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." 9:55:48 AM Co-Chair Bishop relayed that it was the first hearing for HB 307. The committee would hear a bill introduction and sectional analysis and would take invited and public testimony. 9:56:21 AM REPRESENTATIVE GRIER HOPKINS, SPONSOR, relayed that HB 307 was a simple bill that would start a long-term comprehensive solution to a difficult problem that had been worked on in Fairbanks for a decade. He spoke from a Sponsor Statement (copy on file): In 2009, the U.S. Environmental Protection Agency (EPA) designated the more populated 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, and Interior Gas Utility (IGU) have been actively engaged in expanding the availability and use of natural gas through the implementation of the Interior Energy Project (IEP), a project designed to bring lower-cost energy to as many Interior residents and businesses as possible, as quickly as possible. A key to reducing PM2.5 air pollution in the long term is expanding the availability of affordable, clean burning natural gas. A critical component of the IEP is financing for the development of a unified public gas utility with competitive rates. SB 23 (chapter 26 SLA 13) 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. Among the financial tools granted to AIDEA for the IEP was 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 the FNSB. Authorization under SB 23 for issuing these bonds was originally scheduled to expire June 30, 2018. Through the passage of HB 119 (chapter 64 SLA 18) in 2018, 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. Representative Hopkins cited that there were letters of support from the Alaska Industrial Development and Export Authority (AIDEA), the City of Fairbanks, the Fairbanks Economic Development Corporation, and the Fairbanks NorthStar Borough (copy on file). Senator Wilson thought the Titan Facility was good to have in the borough and he would love to see its expansion. He asked about how the additional bonding capacity would be used. He referenced the capacity of the railroad and moving gas containers. Representative Hopkins understood that the funds would just be for the facility. For specific plans, he deferred to the Interior Gas Utility. 10:00:35 AM DAN BRITTON, INTERIOR GAS UTILITY, FAIRBANKS (via teleconference), stated that the current plans did not include any specific investment for rail infrastructure as the Interior Gas Utility (IGU) worked towards expansion of liquefaction. He continued that IGU continued to look for opportunities to do so, but the bonding authorization had not identified a specific investment in rail. Co-Chair Bishop asked if Mr. Britton had anything to add. Mr. Britton noted that in 2022, it was estimated that an additional 600 customers would be converting to natural gas. The funds would be used for expanding availability of gas, through the distribution system expansion and installation of new services as customers were interested. Co-Chair Bishop referenced the anticipated 600-unit expansion and asked if it was above or below estimates. Mr. Britton stated the number was slightly above the pro- forma for the current year of approximately 457 customers. He continued that IGU had reached over 300 approved-for- construction service lines already and it was well ahead of the previous years progress. 10:02:29 AM Co-Chair Bishop OPENED public testimony. 10:02:40 AM Co-Chair Bishop CLOSED public testimony. Co-Chair Bishop relayed that the amendment deadline was Friday, May 6 at 5 oclock p.m. HB 307 was HEARD and HELD in committee for further consideration.