ALASKA STATE LEGISLATURE  HOUSE SPECIAL COMMITTEE ON ENERGY  January 26, 2023 10:16 a.m. DRAFT MEMBERS PRESENT Representative George Rauscher, Chair Representative Tom McKay Representative Josiah Patkotak Representative Calvin Schrage MEMBERS ABSENT  All members present [As of 1/26/23 there was a vacant seat on a committee of five.] OTHER LEGISLATORS PRESENT    Representative David Eastman COMMITTEE CALENDAR  PRESENTATION: CURTIS THAYER~ EXECUTIVE DIRECTOR~ ALASKA ENERGY AUTHORITY - HEARD PREVIOUS COMMITTEE ACTION  No previous action to record WITNESS REGISTER  CURTIS THAYER Executive Director of Alaska Energy Authority Anchorage, Alaska POSITION STATEMENT: Provided a presentation about the status of the Susitna-Watana Hydroelectric Project for the Alaska Energy Authority. BYRAN CAREY, Director of Owned Assets Alaska Energy Authority Anchorage, Alaska POSITION STATEMENT: Answered questions in the capacity of Director of Owned Assets for the Alaska Energy Authority about the Susitna-Watana Hydroelectric Project. ACTION NARRATIVE 10:16:22 AM CHAIR GEORGE RAUSCHER called the House Special Committee on Energy meeting to order at 10:16 a.m. Representatives McKay, Patkotak, and Rauscher were present at the call to order. Representative Schrage arrived as the meeting was in progress. ^Presentation(s): Curtis Thayer, Executive Director, Alaska Energy Authority PRESENTATION(S): CURTIS THAYER, EXECUTIVE DIRECTOR, ALASKA  ENERGY AUTHORITY    10:17:28 AM CHAIR RAUSCHER announced that the first order of business would be the Alaska Energy Authority presentation. Later, we will hear from Matt Morrison the leader of the Pacific Northwest Economic Region. 10:18:35 AM }CURTIS THAYER, Executive Director* Alaska Energy Authority* Anchorage, Alaska* Gave a presentation on the Alaska Energy Authority.{ He described the background of AEA to the members. Established in 1976 by the legislature with the mission to reduce the cost of energy to all Alaskans, AEA is also the lead state office for energy policy and statewide program development. One area in which AEA is involved is in Alaska's Railbelt. Mr. Thayer said, AEA owns the largest hydroelectric project in the state, Bradley Lake, outside of Homer; it's a 120-megawatt plant that also brings power to Fairbanks. The authority also has the Alaska Intertie which is the "SS" fuel line from the Kenai Peninsula to Willow and Healy. The state's ownership of the intertie saves the city of Fairbanks approximately $37 million in energy costs from ownership of the intertie. MR. THAYER stated that AEA also runs the power cost equalization (PCE) program for rural Alaska, which provides approximately $40 million a year, and operates the rural energy program. The authority also has power houses, bulk fuel, and upgrades and deferred maintenance costs. It continues to work with federal partners for funding, and it does energy ratings and "renewables". He reminded committee members that the state also has biomass, windfarms, and hydro projects. AEA also does grants, loans, and energy planning as well as being currently involved in the electric vehicle (EV) planning for the state. The authority expects it will have $200 million with the help of the legislature. 10:21:14 AM MR. THAYER stated that these projects are all still on-going, active projects. He then gave a PowerPoint presentation, titled "Susitna-Watana Hydroelectric Project", [hard copy included in the committee packet]. He began on Slide 1, which read as follows [original punctuation provided]: Created in 1976 by the Alaska Legislature, the Alaska Energy Authority (AEA) is a public corporation of the State of Alaska governed by a board of directors with the mission to "reduce the cost of energy in Alaska." AEA is the state's energy office and lead agency for statewide energy policy and program development. MR. THAYER stated that the majority of the work was conducted under the Governor Parnell Administration and the Governor Walker Administration for the Susitna-Watana Hydro Project. The project was put on the shelf until 2019 until Governor Mike Dunleavy rescinded Administrative Order 271, which effectively halted the project. As of 2022, no state funds have been spent on the project. The updates of the project have been provided each year to the legislature and to federal authorities but since then, no new work has taken place on the project. In order for the project to advance, more updating would need to be done. MR. THAYER moved on to Slide 7, which illustrated the project history and the decline of funding available to the AEA. He noted that Slide 9 serves to