ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 4, 2024
1:32 p.m.
MEMBERS PRESENT
Senator Jesse Bjorkman, Chair
Senator Click Bishop, Vice Chair
Senator Elvi Gray-Jackson
Senator Kelly Merrick
Senator Forrest Dunbar
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 154
"An Act relating to bidder preferences in state procurement."
- HEARD & HELD
SENATE BILL NO. 102
"An Act relating to refuse utility rates and Regulatory
Commission of Alaska regulations regarding refuse utilities; and
providing for an effective date."
- HEARD & HELD
SENATE BILL NO. 257
"An Act relating to the Regulatory Commission of Alaska;
relating to public utilities; relating to electric reliability
organizations; relating to the Alaska Energy Authority; relating
to the Railbelt Transmission Organization; and providing for an
effective date."
- HEARD & HELD
SENATE BILL NO. 44
"An Act relating to the practice of naturopathy; establishing
the Naturopathy Advisory Board; relating to the licensure of
naturopaths; relating to disciplinary sanctions for naturopaths;
relating to the Department of Commerce, Community, and Economic
Development; and providing for an effective date."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: SB 154
SHORT TITLE: BIDDER PREF MILITARY CAREER SKILLS PROG
SPONSOR(s): SENATOR(s) WIELECHOWSKI
05/17/23 (S) READ THE FIRST TIME - REFERRALS
05/17/23 (S) L&C
03/04/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 102
SHORT TITLE: REFUSE UTILITY REGULATIONS
SPONSOR(s): SENATOR(s) MYERS
03/15/23 (S) READ THE FIRST TIME - REFERRALS
03/15/23 (S) L&C
03/04/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 257
SHORT TITLE: ELECTRIC UTILITY REGULATION
SPONSOR(s): RESOURCES
03/01/24 (S) READ THE FIRST TIME - REFERRALS
03/01/24 (S) L&C, RES, FIN
03/01/24 (S) L&C WAIVED PUBLIC HEARING NOTICE,RULE
23
03/04/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 44
SHORT TITLE: NATUROPATHS: LICENSING; PRACTICE
SPONSOR(s): SENATOR(s) GIESSEL BY REQUEST
01/25/23 (S) READ THE FIRST TIME - REFERRALS
01/25/23 (S) HSS, L&C, FIN
02/23/23 (S) HSS AT 3:30 PM BUTROVICH 205
02/23/23 (S) Heard & Held
02/23/23 (S) MINUTE(HSS)
03/07/23 (S) HSS AT 3:30 PM BUTROVICH 205
03/07/23 (S) Moved CSSB 44(HSS) Out of Committee
03/07/23 (S) MINUTE(HSS)
03/08/23 (S) HSS RPT CS 1DP 4NR SAME TITLE
03/08/23 (S) NR: WILSON, TOBIN, KAUFMAN, DUNBAR
03/08/23 (S) DP: GIESSEL
05/15/23 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
05/15/23 (S) -- Invited & Public Testimony --
03/04/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
SENATOR BILL WIELECHOWSKI, District K
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 154.
KALEB CALLAHAN, Intern
Senator Bill Wielechowski
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SB 154 on behalf of the sponsor.
KYLE KAISER, President
VIPER Transitions
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 154.
SENATOR ROBERT MYERS, District Q
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 102.
DAWSON MANN, Staff
Senator Robert Myers
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis for SB 102.
ROBERT DOYLE, Chair
Regulatory Commission of Alaska
Anchorage, Alaska
POSITION STATEMENT: Answered questions on SB 102.
KURT FROENING, Division Vice President
Alaska Waste
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 102.
SENATOR CATHY GIESSEL, District E
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SB 257 as Co-Chair of the Senate
Resources Standing Committee.
GWEN HOLDMANN, Director
CEM INE Alaska Center of Energy Power
University of Alaska Fairbanks
Fairbanks, Alaska
POSITION STATEMENT: Offered the presentation The Railbelt
Transmission Grid (now and future).
TONY IZZO, CEO
Matanuska Electric Association
Palmer, Alaska
POSITION STATEMENT: Testified by invitation on SB 257.
