SB 246-SUSITNA HYDRO WORKING GROUP; REPORT  4:53:02 PM CHAIR HUGGINS announced SB 246 to be up for consideration. 4:54:47 PM SENATOR JOE THOMAS, Alaska State Legislature, sponsor of SB 246, told members this bill establishes a working group to analyze the potential of a hydroelectric power project on the Susitna River. It directs the governor to designate a lead agency and establish a working group to consult with organizations and departments to analyze the hydroelectric potential. The agency will review and update past studies, bringing the current feasibility, demand, and cost analyses back to the legislature at a designated date. SENATOR THOMAS noted in recent years Alaskans have seen energy costs skyrocket. High costs and uncertainty make it difficult for Alaskans to make ends meet and also adversely affect economic growth. The energy from a hydroelectric facility is predictable, stable, clean, and low-cost; for instance, the Bradley Lake hydroelectric dam produces energy for the Railbelt at 5 cents a kilowatt hour, far below the 17.5 cents paid in the Interior, not to mention rural areas. SENATOR THOMAS said the majority of Railbelt turbine power plants are over 30 years old; all will need retrofitting and replacement, estimated at $1 billion to $2.5 billion, a cost he predicted will increase dramatically. Once replacements begin, there will still be rising energy costs, fluctuating operating expenses, and high-pollution facilities. SENATOR THOMAS pointed out that 25 years ago, when a dam along the Susitna River was looked at, Cook Inlet gas cost 25 cents per million cubic feet, compared to more than $8 today. The population was substantially less, and other energy costs were a fraction of today's costs. He suggested these factors, along with environmental and long-term energy considerations, merit reopening the discussion. SENATOR THOMAS noted this anticipates that the designated agency will work along with the U.S. Army Corps of Engineers, which was responsible for the original study. Urging support for SB 246, he said nothing is as comprehensive an approach to reducing costs, emissions, and dependency on finite, nonrenewable energy production for the Railbelt and adjacent areas. SENATOR THOMAS, in response to Chair Huggins, relayed what is envisioned: The governor will pick the Alaska Energy Authority as an energy coordinator. That agency will coordinate with the Department of Natural Resources; Department of Environmental Conservation; Department of Fish & Game; Department of Labor & Workforce Development; Department of Commerce, Community & Economic Development; and Railbelt utilities and other area stakeholders. The intent is to update the old study to reflect current costs and feasibility, as well as other issues that may have been raised. SENATOR THOMAS reported that it is anticipated to be done by the end of 2009, though he expressed willingness to have it be longer. He noted another bill addresses a longer timeframe, and the money is addressed in both bills. Regarding opposition, he said almost every comment he's heard has been that people are encouraged by revisiting the Susitna issue; it isn't just those who worked on it before and thought it a good idea. 4:59:05 PM GRIER HOPKINS, Staff to Senator Joe Thomas, Alaska State Legislature, explained that now the Railbelt uses about 800 megawatts of power, with a maximum capacity of about 1,400. Expected to increase more than 40 percent in the next 20 years, this power is generated by an aging infrastructure. With most of it at least 30 years old, it will have to be replaced in the next 10 years, at a pretty high cost. MR. HOPKINS opined that the Susitna option needs to be looked at to ensure the Railbelt isn't locked into the same path if it's not the preferred option. This could be an overarching project that is stable, clean, renewable, and low-cost, with predictable energy and operating costs throughout the 100-plus-year lifespan. Reopening the study now would allow the legislature to make sure all options are judged before going down that path. CHAIR HUGGINS asked which communities would benefit. He surmised Fairbanks wouldn't need the energy, since it would get natural gas from the proposed pipeline. SENATOR THOMAS replied he hoped so, but also believed there would be a strong impetus to sell that gas, as had happened with oil. That would provide the most monetary gain, though not necessarily if one looked at economic development in Alaska, a tougher hurdle. He cautioned against putting all the eggs in one basket. CHAIR HUGGINS asked if he'd coordinated with any power- generation organizations or received feedback. SENATOR THOMAS replied yes, as far as looking at their interest. Everyone spoken with had responded positively. He surmised more letters of support would be forthcoming. 5:01:43 PM SENATOR WAGONER informed members that he'd talked to fishing groups and other associations. At one time, they opposed this project, but with new technologies and potential for rearing salmon and other sport fish, they're very supportive now. SENATOR WIELECHOWSKI noted he'd forwarded an e-mail about possibly getting the U.S. Army Corps of Engineers involved. SENATOR THOMAS responded that involvement of the U.S. Army Corps of Engineers is anticipated, since it did the original study. But it isn't believed that such involvement can be mandated. SENATOR GREEN recalled a previous study group in which the U.S. Army Corps of Engineers was listed as a participant, possibly in legislation. She suggested that participation is needed here. SENATOR THOMAS replied this might be amended to add some language that anticipates or requests such involvement. CHAIR HUGGINS held SB 246 over.