answer the question, "Why Susitna- Watana?" Mr. Thayer narrated the benefits of renewable energy and the savings over the first 50 years of operation to the State of Alaska. He stated that the project is a 100-plus year project. Projected estimates made in 2014 showed the savings would be in the billions for the Railbelt communities as a result of not using non-renewable natural gas, and carbon emissions could be reduced. MR. THAYER noted that this is a Federal Energy Regulatory Commission (FERC) regulated project. He further noted that FERC licensing is still in the process of permitting. The project still has investors and interest from the public. The FERC license removes a lot of the risk factors. Mr. Thayer shared that there are 58 FERC approved studies: 19 were advanced by FERC and 39 remain to require further investigations. 10:25:46 AM MR. THAYER, referring to Slide 11, stated that there weren't any problems with the FERC filing, but it is still on hold during the time of the update to the committee. All proposed study modifications were rejected by FERC. The data was deemed to be only useful for baseline information. The earliest studies were conducted in the 1950s, 1980s, and 2011. The legislature unanimously granted AEA the authority to move forward with the project once again. In 2012, the AEA studies began until 2017; no further funding is available at present, and the project is in abeyance, [as shown on Slide 12]. 10:26:36 AM MR. THAYER turned to Slide 13, to the map showing the project area and nearby communities. The project area is shown in red near Talkeetna. The project would create a 42-mile-long lake or reservoir to the east of the dam location. He continued that there was some concern about the effects of a dam on salmon. He stated that only a dozen Chinook salmon were observed above the proposed dam site; fisheries would not be an issue despite the FERC rejection. MR. THAYER turned to Slide 14, "Project At-A-Glance," and discussed the bulleted items, which read as follows [original punctuation provided]: .notdefDam Height 705 feet .notdefDam Elevation 2,065 Feet .notdefReservoir Length ~42 miles .notdefReservoir Width~1.25 miles .notdefInstalled Capacity 618 MW .notdefAnnual Energy 2,800,000 MWh .notdefCost~$5.6 billion (2014$) MR. THAYER added that the price tag has increased over eight years, and technology improvements will affect cost in the future. MR. THAYER moved to Slide 15, "Engineering," and covered the information, which read as follows [original punctuation provided]: .notdefSize and generation optimized .notdefDesign reviewed by International Board of Consultants .notdefDesigned to withstand: -10,000-year flood -Maximum credible earthquake of a magnitude 8.0 .notdef2014 Engineering Feasibility Report MR. THAYER then highlighted Slide 16, "Economics," which read as follows [original punctuation provided, with some formatting changes]: .notdefBenefit-Cost and Economic Impact Analyses completed in 2015 -Based on 2014 projection of natural gas prices: .notdefBenefit-cost ratio of 2.39 from energy savings alone .notdef$11.2 billion (2014$) in energy savings over first 50 years .notdefEnergy savings and retirement of older generation facilities MR. THAYER shared the information on Slide 17, "Employment Opportunities," regarding pre-construction, construction, and operations employment, all of which would provide benefits to the state. He concluded his presentation on Slide 18, "Project Timeline," which illustrated the entirety of the project from planning to power generation. He noted that the initial phase involves preparation, planning, collaboration, and environmental studies. He said FERC will review and make a determination on the feasibility of the project, which usually takes two years. The project execution phase - the actual construction - will last 9-11 years. 10:32:17 AM MR THAYER said that the dam won't be operational for about 15-20 years. He noted that it is very important that the legislature act to green light the project into the future and take the next steps to advance the project. He described the PCE process. The Railbelt energy cost is tied to the cost equalization program, which would benefit rural Alaska. CHAIR RAUSCHER asked for the total aggregate cost for the proposed updates on page [Slide] 19 of the presentation. MR. THAYER replied that the cost will be $5 million. He provided estimates of the costs associated with green lighting the project. Studies and licensing are separate costs, he noted. 