JOHN BURNS, President and CEO
Golden Valley Electric Association
Fairbanks, Alaska
POSITION STATEMENT: Testified by invitation on SB 257.
CURTIS THAYER, Executive Director
Alaska Energy Authority (AEA)
Anchorage, Alaska
POSITION STATEMENT: Testified by invitation on SB 257.
ACTION NARRATIVE
1:32:41 PM
CHAIR JESSE BJORKMAN called the Senate Labor and Commerce
Standing Committee meeting to order at 1:32 p.m. Present at the
call to order were Senators Gray-Jackson, Dunbar, Merrick,
Bishop, and Chair Bjorkman.
SB 154-BIDDER PREF MILITARY CAREER SKILLS PROG
1:33:55 PM
CHAIR BJORKMAN announced the consideration of SENATE BILL NO.
154, "An Act relating to bidder preferences in state
procurement."
1:34:12 PM
SENATOR BILL WIELECHOWSKI, District K, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 154. He gave a brief overview of
SB 154. He explained that this legislation would establish a
bidder preference for state contracts for veterans and service
members. It does this by encouraging businesses to hire service
members who are taking part in apprentice-type programs. He said
that 43 percent of post-9/11 veterans could not find work within
six months of transitioning from military service. Veterans'
labor force participation is around 47.7 percent, compared to 64
percent for non-veterans. He added that the unemployment rate
for the spouses of active-duty members is around 21 percent.
SENATOR WIELECHOWSKI stated that barriers to veteran employment
include a lack of transition support, negative experience with
support services, a feeling of completely starting over, and
perceived employer/societal stigma and discrimination. He
reiterated that SB 154 would give bidder preference to companies
who hire employees who have taken part in training programs that
are designed to help service members find employment once they
have completed their military service.
1:36:35 PM
KALEB CALLAHAN, Intern, Senator Bill Wielechowski, Alaska State
Legislature, Juneau, Alaska, presented SB 154 on behalf of the
sponsor. He explained that the intent behind this legislation is
to close the transition gap between military service members who
have completed their long military contracts as they transition
into the civilian workforce. He said he considers SB 154 to be a
"supporting pipeline" to aid exiting service members in finding
employment while also giving bonuses to those businesses that
employ them. He explained that the programs are DOD SkillBridge
and Army Career Service (ACS) programs, which are completed
during the last 180 days of the servicemember's contract. These
programs offer apprenticeships, internships, and training
programs that allow the servicemember to transition directly
into a career field of their choice.
MR. CALLAHAN pointed out that both ACS and SkillBridge support a
variety of professions and have locations across the state -
including locations at Fort Richardson, Fort Wainwright, and a
number of locations in Anchorage and Fairbanks. These
professions range from those in the medical industry to
mechanics and heavy equipment operators. He explained that this
would allow the skills obtained during military service to
transfer more easily to the civilian workforce - e.g. a
Blackhawk mechanic could find work in a Ford factory; a combat
medic could work in nursing; and Army construction officers
could obtain certifications to be heavy equipment operators.
MR. CALLAHAN stated that SB 154 establishes a 2 percent bidder
preference; however, the preference is capped at $5 thousand,
regardless of bid size. He opined that this is a modest
expenditure and a win-win scenario. He stated that entities that
have employed at least one person enrolled in - or recently
graduated from - United States Department of Defense (US DOD),
SkillBridge, or ACS would be eligible for bidder preference. He
added that this applies to both service members and their
spouses.
1:39:45 PM
SENATOR BISHOP asked how this compares to the Helmets to
Hardhats (H2H) program. He asked for clarification on the $5
thousand cap for bidder preference and how this would apply to
large contracts of $1 million or more.
1:40:55 PM
MR. CALLAHAN replied that the 2 percent bidder preference is
capped at $5 thousand. He surmised that the majority of the
contracts would likely be much less than $1 million. He stated
that the intent of SB 154 is to use bidder preferences to
encourage businesses to utilize the aforementioned programs.
