was due to the economics of the projects or future funding for the costs of the projects. He added that there were a few projects currently seeking additional funding, primarily through the federal infrastructure bill or other means. He discussed feasibility work, which had to be complete in order to move projects forward. He noted that early in the program itself there was more funding available, while currently there was the ongoing challenge of a $1 million funding cap. Senator Wielechowski inquired about the 100 projects that had not gone forward and asked what percentage had been abandoned versus projects still in development. Mr. Thayer did not have the information at hand. He offered to send the committee a complete list of projects and project status. Senator Wielechowski expressed his continued support of the REF Program and thought it had been very successful. He wanted to get a sense of if there was something to be improved if the state had invested in projects that had not gone forward. Senator Wielechowski asked if the REF funds were sweepable. Mr. Thayer stated that there were usually no funds left to sweep because projects were already encumbered by the end of the fiscal year. He noted that the $4.75 million for Round 13 (completed in August) had been encumbered. Currently AEA was on Round 14 and had approximately $15 million if the legislature approved the funding, with 39 applications for a total request of $19.2 million in REF funds. He identified that there were some projects that would be disqualified based on economics or technical viability. The funds had not been swept in the past because from the time AEA moved a project forward and received legislative approval, the funding was encumbered within a few months. 10:12:44 AM Senator Olson asked if the funds were sweepable if there were funds left in the account. Mr. Thayer thought the funds were sweepable. He noted that Round 10, 11, and 12 had no funding by the legislature for the program. The previous year REF had received $4.7 million, and currently there was a request for $15 million. He reiterated that there had been no money in the fund to sweep. Senator Hoffman thought the REF was a great program. He thought that the largest benefit was that grantees funded for hydro or wind power receive stabilized rates. He thought people using diesel would have seen rates double in the last few years. He thought energy costs continued to be the largest expenditure for individuals in rural Alaska, whether on heating, electricity, or fuel. He was greatly supportive of the program because it stabilized individual rates and the lives of those that benefited were greatly improved. Senator Revak thanked the committee for hearing the bill. Co-Chair Bishop set the bill aside. SB 202 was HEARD and HELD in committee for further consideration. Co-Chair Bishop discussed the agenda for the afternoon.