10:35:41 AM CHAIR RAUSCHER asked if there was any cooperation from other state departments on the project. MR. THAYER answered that under Alaska statute the purview of the project falls under AEA. 10:36:27 AM REPRESENTATIVE MCKAY informed the committee he has worked for four years in Norway on oil and gas energy projects that developed hydroelectric projects concurrently. He asked if the department had looked at Norway specifically as a model as to how to proceed with the state's project. 10:37:21 AM }BYRAN CAREY, Director of Owned Assets* Alaska Energy Authority*, Anchorage, Alaska* Answered questions during the Alaska Energy Authority presentation. He stated no formal research has been undertaken with respect to Norway. 10:37:46 AM REPRESENTATIVE MCKAY pointed out that in Norway, a company called Norsk Hydro has similar projects that have combined oil development with hydroelectric projects. MR. BRIAN CAREY answered that no formal research has been undertaken with respect to Norway and was not familiar with the company Norsk Hydro. He said the authority did look at Iceland because, at the time of the Susitna-Watana project development, that country was building a 600-700 foot dam for power generation and possibly internet cloud servicing. 10:38:49 AM REPRESENTATIVE MCKAY asked about what the obstacles, challenges and oppositions are to getting the project done. MR. CAREY answered, "About $100 million." He said the 2014 costs need to be updated for inflation and other factors. He advised that the legislature and the Office of the Governor need to assess whether this project should move forward. 10:40:30 AM REPRESENTATIVE PATKOTAK asked what communities would benefit from the project. MR. CAREY answered the communities connected to the Railbelt would benefit directly. 10:41:56 AM REPRESENTATIVE PATKOTAK asked, about when the project obtains a FERC license, whether there would be outside funding for the project or the $5.6 billion to complete the project would be needed from the legislature. 10:42:57 AM MR. THAYER answered that there are a number of countries that are interested in renewable projects. Furthermore, he said that there are companies that know how to contract dams, operate dams and would work with AEA in the regulatory process during the life of the project. He informed the committee that he is aware of a company that budgets $5.6 billion a year for renewable [energy] projects and may be willing to invest in the [Susitna- Watana] project. MR. THAYER told the committee that establishing renewable energy is the purpose of the project. The cost per kilowatt has increased since the initial studies were conducted. He pointed out that the cost currently is 6 cents/kilowatt and is locked in for the long term. He summarized his presentation, and he reiterated that there are companies interested in seeing the project move forward. 10:44:59 AM REPRESENTATIVE PATKOTAK asked what the role of the state is after providing $100 million in funding by the legislature to AEA. 10:45:36 AM MR. THAYER replied that AEA would see a reduced role in the operation of the dam after construction. He said that there is the issue of the $300 million already invested in the project by the State of Alaska and possible outcomes for recouping those cost. Once the state has the FERC license, the options for recovering the costs of the initial $200 million spent on the initial studies could be reassessed. 10:46:39 AM MR. THAYER responded to a further question from Representative Patkotak. He said that once the state obtains the license, there will be a value of potentially $300 million for Alaska. He said AEA could provide the funding history from 2009 to present, but the data from the 80s or earlier came from different sources. He reviewed that the current sources of power to the Railbelt are natural gas, wind power, and the Bradley Lake hydroelectric dam. Mr. Thayer estimated that the Susitna-Watana dam could provide 50 percent of the necessary power needed for Railbelt communities, but further studies are needed to quantify the actual savings. 10:50:37 AM REPRESENTATIVE MCKAY inquired about cold temperatures and how that effects the reservoir. He said he wondered if the project could create ice dams downstream in the spring. He expressed interest in knowing how the project dealt with salmon, as well as the potential effects to the salmon, and he asked, if salmon could make it upstream after the dam is constructed. 