With respect to H2H, he stated that he is not familiar with this
program; however, he said that it sounds similar to DOD
SkillBridge.
SENATOR WIELECHOWSKI clarified that - in contrast to H2H - SB
154 provides a bidder preference to companies.
SENATOR BISHOP shared his understanding that the goal is to get
more skilled people in the workforce.
SENATOR WIELECHOWSKI replied yes.
1:43:11 PM
MR. CALLAHAN noted that veteran preference is already in
statute; however, statute does not mention transitionary bidder
preferences. He explained that SB 154 works as a pipeline by
giving preference for servicemembers to become veterans and
providing a 2 percent bidder preference. This would eventually
enable businesses to employ enough veterans to qualify for the 5
percent bidder preference that is already in statute.
1:43:53 PM
CHAIR BJORKMAN asked if a company would track how many employees
are within the two-year graduation window from these programs
and submit this information in their bid packet to determine
their eligibility for the bidder preference.
1:44:20 PM
MR. CALLAHAN replied yes. He added that this amount of tracking
would be unnecessary, as only one employee would need to be
associated with one of these programs in order to qualify for
the bidder preference.
1:45:08 PM
CHAIR BJORKMAN opened public testimony on SB 154.
1:45:23 PM
KYLE KAISER, President, VIPER Transitions, Anchorage, Alaska,
testified in support of SB 154. He explained that part of the
problem for servicemembers, veterans, and their spouses is
access to the jobsite. He noted that there is a great deal of
discussion around how to keep these individuals from pursuing
careers outside of Alaska. He stated that around 80 percent of
servicemen and women leave Alaska once they have completed their
military career. He expressed a desire to change this and
emphasized the importance of addressing the issue before they
are completely separated from the military. He emphasized the
importance of the 180 window to determine where these
servicemembers will go and what career they will follow. He
added that the apprenticeships and other skill-building
opportunities will help them to step directly into the civilian
workforce. He opined that SB 154 is great for servicemembers,
businesses, the military, and for the state of Alaska. With
respect to Helmets to Hardhats, he said that SB 154 would
incentivize employers to create more spots for apprentices on
their staff, thus connecting more servicemembers with the
apprenticeship opportunities that organizations like helmets 2
hardhats advertise.
1:48:01 PM
CHAIR BJORKMAN held public testimony on SB 154 open.
1:48:11 PM
SENATOR BISHOP commented that broadband expansion in Alaska has
a workforce need of 17 thousand people.
1:48:52 PM
CHAIR BJORKMAN held SB 154 in committee.
1:48:56 PM
At ease
SB 102-REFUSE UTILITY REGULATIONS
1:50:12 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 102, "An Act relating to refuse
utility rates and Regulatory Commission of Alaska regulations
regarding refuse utilities; and providing for an effective
date."
1:50:34 PM
SENATOR ROBERT MYERS, District Q, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 102. He paraphrased the sponsor
statement for SB 102:
[Original punctuation provided.]
SB 102 - Sponsor Statement
REFUSE UTILITY REGULATIONS
"An Act relating to refuse utility rates and
Regulatory Commission of Alaska regulations regarding
refuse utilities; and providing for an effective
date."
The Regulatory Commission of Alaska (RCA) is an
independent, quasi-judicial regulatory body that was
formed by the legislature in 1999 to replace the
Alaska Public Utilities Commission. The RCA is charged
with regulating public utilities and pipeline
services. Among these regulated utilities are refuse
waste collection providers throughout the state.
Unfortunately, due to workload and protracted legal
processes it has been the experience of some refuse
utility providers that rate filings have taken years
consuming a large number of resources for both the
companies and the RCA. The prolonged filling process
has also led to consumer price shock due to the time
lapse between the refuse utilities filling years and
when new rates take effect.
SB 102 streamlines the rate adjustment process for
refuse utilities by allowing them to make use of the
already existing simplified rate filing procedure.
This procedure allows utilities to apply for rate
adjustments over a specified period, provided they
meet certain regulatory requirements.
The RCA will be required to adopt specific regulations
tailored to the unique nature of refuse utilities.
