SB 289-HOME ENERGY CONSERVATION  1:32:56 PM CHAIR ELLIS announced SB 289 to be up for consideration. 1:34:02 PM DR. JOHN WEISE, Staff to Senator Hoffman, sponsor of SB 289, explained that Alaska has roughly 670,000 people who live in 260,000 - 280,000 homes; one third of them have an income under $30,000 and it's estimated that 45,000 of those households are eligible for low income weatherization through Alaska Housing Finance Corporation (AHFC). He said in developing the bill they looked for something responsive to Alaskans impacted by high energy costs. The proposal is a short-term fix that will update and expand the home energy efficiency and weatherization program and the rebate program in AHFC. Targeted improvements include insulation and improved heater efficiencies including water heaters. Eligibility for the weatherization program is now based on 60 percent median income; the proposal changes that to 100 percent. Low income Alaskans will receive priority, but going to 100 percent will help even more Alaskans. 1:37:43 PM DR. WEISE said in past years AHFC has spent $4.8 million/year ($1.8 million federal and $3 million from AHFC) to help 600 households or 1,700 people. With $48 million they can help a little over 4,000 households and almost 12,000 people. A survey showed that 45,000 households would meet the 60 percent median income requirements and the sponsor felt that wasn't enough. SB 289 recommends spending $200 million to expand the program to 100 percent median income which is projected to help 17,000 households and almost 50,000 people. 1:38:32 PM SENATOR STEVENS asked him how 60 percent of median income translates into annual income. DR. WEISE replied according to AHFC's figures the 60 percent median goes from $23,887 for a family of one up to $71,660 for a family of 14. At 100 percent it goes from $39,800 up to $119,400. 1:39:23 PM SENATOR HOFFMAN asked about families of 2 and 4. DR. WEISE answered at 60 percent a family of 2 would be a little over $31,000 and at 100 percent median at $52,000. A family of four is at almost $46,000 at 60 percent; and a little over $76,000 for 100 percent. 1:39:50 PM He said the second part of the proposal funds a home energy rating rebate program which is not income dependent. Any Alaskan could apply for it and would have to first be accepted by AHFC, then do an as-is and a post-energy rating on the home using an AHFC computer program. A one star rating would equal a $2,500 rebate; each additional step would earn a $500 rebate up to a maximum of $5,000. AHFC would expect a 30 percent reduction in home energy costs. 1:41:40 PM He said the cost for this portion is $100 million, but investment would have to be made by the homeowners of $175 - $200 million. This is a great relief program until the housing market recovers. 1:42:50 PM SENATOR STEVENS asked the rationale for cutting it off where they did because people earning $50,000 are barely able to make ends meet. The cost of living in some communities like Dutch Harbor is more than Anchorage for instance. 1:43:55 PM SENATOR HOFFMAN answered he did not feel comfortable going over 100 percent and realized further discussions were needed, but he didn't have any conclusions. SENATOR BUNDE asked why he thought this would be a temporary program. SENATOR HOFFMAN answered they are adding on to an existing program because he wanted to help as many Alaskans as possible. The program could be reevaluated in a few years. 1:47:04 PM DR. WEISE commented that the bill cleans up language in existing statute that removes reference to two programs, the Craftsman Program and the Home Energy Program, that are no longer in existence or have been privatized. SENATOR HOFFMAN clarified that both of these programs are existing, but have been modified in SB 289 as presented by Dr. Weise. 1:47:54 PM DAN FAUSKE, CEO, Alaska Housing Finance Corporation (AHFC), said the rebate program had fallen off lately because of funding, but he still offers interest rate reductions for energy efficiency, which AHFC funds on a limited basis with arbitrage proceeds for its bonding capability, but it is a finite amount of money. MR. FAUSKE said people could make improvements to their homes that they won't have to make in the near future - simple things like re-insulating an attic and caulking windows and door seals. The energy savings used to be recouped in 6 to 7 years, but now with oil being $100/barrel, it's 1.5 - 2 years. He said there is a slowdown from the house building peaks of a few years ago, and while he didn't view it as a downturn, this is work that can be taken up by those homebuilders as well as the homeowner himself. He said the legislature and AHFC developed the rating software years ago, and it gets updated on a regular basis; it's known throughout the state and is easily used and quite accurate. 