10:52:02 AM MR. CAREY responded that salmon would not be affected; He said salmon are not affected; currently 99.9 percent of Susitna salmon divert to other streams and do not go up to the proposed dam site. He said in one summer there was sonar equipment monitoring streams above the proposed dam location. Only 25 Chinook salmon were counted by sonar above Devil's Canyon near the proposed dam site. He informed the committee that very few salmon make it past Devil's Canyon. MR. CAREY stated fish passages are an option. There would be a cost issue to create fish passages, consideration of them would require feasibility studies. He said fish would need to make it up the dam and down safely. MR. CAREY addressing previous issues brought up by Representative McKay regarding winter operations, said that the dam would be operational year-round. He explained that winter is the most expensive time of year for Railbelt communities, so it would be essential to harvest power year-round. Water-flows during the winter would be higher than they currently are. Ice- flows already exist downriver on the Susitna River, and ice- flows would continue to occur after construction of the dam. He said there was modeling conducted to predict water flows. He confirmed that at least part of the reservoir would freeze up with thick ice in the winter. 10:55:01 AM CHAIR RAUSCHER announced the final only order of business would be the Pacific Northwest Economic Region presentation. CHAIR RAUSCHER thanked the previous presenters and moved onto the next presentation for the day. ^PRESENTATION(S): Pacific Northwest Economic Region 10:55:26 AM }MATT MORRISON, CEO* of the Pacific NW Economic Region* Seattle, Washington*{introduced the Pacific NorthWest Economic Region (PNWER) organization. He stated that PNWER is statutory, and that Alaska is a founding member, along with the states of Washington, Oregon, Idaho, and Montana, and the Canadian provinces and territories of Alberta, British Columbia, Saskatchewan, the Yukon, and Northwest Territories. He stated that the leadership of PNWER is made up of legislators from the different states, provinces, and territories. The mission of PNWER is to develop a framework for energy security and sustainability in the United States and Canada. 11:00:04 AM MR. MORRISON reiterated the state of Alaska is an energy "superpower" in the world, and the resources in the region are astounding. He urged the committee to take stock of the infrastructure and how to utilize funding available from the federal government. He emphasized the need to attract, train and sustain talent to the workforce of Alaska. He related an example from a year ago where parents couldn't find baby formula in the grocery stores. He said the pandemic illuminated how supply was affected. For example, [microchips] weren't available in order to purchase an automobile. MR. MORRISON stated the need to transition from fossil fuels to electric power, and he question supply and infrastructure preparedness. He pointed out the need for electric charging stations. MR. MORRISON began a PowerPoint presentation, entitled "Global Challenges | Regional Solutions", [hard copy included in the committee packet]. He mentioned the success stories of Alaska. He said the states within the group know how to produce and transport energy. He pointed to Slide 7, "Outcomes," which lists four issues that the group faces [original punctuation provided]: 1. Develop a repository of information to share best practices between the states, provinces, and territories to achieve success in energy sustainability and security while increasing food production and developing critical mineral production. We need Alaska's success stories for this. 2. Work with the PNWER States Provinces and Territories to provide specific data and best practices on how our jurisdiction are planning for a transition toward a secure, sustainable clean energy future. What data can we bring from Alaska? 3. Work with the PNWER States, Provinces, and Territories, First Nations and Tribes to identify priority opportunities for environmentally sound, critical mineral development and related permit reform. What are Alaska's issues and challenges here? 4. Develop clear recommendations to both Washington,DC and Ottawa to develop a transition plan working with states provinces, and territories on how best to move toward the goal of a secure and sustainable energy and food security future for our two great nations. He emphasized the need to work with Ottawa and Washington D.C. toward mutual goals. He noted what Alaska can offer with respect to energy development. He emphasized the need to work with First Nations Tribes on what the challenges are for critical mineral development. He warned that rare-earth minerals will be depleted in roughly 10 years unless the country does something drastically different from what the country is doing now. He spoke about a work group that will be pulling together for the annual summit in Boise, Idaho for future recommendations. 