These regulations will include provisions for
sufficient public notice and meaningful opportunities
for ratepayers to comment on rate filings. By doing
so, the bill promotes transparency and accountability
in the rate-setting process, safeguarding the
interests of both consumers and utility providers.
SB 102 establishes a balanced approach to regulating
refuse utility rates in Alaska, prioritizing fairness,
transparency, public participation, and expediency.
1:52:17 PM
DAWSON MANN, Staff, Senator Robert Myers, Alaska State
Legislature, Juneau, Alaska, presented the sectional analysis
for SB 102:
[Original punctuation provided.]
SB 102 v. A Sectional Analysis
REFUSE UTILITY REGULATIONS
"An Act relating to refuse utility rates and
Regulatory Commission of Alaska regulations regarding
refuse utilities; and providing for an effective
date."
Section 1: Page 1, Lines 4-14, Page 2, Lines 1-4
This section amends AS 42.05.381(e) to include refuse
utilities. AS 42.05.381(e) is the section of statutes
that provides for a simplified rate filing procedure.
This section also outlines that the Regulatory
Commission of Alaska shall adopt regulations
specific to refuse utilities to provide sufficient
public notice and time for ratepayers to meaningfully
comment on rate filings.
Section 2: Page 2, Line 5
This section establishes an immediate effective date.
1:53:19 PM
SENATOR DUNBAR noted that not all waste companies are regulated
by the Regulatory Commission of Alaska (RCA) and asked if SB 102
would change this.
1:53:44 PM
SENATOR MYERS replied that SB 102 would not change which waste
companies are regulated; rather, an existing regulatory process
would be applied to waste companies.
1:54:01 PM
SENATOR DUNBAR asked if Solid Waste Services (SWS) has any
expressed any views on SB 102.
1:54:29 PM
MR. MANN deferred to RCA representatives to speak to the
relationship between RCA and municipal trash collection.
1:55:00 PM
ROBERT DOYLE, Chair, Regulatory Commission of Alaska, Anchorage,
Alaska, answered questions on SB 102. He said that RCA does not
regulate specific landfills but does regulate refuse utilities.
He stated that this process is straightforward and simple. He
explained that this will avoid costs and save and/or reduce time
consuming processes and make moderate adjustments. He added that
the maximum is controlled can only be increased 8 percent in 12
months or 20 percent in 36 months. For telecoms, this would be 6
percent in 12 months and 15 percent over 36 months. This would
keep the size of the increase down. This is a result of the
public comment process. He reiterated that RCA regulates the
refuse collection utilities but does not regulate the landfills.
1:56:24 PM
SENATOR DUNBAR commented that SWS is unique in that it is both
the collection utility and the landfill. He questioned how SWS
would be impacted by this legislation.
1:56:44 PM
MR. DOYLE replied that SWS would be impacted as a regulated
entity for the refuse collection portion of the business. He
noted that SWS could apply as for simplified rate filing (SRF).
He clarified that for any business entity, SB 102 would only
apply to the refuse collection portion.
1:57:16 PM
SENATOR GRAY-JACKSON sought clarification that SB 102 is adding
refuse utilities to the list of cooperatives and utilities that
are regulated by the RCA.
1:57:31 PM
SENATOR MYERS clarified that refuse utilities are already
regulated by RCA. He explained that SB 102 would allow these
utilities to use a simplified rate-filing process. He noted that
electrical cooperatives already use this service.
1:58:00 PM
CHAIR BJORKMAN referred to subsection (e) and asked if RCA
currently regulates local exchange telephone utilities.
1:58:25 PM
MR. DOYLE replied yes and clarified that many of these utilities
are regulated. He gave an example of a regulated utility in
Kotzebue. He said that there are local exchange carriers (LEC)
and interstate carriers as well as interstate and intrastate
carriers. He briefly noted the distinction between interstate
and intrastate carriers.
1:59:07 PM
CHAIR BJORKMAN asked if RCA wants to change the telephone
utility language.
