SB 193-EXTEND EXEMPTION FOR SMALL POWER PLANTS  1:53:28 PM CO-CHAIR MICCICHE announced the consideration of SB 193. 1:53:38 PM JESSE LOGAN, Chief of Staff, Senator McGuire, Alaska State Legislature, Juneau, Alaska, Provided an overview of SB 193 as follows: SB 193 seeks to extend the regulatory exemption for power plants that utilize renewable resources under 65 megawatts. The original exemption "sunsetted" January 1 and we are looking to extend that to January 1, 2025. The electrical demand of the relatively small and dispersed population of Alaska is generally served by regulated utilities. RCA is charged with clarifying utilities, regulating rates, resolving disputes, and protecting customers; however, Alaska has also seen an increase in private sector investment in the development of renewable energy systems across the state and I think the last bill helps exemplify that. Previously, Alaska has exempted small power producers from regulations if they sell power on a wholesale basis to regulated utilities who then distribute power to local customers. The system of exemption lowers the barrier cost of entry and reduces the regulatory overreach and regulatory cost borne by the state and it helps small-power producers that develop brand-new financing for renewable systems. This exemption expired on January 1. Regulation can increase the cost of a project and pose barriers to investment, but also increases the cost of government through the RCA. SB 193 continues to put Alaska on the middle-ground between a thoroughly deregulated market and a highly regulated market that we have currently in Alaska for most utilities. This arrangement maintains RCA oversight on the Power Purchasing Agreements (PPA) and thereby continues to provide a layer of protection for rate payers. One of the most valuable projects to come to fruition from the previous exemption is CIRI's Fire Island Wind Project just outside of Anchorage. The negotiated offtake agreement and private-risk investment dollars have now provided long-term flat priced renewable wind power to Chugach Electric Association for the last 2 years and have another 22 years to go on their PPA. This bill helps to maintain an open-door to Alaska's electrical market and encourages private sector investment in renewable energy and energy infrastructure across the state in general, which during this time of fiscal downturn is probably much needed. It is the belief of the sponsor that it is important to extend the sunset so that other independent projects can also have regulatory certainty and continue to develop Alaska's energy potential and at no cost to the state. CO-CHAIR BISHOP asked what fits under the definition of renewable energy under SB 193. MR. LOGAN answered that in statute there was a full list that included: wind power, solar, geothermal, hydro-electric. He assumed that heat-pump transfer would be listed, but he did not know the entire list. CO-CHAIR BISHOP asked if the federal government had decided that hydropower was renewable. MR. LOGAN revealed that U.S. Senator Murkowski was working on the renewable listing for hydropower. 1:57:26 PM DUFF MITCHELL, Executive Director, Alaska Independent Power Producers Association (AIPPA), Juneau Hydropower, Inc., Juneau, Alaska, detailed that AIPPA represents a wide range of independent power producers that could be called non-utilities. He set forth that SB 193 extends the exemption of small power producers to the federal government's lower level and removes some state-overreach in RCA regulations. He opined that regulation was costly in terms of time, money, and project delays if the exemption was not extended. He summarized that SB 193 allows independent power producers to continue the exemption at the federal standard. He added that SB 193 would keep the "open for business" sign and encourage private capital in Alaska's renewable energy. He noted that SB 193 had no fiscal impact to the state, avoided added work for the RCA, and lessened the barrier for smaller independent power producers to enter the market. SENATOR EGAN asked Mr. Mitchell to address the Alaska Power Association's claim that the 65 megawatt size restriction within the exemption was too high. MR. MITCHELL revealed that the federal size restriction was actually 80 megawatts. He remarked that Alaska's 65 megawatt size restriction was a unique case where the federal regulation was less that the state's regulation. He summarized that SB 193 simply asks that the 65 megawatt restriction match the previous bill. CO-CHAIR MICCICHE opened public testimony. 2:00:49 PM MIKE CRAFT, President/CEO, Delta Wind Farm, Delta Junction, Alaska, stated that he supported the extension proposed in SB 193. He asserted that developing renewable energy projects was difficult and adding the uncertainty in obtaining a certificate of public convenience or getting permission of a utility or anybody else in Alaska would be a barrier. He revealed that being exempt allowed the Delta Wind Farm to bring $54 million worth of development capital to the Delta Junction area in the upcoming 2 years. He remarked that the federal exemption was 80 megawatts and the majority of renewable energy projects will be well under 65 megawatts. CO-CHAIR MICCICHE asked Commissioner Wilson from the RCA if SB 193 had any potential negative impacts to ratepayers in the long run. JAN WILSON, Commissioner, Regulatory Commission of Alaska (RCA), Anchorage, Alaska, replied that RCA had no position on SB 193. She added that a public meeting and vote by the commission would be required for the RCA to take an official position on SB 193. CO-CHAIR MICCICHE asked in what ways ratepayers might be negatively affected by the bill's extension for small power plants. MS. WILSON answered that her personal position as a commissioner was that ratepayers would not be affected. She asserted that her personal position was not the position of the RCA. CO-CHAIR MICCICHE asked her to confirm that the RCA could not provide the committee with advice on key issues regarding SB 193. MS. WILSON specified that the RCA would require an inquiry to the RCA's chairman in order to have a public meeting for the commission to discuss the bill and take a position. CO-CHAIR MICCICHE asked Ms. Wilson to suggest a state agency that might be more helpful to the committee. MS. WILSON replied that the RCA has five commissioners with differing opinions. She reiterated that the RCA has not discussed SB 193 in order to provide a position. She stated that the RCA would be happy to address SB 193 and get back to the committee. CO-CHAIR MICCICHE announced that SB 193 would be held in committee. He set forth that he personally supported both SB 192 and SB 193. He asserted that without projects that move the state forward, the state begins to die. He addressed SB 192 and recommended that testimony should also stress why the projects are important rather than strictly focusing on jobs. He specified that explaining why capital infrastructure was so important was a good way to reach out and communicate with Alaskans.