11:03:52 AM }STEVE MYERS, Operations Manager* Pacific NorthWest Economic Region * Seattle, Washington* { Offered information during the Pacific NorthWest Economic Region presentation. He gave the second part of the PNWER presentation. He told the committee that PNWER had the chance to visit the U.S. Department of Defense (DoD) in Washington D.C. in 2022 to discuss the program. The origin of the program is from the Defense Protection Act enacted by the federal government. He informed the committee that the Defense Production Act provided a fund of $750 million to a private company sector that can apply for funding. These monies can be used to complete various impact studies, essentially to allow projects to move forward that might otherwise be stalled because of funding shortfalls. He told the committee he could provide more details on how the application process works if they would like or answer any questions they might have. 11:05:08 AM }MATT MORRISON* CEO of Pacific NW Economic Region City & State took the opportunity to describe the Defense Protection Act to the committee members. 11:05:59 AM MR. MORRISON moved ahead to Slide 10, Legislative Energy Horizon Institute (LEHI). MR. MORRISON said the group is actively recruiting legislators to attend next year's working group. MR. MORRISON then listed the statistical break down of active graduates still seated in the respective legislatures. MR. MORRISON expressed his gratitude to be able to offer the LEHI program. MR. MORRISON said the governor's office will be sending several staff members to the meeting in Richmond, Washington. 11:07:18 AM MR. MORRISON told the committee about the annual graduation ceremony at the Canadian embassy. MR. MORRISON presented a slide that showed this year's graduating class. MR. MORRISON discussed an activity that LEHI does with legislators where the draft a 10-year utility plan. At the end of the exercise all of the legislators compared their plans with the other legislators. The activity provided a real example of utility costs at a hypothetical rate. 11:08:41 AM MR. MORRISON concluded by describing his experiences in Alaska from the early 70s. MR. MORRISON stated the Alaska is the new frontier. MR. MORRISON said the world is watching Alaska. MR. MORRISON stated the pioneering innovation begins here [Alaska]. Federal assistance is a vailable for communities. MR. MORRISON said that what has made America great has come from pioneering states. MR. MORRISON told the committee that Alaska has the opportunity to be a pioneer in innovation from the village up to community stability. MR. MORRISON said there is a once-in-a- generation chance to gain federal funding to spark Alaska's energy independence. MR. MORRISON highlighted a "Riv-Gen" project that could work in Alaska. The project is the longest marine project in North America; it has survived two winters... 11:10:41 AM MR. MORRISON said the project was made possible by SENATOR MURKOWSKI and will benefit so many villages that are still dependent on diesel fuel. MR. MORRISON finished his presentation and asked if there were any questions and thanked the committee. 11:11:26 AM MR. MORRISON played a 3-minute video [undiscernible]. MR. MORRISON said the Riv-Gen project is a great example of sustainable energy and innovation. 11:12:49 AM MR. MORRISON said with the coming funding for infrastructure is available. MR. MORRISON continued by saying that there is $90 billion in funding from the United States Department of Energy. MR. MORRISON described how the generator is fully submerged underwater and has provided consistent power to the community it serves. [Undiscernible music.] MR. MORRISON told the committee the project is a public-private partnership. MR. MORRISON said this [the project] is a good opportunity. 11:13:50 AM CHAIR RAUSCHER asked if there were any questions. 11:14:03 AM REPRESENTATIVE SCHRAGE offered to thank the presenters for being there and the work that LEHI does. 11:14:26 AM REPRESENTATIVE MCKAY also thanked the presenters. 11:15:12 AM CHAIR RAUSCHER though it was a great program and that he learned a lot and described his experience to the rest of the committee. MR. MORRISON invited all of the members of the committee to the next meeting in Idaho next October. 11:15:27 AM ADJOURNMENT  There being no further business before the committee, the House Special Committee on Energy meeting was adjourned at 11:15 a.m.