1:59:20 PM
MR. DOYLE replied not to his knowledge. He explained that he was
on the Matanuska Electric Association, Inc. board for 12 years
and said that SRF filing is a straightforward process that is
less time-consuming and costly.
2:00:25 PM
CHAIR BJORKMAN opened public testimony on SB 102.
2:00:40 PM
KURT FROENING, Division Vice President, Alaska Waste, Anchorage,
Alaska, testified in support of SB 102. He said that the
simplified rate-filing process would make it much easier to
adjust rates to current market conditions. He explained that
currently, this is a 450-day process; this means that by the
time rate changes are enacted, the data and expenses have
changed drastically. Additionally, he said that rate cases are
expensive to prepare and added that the most recent rate case
cost Alaska Waste close to half a million dollars to prepare.
This cost is then passed along to ratepayers. He surmised that
SB 102 would streamline this process and make it less expensive.
He pointed out that this process is already in place for
electrical cooperatives and local exchange telephone utilities;
SB 102 would simply allow refuse utilities to also utilize this
process.
2:02:31 PM
CHAIR BJORKMAN held public testimony on SB 102 open.
2:02:53 PM
CHAIR BJORKMAN opined that SB 102 is "common sense" and added
that refuse utilities should be able to take advantage of this
process.
2:03:00 PM
CHAIR BJORKMAN held SB 102 in committee.
2:03:05 PM
At ease
SB 257-ELECTRIC UTILITY REGULATION
2:05:44 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 257, "An Act relating to the
Regulatory Commission of Alaska; relating to public utilities;
relating to electric reliability organizations; relating to the
Alaska Energy Authority; relating to the Railbelt Transmission
Organization; and providing for an effective date."
2:06:09 PM
SENATOR CATHY GIESSEL, District E, Alaska State Legislature,
Juneau, Alaska, presented SB 257 as Co-Chair of the Senate
Resources Standing Committee. She paraphrased from the sponsor
statement:
[Original punctuation provided.]
SENATE BILL 257
Railbelt Transmission Organization
SPONSOR STATEMENT
Critical to Alaska's future is the need for low-cost,
reliable energy throughout the entire state. A
reliable and efficient transmission system supports
economic growth by ensuring a stable, affordable power
supply for businesses and communities, and it
encourages investment in new industries and
infrastructure development.
Senate bill 257 seeks to establish a strong,
resilient, and open-access transmission network. It
will provide sound long-term governance and planning
to make it stronger and better over time. The network
will enable and accelerate the energy transition in
Alaska a revolution in how we generate, store,
distribute, and consume electricity.
The electric transmission system that provides
electricity from Homer to Fairbanks serves more than
70 percent of our population along a 700-mile-long
corridor. This system, however, is challenged with
insufficient transfer capacity, outdated technology,
and inefficient pricing, all of which threaten
reliability and prevents new, diverse generation
sources from serving ratepayers at the lowest possible
cost.
2:08:33 PM
SENATOR GIESSEL continued to paraphrase the sponsor statement:
[Original punctuation provided.]
As we enter into a new era of energy management and
sustainability, it is imperative we take bold steps
toward modernizing our Railbelt's electricity
transmission system. Our current energy infrastructure
is outdated and fragmented, resulting in
inefficiencies, vulnerabilities, and obstacles to a
more efficient adoption of alternatives and lower-cost
electric generation sources. Larger transmission lines
and more efficient modern equipment will enable the
seamless integration into our new energy mix with
clean and renewable energy sources such as advanced
nuclear, hydro, solar, and wind power. Planning and
building that new energy mix will drive innovation and
create high-wage jobs. By truly integrating and
upgrading our electric grid and pricing it fairly for
all users, we can unlock a host of benefits, including
increased reliability, enhanced flexibility, and
greater resilience against disruptions and natural
disasters.
An upgraded Railbelt electric grid is an improvement
for all Alaskans. The Power Cost Equalization program
helps pay the cost of electricity in rural and remote
parts of the state with an aim to equalize electricity
rates by reducing the economic burden of high energy
costs. The offset is based on the difference between
the actual cost of electricity and the target rate
which is the weighted average retail residential rate
of electricity in Anchorage, Fairbanks, and Juneau.
