SB 143-RAILBELT ENERGY & TRANSMISSION CORP.  4:50:43 PM CO-CHAIR MCGUIRE announced the next order of business to come before the committee was SB 143. REBECCA LOGAN, chairman of board, Chugach Electric and chairman, Railbelt Utility Task Force, said she is here to support SB 143 and will let the other utilities speak. CO-CHAIR MCGUIRE said every governor in years past, regardless of party, has failed to bring the utilities together. Ms. Logan's bringing groups together to communicate is impressive. SENATOR WIELECHOWSKI said rate regulation is a concern, particularly no regulation after five years. He is trying to be open to the idea and would like to hear how it is going to protect consumers. 4:52:57 PM MS. LOGAN said an in-depth discussion should take place at a different time about the pros and cons of regulation. One of the Utility Task Force's "must-haves" was no regulation of Greater Railbelt Energy and Transmission Corporation (GRETC). A compromise was reached with the governor's office three weeks ago: five year regulation with a sunset. MARK JOHNSON, general counsel, Chugach Electric, said rate regulation is clearly a central issue. He would like to make a presentation and allow for dialogue; understanding rate regulation pertaining to GRETC is essential to SB 143. 4:55:28 PM CO-CHAIR MCGUIRE told Mr. Johnson she wants to know what options will be available if lack of regulation led to a colossal failure and the consumer is not protected. SENATOR WIELECHOWSKI said he is concerned about the provision about not being able to preclude Independent Power Producers (IPP's) from getting into a system. He wonders how that works without regulation. MR. JOHNSON said more discussions and a firm answer will come. 4:57:59 PM PHILLIP OATES, city manager, Seward, said he is present to offer Electric Utility's support to SB 143. All of the utilities together have better financing due to more resources, rate payers, revenue stream and partnership with the state. GRETC will help manage the transmission system across all utilities, will accomplish regional economic dispatch and comprehensive long-range, regional planning. Bringing together the particular circumstances of 4 co-ops and 2 municipalities, of which Seward is one, is complex. Seward supports the adequate reliable, safe and stable delivery of energy and wholesale electric power transmission. Seward will have full membership in this not-for- profit corporation along with other utilities and individuals appointed by the governor. 5:01:39 PM Brad Janorschke, general manager, Homer Electric Association (HEA) said that a common misconception is that the Railbelt utilities can't get along and work together. The Bradley Lake Hydro-Electric project is a big success story with six utilities working together with a state agency to build and finance a project that generates some of the lowest cost power in the state. The Railbelt utilities have accomplished much in price and reliability and can choose to think big and develop opportunities, particularly in renewables. GRETC is an omnibus document supported by all utilities and developed by electric utility professionals. The intent of the letter distributed by HEA was to encourage minimal change to the originally agreed upon legislation. He reiterated HEA's support of GRETC, in its original form, which provides the best opportunity to diversify energy sources. 5:05:40 PM SENATOR FRENCH asked if Mr. Janorschke does not support the current committee substitute before the committee. MR. JANORSCHKE replied that the letter states HEA's support of GRETC and is trying to encourage minimal changes to it. SENATOR FRENCH said he agrees with Mr. Janorschke but the 2nd paragraph of HEA's letter says "recent amendments and changes being proposed will significantly alter the GRETC legislation". And then it says, "the HEA board cannot support these amendments without a thorough review and consideration of the effect they will have". Senator French said that it looks like HEA does not support the committee substitute. MR. JANORSCHKE replied that HEA did agree to one change from the original GRETC legislation pertaining to RCA regulation. He knows further changes have been requested to AS 42.50.170, regarding the authority for oil and gas leases. One of the key components of SB 143 that the Task Force agreed to was allowing GRETC to pursue that. He hopes the clause will remain in SB 143. 5:08:51 PM CO-CHAIR MCGUIRE asked Mr. Janorschke what he opposes in Version S that is before the committee. MR. JANORSCHKE replied that HEA's request is that the authority for oil and gas leases remain in the GRETC legislation. CO-CHAIR MCGUIRE confirmed that this is Mr. Janorschke's only "hang up". MR. JANORSCHKE replied, "affirmative". CO-CHAIR MCGUIRE asked Mr. Janorschke for a letter to that effect. MR. JANORSCHKE replied that he will provide such a letter. PETER BRUSHELL, director, Matanuska Electric Association (MEA), said Bradley Lake is a success story and is operated effectively without RCA. The Joint Utility Task Force argued and things got heated but the Task Force also realized and admitted not much could be accomplished without working together. 