SB 96-ESTABLISHING A RENEWABLE ENERGY FUND  4:36:34 PM CHAIR HUGGINS announced SB 96 to be up for consideration. SENATOR ELLIS, sponsor of SB 96, said renewable energy is a very mainstream issue and Alaska can be a leader in the country by moving forward on it now. All our congressional leaders have mentioned it as a priority and there is recognition across the political spectrum about the value and wisdom of developing renewable energy resources in the State of Alaska so it is timely. There is money to be saved and money to be made by selling the power and the technology. Alaska has excellent sources for renewable energy - such as wind, geothermal, solar, biomass and hydropower to name a few - and the intelligence to develop them. He said SB 96 would establish a renewable energy fund to be administered by the Alaska Energy Authority (AEA) that would offer both grants and loans to communities to develop renewable and cost-effective sources of energy around the state. AEA would take advice from an advisory committee with members appointed by the governor from various stakeholder groups. SENATOR ELLIS said SB 96 is a logical progression toward developing Alaska's inexhaustible energy resources and it means looking ahead to the next 100 years. He said there is amazing support for this building across the state and the list grows daily. To name a few - Mat-Su Borough, Southeast Alaska Municipal Conference, Alaska Municipal League, Chugach Electric, Golden Valley Electric Association, Alaska State Chamber, Alaska Federation of Natives and Municipal Light and Power. 4:40:30 PM PETER CRIMP, Program Manager, Alternative Energy and Energy Efficiency, Alaska Energy Authority, said AEA supported efforts to further develop the state's renewable energy resources. He said the market for renewable energy is increasing due to the increase in oil and gas prices. Hydropower has been providing 25 percent of the state's energy for a long time and there are many potential hydro projects throughout Southeast, Railbelt and rural Alaska that look promising. They range in size from 200 kilo watt project in Chignik Lagoon to a 430 mega watt project in the Chakachamna project. He said wind energy has been shown to be cost effective in 30 to 45 locations in rural Alaska. Kodiak is developing an 8 mega watt wind facility, Golden Valley has been working toward developing a large wind farm near Healy, and CIRI with a number of Railbelt utilities is moving forward on Fire Island. As for geothermal, Chena Hot Springs in Fairbanks has shown that it is looking pretty good. That project is displacing over 100,000 gallons of diesel per year. The Valley is looking at a potential project at Mt. Spur of 25 to 100 mega watts. 4:42:53 PM MR. CRIMP said that wood is abundant throughout the Interior and areas where there isn't wind and is being used for small-scale thermal applications like heating schools and community facilities. Small-scale modular bio-power technology and innovative harvesting techniques are being looking at also as well as cellulosic ethanol development in Southeast Alaska by Sealaska. The economics of that are still questionable, but the technology is under development. He said that AEA and its utility partners are continuing to work in other areas such as fish oil bio-diesel and tidal industry using the flow of the rivers in the Interior and elsewhere to generate power. 4:47:35 PM CHAIR HUGGINS asked if there was a market for birch bark pellets. MR. CRIMP replied that AEA and AIDEA have considered financing pellet manufacturing facilities both as an industrial-grade pellet that could be used to produce power in a conventional power plant as well as a feeding a residential market. Just about all pellets from all species burn quite cleanly and have been widely used throughout the Lower 48. CHAIR HUGGINS asked why he thought the Chakachamna project would be any different than the Susitna hydro project. MR. CRIMP replied both projects are large with potential impacts that would need to be studied before they move forward. He didn't want to portray the Chakachamna project as a go. It has many hurdles in terms of power market, fish migration, and economics that would have to be leapt over and the Susitna project has many of the same hurdles. 4:48:34 PM CHAIR HUGGINS asked how he got into this business. MR. CRIMP said he had worked with the AEA for 14 years and has moved up through the ranks. He is a forester and a planner by background and got hired to manage the state's biomass energy program. His duties have expanded onto the economic analysis side and overall project planning. 4:49:22 PM SARAH FISHER-GOAD, Deputy Director, Alaska Energy Authority, said that Mr. Crimp did a good job on an overview of renewable energy projects. She said the companion bill is HB 152 and she pointed out that based on AEA's recommendation the House changed the bill from being a combination grants and loan fund to just a grant fund. This is because the loan provision was actually a duplication of an existing program in the Power Projects Fund. 4:51:21 PM SENATOR STEVENS asked her to explain language on page 4 of SB 96 where it says "must link a renewable energy project or natural gas project to the electric grid." MS. FISHER replied that language had changed in the House version to "transmission or distribution infrastructure" and doesn't refer to the electric grid at all. 4:52:47 PM MITCH ERICKSON, Executive Director, Nome Chamber of Commerce, supported SB 96. He said the Nome Chamber held a two-day energy summit to look for alternatives to diesel in both community power generation and home heating. It was spurred by the 20 percent annual increases in diesel fuel prices over the past several years. Very few people receive pay raises to match this cost of living and some locals see their winter heating and utility bill is higher than their mortgage payment. Their goal is to wean their community from diesel as a primary source of energy. Experts addressed wind, hydrogen, solar, geothermal, and nuclear as well as the funding and financing available. He said members of AEA participated and that the City of Nome is now conducting an energy study along with the Department of Energy and the AEA to see what individuals and businesses can do to lower their energy costs. It included better insulation and using wind and solar as a secondary source of energy. One point that came out of the energy summit was the need for a fund such as SB 96. He said the Chamber has not been able to find an expert to work with them on these issues and it is trying to develop a relationship with the University of Minnesota solar energy lab for its technical expertise. 4:55:52 PM NELS ANDERSON, Jr., Chair, Southwest Municipal Conference Energy Committee, Dillingham, said he is also a member of the Bristol Bay Alternative Energy Task Force. He said SB 96 is needed because their villages are almost totally dependent on diesel for their electricity. Many pay 50 to 75 cents per kilo watt hour for their electricity; most individuals spend any available money on lighting and heating their homes. He said "SB 96 needs to pass as soon as possible" and they believe the AEA can do an excellent job in implementing the renewable energy fund. SB 96 is the key to unlocking all of Alaska's remarkable renewable energy resources. MERRA KOHLER, President and CEO, Alaska Village Electric Cooperative (AVEC), supported SB 96. She said AVEC is a non- profit electric utility that serves 52 villages primarily in northwest and western Alaska. Their 21,000 residents represent almost half of Alaska's village population. They operate 47 power plants, almost all of them are exclusively diesel. Since 2000 they have made tentative efforts to add a few renewables - all wind. They now have supplemental wind generation in four villages and the benefits of those four flow to another two communities through interties. One more intertie is being built. Two more wind projects are being planned for this year and another two for next year. She said these projects have been almost exclusively funded with federal and local dollars; very little or no state dollars are involved in any of those projects. Utility generation in Alaska is very expensive. They can only use small wind turbines and their construction costs are staggering due to the arctic and sub-arctic conditions and that is why development of these projects is very slow. Other technologies are only just emerging. Alaska needs a renewable energy bill to support the development of renewable power sources in its communities. AVEC supported both versions of this bill. 5:00:26 PM SENATOR WAGONER asked if she could relate any reduction in diesel electric generation because of using wind generation. MS. KOHLER answered that their two most recent projects that became functional last year in Kasigluk and Toksook Bay are both excellent wind regimes and expectations have been exceeded during the high wind months of this last winter. In January they displaced more than 30 percent of their diesel fuel in both communities. The cost of fuel in those communities is about $2.50/gallon. CHAIR HUGGINS said members had other meetings to attend and adjourned the meeting at 5:02:48 PM.