Lowering the cost of electricity in Anchorage through
an upgraded grid provides a commensurate lower cost of
electricity for residents in rural and remote Alaska.
2:11:03 PM
GWEN HOLDMANN, Director, CEM INE Alaska Center of Energy Power,
University of Alaska Fairbanks, Fairbanks, Alaska, gave the
presentation, "The Railbelt Transmission Grid (now and future)."
She said that there is urgency around the railbelt system. She
added that at this point, the system can either advance or slip
backward.
2:11:41 PM
MS. HOLDMANN advanced to slide 2:
[Original punctuation provided.]
A Vision for our Railbelt
We want a system that:
• Allows cheapest cost power to get to end-users
wherever it is produced, whatever the source is,
and wherever that generation is located.
• Facilitates clean energy projects at scale for
energy security and diversification.
2:12:54 PM
MS. HOLDMANN advanced to slide 3:
[Original punctuation provided.]
Realities of the Railbelt Today
• Railbelt politics are inherently local
• Our energy sources are becoming more diverse
• Projects are more economical when built at scale
• The Railbelt transmission system needs to be
upgraded. We have an opportunity for federal
funding to help defray those costs.
• Alaska has avoided transmission deregulation
because we are not grid connected (thus not
subject to FERC)
• Finding analogous correlatives to Alaska can be
challenging
MS. HOLDMANN said that the markets in Iceland, Texas, and Hawaii are
most similar to Alaska's market and SB 257 includes elements of best
practices from these three jurisdictions.
2:16:04 PM
MS. HOLDMANN advanced to slide 5:
[Original punctuation provided.]
Three Goals:
• Eliminate pancaking wheeling rates and establish
a framework for how transmission costs will be
recovered and allocated
• Create an organization that can oversee, manage
and develop backbone transmission assets and that
is subject to appropriate regulation
• Re-imagining a planning process that uses a
whole-system approach (transmission, generation,
and distribution)
2:17:31 PM
SENATOR MERRICK asked whether Grid Resilience and Innovation
Partnerships (GRIP) fund payouts would be better made in a lump sum
or made over several years.
2:17:49 PM
MS. HOLDMANN replied that while she is not prepared to speak to this
issue, it is important to signal to the federal government that
Alaska is serious about matching these types of federal funds. She
stated that she would like to see Alaska benefit as much as possible
from these types of federal opportunities and not having a clear path
and process to match these funds makes the state less competitive in
this area. She expressed concern about this and added that GRIP
funding is not the only funding source. She listed several types of
energy sources and stated that Alaska must show that it is serious
about developing these types of projects in partnership with the
federal government.
2:19:07 PM
SENATOR MERRICK commented that she and Senator Bishop would likely
dig deeper into this when SB 257 is heard in the Senate Finance
Committee.
2:19:18 PM
MS. HOLDMANN advanced to slide 6:
[Original punctuation provided.]
Goal # 1: Remove pancaking wheeling rates
• Decisions about investment in projects or
economic dispatch should not be inhibited by the
cost of transmission, or the need to move power
across transmission lines with different
ownership
2:20:58 PM
MS. HOLDMANN advanced to slide 7:
[Original punctuation provided.]
Goal 1: Remove pancaking wheeling rates and establish
a framework for how costs will be recovered and
allocated
• "Pool backbone transmission system costs and
allocate those costs based on a coincident peak
or load share ratio basis" (Adapted from Texas
Substantive Rule 25.192)
• Coincident peak demand - period when electricity
usage (demand) is at its highest across the
entire system
• Load share ratio - considers users' overall
energy consumption over a specific period
• Transmission lines (like highways) are typically
built for peak demand, not how much energy
(traffic) flows through the system.
• Texas operates as an electrical "island" and
because power generated in Texas is not sent
outside of the state, Texas is exempt from
federal FERC regulation (like Alaska and Hawaii)
2:22:51 PM
SENATOR DUNBAR commented that Texas has become notorious for failures
of the energy grid system that led to freezing deaths. He asked for
reassurance that SB 257 would not cause the kinds of problems that
Texas has experienced.
