SB 121-ENERGY EFFICIENCY BLDGS/PUBLIC WORKS  CO-CHAIR WIELECHOWSKI announced SB 121 to be up for consideration. 3:36:01 PM CO-CHAIR MCGUIRE moved to adopt work draft CSSB 121(RES), labeled 26-LS0586\W. There was no objection and version W was before the committee. 3:36:36 PM SHELLY MORGAN, staff to Senator Wielechowski, explained that SB 121 will reduce the cost of operating state facilities by reducing the amount of energy consumed by them over the next 15 years. It enables the state to lead by example in the arena of energy efficiency and better position Alaska to receive federal stimulus funding for the state Energy Program grants. By prioritizing energy retro-fit projects and using performance contracts, the state can begin saving energy right away. She pointed out that performance contracts require no upfront payments from the state. Performance contractors perform energy audits for facilities and make whatever construction changes are needed for the energy retro-fit. They are paid solely through the energy savings the state accrues over time. 3:37:31 PM SENATOR WAGONER joined the committee. 3:38:02 PM MS. MORGAN said that these guaranteed savings are paid to the energy service company for the retro-fit and within 15 years or less cost savings from efficiency upgrades go directly to the state - saving public funds. She said the Department of Transportation and Public Facilities' (DOTPF) first performance contract of only eight buildings resulted in a savings of $365,991 based on 2006/07 rates, which would be $557,096 based on 2008 rates. Within the first year the savings from just these eight buildings could essentially cover the annual staffing and travel requirements found in the DOTPF fiscal note. If the state executed just 25 similar contracts, it could save over $13 million based on 2008 rates in the first year. Two fiscal notes from DOTPF are for doing the work with performance contracting - $363.600; the other shows the cost to the state without performance contracting - over $17 million. She said it is their intent that the committee adopt the fiscal note based on doing performance contracting. 3:39:17 PM MS. MORGAN went on to explain the six changes made to version P dated 3/9/09 that are now found in version W. All the changes were based on feedback from experts and committee members at the March 9 hearing; all changes have been approved by the DOTPF and the Alaska Energy Authority. The first change is that the database be updated annually rather than every 10 years. This can be done simply by having individual building managers update data based on their utility bills. Basically the individual responsible for paying the utility bill for a facility could easily enter the utility data into a spread sheet and once each year that data could be rolled up into the rather than paying a DOTPF staff person to spend hours compiling data on every facility. The second change is that all facilities, not just heated facilities, will be retrofitted and eligible for performance contract retro-fit projects. Third, the performance contracts may also include renewable energy projects. "Alternative energy" was replaced with "renewable energy" to better fit with the intent of this bill. When determining the best energy efficiency measures for each facility, the performance contractor may determine that it is appropriate for a facility to generate its own energy using renewable sources. The fourth change is that the reference to the International Energy Conservation Code (IECC) was removed. The bill now states that facilities will be made to meet or exceed the most recently published edition of the Illuminating Engineering Society of North America (IESNA) standard 90.1 of the American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE). She explained that ASHRAE is more typically used for commercial facilities and does a much better job of addressing Alaska's climate conditions while still meeting the same basic guidelines found in the IECC. The IECC identifies only three climate zones which are insufficient for the entire state of Alaska. MS. MORGAN said that fifth, the decision to postpone a retrofit due to lack of cost-effectiveness was modified to add a provision that this decision may be based in part on wither or not the department would be able to meet a return on investment within 15 years after project completion. The sixth change is that the energy use index language found in Sec. 44.83.955, was adjusted to better define the energy use index and the database. The Alaska Energy Authority shall establish an energy index to measure energy consumption, and the database they prepare will be made up of energy use index data for each facility. She explained that these changes do not alter content, but just provides clarity through definition. 3:43:38 PM SENATOR STEDMAN remarked that the Railbelt Energy Fund language allows buildings and facilities for energy conservation that are state owned to be retrofitted, and asked how often the state has used it and how that ties into the bill. MS. MORGAN answered that starting in 2004 the DOTPF has done two performance contracts totaling 16 buildings. Now there is no way of prioritizing the retrofit. This bill not only allows for and encourages the performance contracting, but establishes an energy use database so that they can identify which buildings are consuming the most energy so that the retrofit projects can start with the most energy consuming first. SENATOR STEDMAN added that the Railbelt Energy Fund allows access to those funds for retrofitting state owned buildings and facilities for energy conservation and it appears that the Railbelt has most of the major state buildings. He was wondering if that fund was every used for that purpose and how that policy affected this bill. CO-CHAIR WIELECHOWSKI said the capital in Juneau and any public facilities outside of the Railbelt would not be included in the Railbelt Energy Fund. This bill creates an energy use index, which allows the state to prioritize what will be retrofitted first. He thought it better public policy and cheaper for the state to undertake performance based contracting, because it doesn't cost anything. The money you would save in paying for utilities would pay for the upgrades. 3:47:11 PM CO-CHAIR MCGUIRE moved to pass CSSB 121(RES), version W, from committee with individual recommendations and attached fiscal note(s). There was no objection and it was so ordered.