5:12:05 PM The state's support and leadership is also needed. Over the past year, the Task Force has built compromise, examination and cooperation with the state. The document presented to the Legislature includes the best ideas and intentions for meeting a crisis. He noted that he has never heard what the cost will be to MEA commercial and residential consumers if a bullet line or a main line with a spur is built. 5:15:22 PM CAITLIN HIGGINS, executive director, of the Alaska Conservation Alliance (ACA), encouraged statutory language requiring GRETC to evaluate and enact cost-effective conservation in the development of its Integrated Resource Plan (IRP). Renewable energy with a stable long-term price is the region's best long- term economic interest. The ACA supports the committee's goal that Alaska should generate at least 50 percent of its power from renewables. GRETC's statutory language could support the goal as part of the new utilities IRP. ACA supports ongoing regulatory and financial oversight of GRETC, with no sunset, as it ensures that individual rate payers, business and industry have access to reliable, safe utility services. Rate payers' voices are an essential aspect of utility governance; the board of directors of the new utility should include a significant portion of citizen representatives or a separate citizen utility board should overseeing utilities activities. Public representation and oversight should be a meaningful part of GRETC. So that ACA may support SB 143, ACA encourages the committee to consider language to address financial and regulatory oversight, public input and energy efficiency. 5:18:58 PM RICK SCHIKORA, treasurer, Golden Valley Electric Association, said Golden Valley represents 43,000 members in the Interior and has participated in the GRETC task force since April 2009. SB 143 would allow at least 4 of the 6 Railbelt utilities to form a company to provide wholesale power to Railbelt utilities. Participation would be voluntary and rates for power out of those projects would be on a non-discriminatory basis between those participants. GRETC is designed to be a wholesale electric company providing electricity and other services to Railbelt utilities, all of whom, except the city of Seward, are regulated by the RCA. Due to the rate payer protections built in the GRETC legislation, GRETC should not be subjected to RCA regulation. A compromise of five years of regulation has been reached with the governor. The board members of GRETC are either elected by the ratepayers of member utilities or appointed by those who are. All six Railbelt utilities worked on SB 143 and all provisions were agreed to by representatives of the governor's office and Alaska Energy Authority (AEA). SB 143 works and allows GRETC to make electricity by people who know how to do it. 5:22:26 PM RICH WILSON, Alaska Ratepayers, said his group is made up of grassroots ratepayers from Fairbanks down through Southcentral with the goal of pursuing affordable and predictable rates. SB 143 is a way to achieve regional cooperation in an organization that can get the job done. Ratepayers should be given a right to participate in the process. Long-term benefits to ratepayers must include projects that are too big for any one utility in the Railbelt. The financial cost and size of solutions such as Susitna or Chakachamna hydro-facility require a regional solution. 5:25:28 PM TOM LAKOSH, representing himself, said utilities cooperation is needed, not only to plan and purchase generation and transmission, but to have a regional distribution utility. The language allows certain assets to be withheld from the group and does not ensure proper control of the grid to incorporate intermittent renewables. To get to the renewable standard set out in policy, a single dispatch utility for wholesale power from Fairbanks to Homer is needed. The ability to put certain assets into the GRETC coffer seems suspicious in that aging facilities with outstanding debt are most likely to be paid off by GRETC where the most efficient and valuable to the individual utility will be withheld possibly even from distribution and dispatch. Policies for conservation and renewables need to be clearly stated for GRETC. A unified utility should not only buy new generation but effectively conserve throughout the Railbelt and plan for proper dispatch for intermittent renewables. 5:28:38 PM CO-CHAIR MCGUIRE closed public testimony and thanked all utilities that testified. She said she would try to get SB 143 out as soon as possible. A meeting will be scheduled to talk about the issue of regulation. 5:28:57 PM CO-CHAIR MCGUIRE, seeing no further business to come before the committee, adjourned the meeting at 5:28 p.m.