2:23:40 PM
MS. HOLDMANN agreed that there are many challenges associated with
Texas's grid; however, the issuing being referenced was not an issue
with the grid but with the energy generation sources, which were not
able to operate in the cold temperatures and weather conditions that
Texas experienced. She stated that this is a separate issue and
pointed out that Texas is an open market, and this is one example of
why Alaska is not completely analogous to any other jurisdiction. She
explained that Texas is two orders of magnitude larger than Alaska's
railbelt grid in terms of the number of kilowatt hours sold on an
annual basis. Therefore, the open grid system does not easily
translate to use in Alaska. She said that the Railbelt Reliability
Council (RRC) - Alaska's electric reliability organization (ERO) - is
an important piece of the bigger picture in Alaska, where the need is
not only cheap power but also ensuring that the power is reliable.
She said that SB 257 allows RCA to consider actions that will have a
positive long-term impact on Alaska's energy supply.
2:25:44 PM
SENATOR DUNBAR asked if RRC has a specific role in the Railbelt
Transmission Organization (RTO).
2:25:51 PM
MS. HOLDMANN replied yes. She said that SB 257 attempts to clarify
the roles and responsibilities of the two organizations in relation
to one-another. She explained that in most jurisdictions, a
reliability organization is not responsible for planning - it focuses
on reliability and enforcement of reliability standards. She said
they do not want planning to occur in two different places. SB 257
moves planning function to the RTO, though RRC would still play an
important role in the planning process.
2:26:48 PM
CHAIR BJORKMAN asked what work products and outcomes can be expected
from RRC. He questioned the purpose of having an ERO given that RTO
would be responsible for planning.
2:27:22 PM
MS. HOLDMANN replied that reliability is an important component of a
functioning system. She explained that the failure in Texas was not
related to cheap power - which they had. Instead, the failure was a
result of inadequate reliability standards to ensure that the cheap
power was available to consumers. She reiterated that reliability is
an important function and therefore an ERO would be established as
part of this process.
2:28:21 PM
MS. HOLDMANN advanced to slide 8:
[Original punctuation provided.]
Goal 2: Create an organization that can oversee,
manage and develop backbone transmission assets and
that is subject to appropriate regulation
• Iceland provides an interesting analog to
Alaska's Railbelt due to similar transmission
length, population served, and high prevalence of
public power.
• Iceland has a competitive energy market, with
Landsnet as the national transmission system
operator, overseeing the country's transmission
infrastructure. Examining Iceland's governance
and asset management strategies, particularly
their evolution over the past three decades,
presents an invaluable learning opportunity for
Alaska.
• Iceland's electricity sector. Most distribution
utilities also operate generation assets, similar
to the Railbelt utilities.
2:30:39 PM
MS. HOLDMANN advanced to slide 9:
[Original punctuation provided.]
Goal 2: Create an organization that can oversee,
manage and develop backbone transmission assets and
that is subject to appropriate regulation
• Borrow from a simple governance structure that
has passed the test of time (in Alaska)
• The transmission tariff that establishes the rate
that consumers pay should be subject to
regulation (the Bradley Project is exempt)
• The Bradley Lake Project Management Committee
governance structure can be used as a starting
point to design a Railbelt Transmission
Organization
2:32:36 PM
SENATOR DUNBAR asked if existing transmission assets held by
other railbelt utilities would be transferred to RTO and, if so,
how the utilities would be compensated.
2:33:32 PM
MS. HOLDMANN replied that existing assets do not need to be
sold. She surmised that assets owned by the state of Alaska
would be rolled into RTO. She said that assets owned by utility
companies could be sold or leased - this would be decided by the
utility. She noted that this is similar to what was done in
Iceland. She pointed out that oftentimes, these assets are
rolled up in long-term debt held by the utility and separating
these assets would create challenges. She reiterated that each
utility would decide how to interact with RTO in terms of
ownership and management of the assets that they currently hold.