1:52:35 PM BRIAN BUTCHER, Public Affairs Director, AHFC, explained that an energy rater rates the house (one to five stars) and lists what needs to be done. The more that gets done, the more the rebate. The rater would come back in and rate it again. Home construction has slowed and those folks are excited about getting involved in this program. 1:53:40 PM MR. FAUSKE said he had seen numerous cases where a couple thousand dollar investment generates $300 to $500/mo. in savings; quality of life improves while reducing the demand for energy. He emphasized that this is an ongoing program so they would not be reinventing the wheel. 1:55:33 PM SENATOR HOFFMAN asked how long ago the graduated $2,500 - $5,000 rates for the rebate program were set because construction costs have risen substantially in the last few years. MR. BUTCHER replied those are estimates of what they thought reasonable costs would be right now. SENATOR BUNDE asked if this program applies to existing homes or to homes that will be built. MR. BUTCHER replied that it would apply to new homes, but most new homes are being built with a 4 and 5 star energy rating and this would probably apply mostly to older homes. MR. FAUSKE added that combining this program with AHFC's existing program will deliver a double bang for their bucks. 1:57:53 PM BOB BREAN, Director, Research and Rural Development, AHFC supported SB 289. He echoed comments made by Mr. Fauske and Mr. Butcher. These kinds of programs have a great payback. The opportunities for savings are greater in retrofitting existing houses, but they can make energy efficiency recommendations for new housing as well. SCOTT WATERMAN, Energy Specialist II, AHFC, supported what previous comments on SB 289. MR. FAUSKE added that the AHFC's existing program can't purchase mortgages on homes that don't meet a certain standard by state law. 1:59:55 PM SENATOR BUNDE said the existing program was aimed at low income people, but this expands it to middle income people. MR. FAUSKE agreed that it is an all-inclusive program that was designed to reach out across the state, and it could be changed. He said $76,000/year sounds like a lot, but it depends on where you live. Some people in Fairbanks pay a couple thousand dollars a month for energy. This proposal is targeted specifically to affect the energy efficiency of homes, not to add solariums. SENATOR STEVENS said he was thinking about a worker and spouse both working in a cannery in Kodiak and $52,000 could be their annual income. They would be hard pressed to pay for weatherization themselves. MR. FAUSKE agreed and said they should have frequent targeted reports. "It's our goal, if we are given the responsibility and privilege to do this, to make it work and do it right." MR. BUTCHER said they are already talking with legislators about raising the current 60 percent, because it is clear that people in the over 60 percent category also don't have the means. The priority is and will continue to always be the lowest income and work up from there. 2:05:02 PM PAUL KENDALL, representing himself, Anchorage, opposed SB 289. He said because it continues to fund the fossil fuel distribution network, it is a distraction to what needs to be done. He said 1 megawatt of wind covers 250-300 homes and taking that original $500 million and putting it into a wind farm would generate electricity for 75,000 homes and would last over a 25- year period. This would not only move the technology forward, but it would begin to replace the gas that could be sold on the open market, which would generate more revenue for the state. MR. KENDALL said that people in Las Vegas did a lot of energy conservation, but it was for nothing because programs like this come along and enable them to continue using that energy. He advised "You have to find a formula that says we all are accountable to each other for reasonable prices of energy and reasonable availability." That would exclude distribution and maintenance of lines. He said conservation is a big mistake and that big companies are already investing in alternative technologies. He called it a habit and a form of economic subjugation. CHAIR ELLIS said SB 289 would be held for another hearing.