2:34:38 PM
CHAIR BJORKMAN asked who determines the difference between
"transmission" and "delivery" - and what process would be used.
2:35:20 PM
MS. HOLDMANN replied that there are specific rules that are
accepted by the industry to differentiate "backbone transmission
assets" (which is what SB 257 addresses) from "radial assets" -
and to distinguish these from "distribution assets." She said
that SB 257 leaves it to the RCA to define what constitutes the
railbelt backbone grid.
2:35:56 PM
SENATOR BISHOP surmised that there would be a kilowatt number to
define "transmission" and a kilowatt number to define
"distribution."
2:36:30 PM
MS. HOLDMANN replied that this is true; however, she explained
that this question deals more with the radial transmission line
serving a specific utility - or a portion of their service
territory. She clarified that this is not part of the backbone
transmission addressed by SB 257. She emphasized the importance
of distinguishing between the "highway" and what constitutes a
"side road" - even if it is at the same transmission size.
2:37:06 PM
CHAIR BJORKMAN commented that in Alaska, one "road" from Homer
to Healy would be the goal - and there is not a big grid there,
just one wire. He asked if this interpretation is correct.
2:37:28 PM
MS. HOLDMANN replied yes and clarified that it may be one or two
transmission lines.
2:37:34 PM
MS. HOLDMANN advanced to slide 10:
[Original punctuation provided.]
Goal 3: Design a planning process that uses a whole-
system approach
Integrated Grid Planning (IGP) is a successor concept
to Integrated Resource Planning. IGP emphasizes whole
system planning across generation, transmission, and
distribution resources.
Hawaii was an early adopter of IGP and may have coined
the term. According to the Hawaii Public Utilities
Commission, in 2018, the Hawaii Public Utilities
Commission opened the Integrated Grid Planning (IGP)
Docket (2018-0165) to replace earlier grid planning
efforts, namely Hawaiian Electric's Integrated
Resource Planning (19902014) and Power Supply
Improvement Planning (20142017)
• Hawaii differs from Alaska in that power is not
transmitted over long distances, and it is
primarily served by a single investor-owned
utility, HECO, which also owns the transmission
assets (with the exception of Kauai).
2:38:38 PM
MS. HOLDMANN advanced to slide 11:
[Original punctuation provided.]
Three Goals: SB 257
• Eliminate pancaking wheeling rates and establish
a framework for how transmission costs will be
recovered and allocated
• Create an organization that can oversee, manage
and develop backbone transmission assets and that
is subject to appropriate regulation
• Re-imagining a planning process that uses a
whole-system approach (transmission, generation,
and distribution)
2:40:11 PM
TONY IZZO, CEO, Matanuska Electric Association, Palmer, Alaska,
testified by invitation on SB 257. He said that he also speaks
as a co-chair of the Governor's Energy Security Taskforce, co-
chair of the railbelt subcommittee. He said he has been in the
utility business for 43 years. He stated that there are
immediate and secondary energy issues that need to be addressed.
He opined that the immediate issues are being addressed,
including the diversification of the fuel supply, renewable
energy, clean energy, etc.
2:43:32 PM
MR. IZZO said that SB 257 addresses a critical, parallel
process. He shared his belief that while triage is being done on
the immediate situation, work needs to be done to shift the
paradigm in order to avoid returning to the same problematic
cycle in ten years. He said that he has seen these cycles play
out numerous times over the years. He stated that the energy
taskforce looked at its work - based on the Governor's
instructions - to seek out a rate of 10 cents per kilowatt-hour.
He added that his utility is roughly 20 cents per kilowatt-hour.
He explained that the largest component of power is the fuel
cost - and the taskforce determined that 10 cents per kilowatt-
hour is not feasible at this time. Therefore, the taskforce
shifted its focus to determining ways to get to a future in
which it is possible.
MR. IZZO explained the three taskforce goals, which included
unifying and upgrading transmission assets; diversifying
generation; and increasing demand. He shared how visiting
Iceland allowed the taskforce to see how these goals could
successfully play out 30 years down the road. He stated that the
taskforce's intent for the transmission goal was to provide a
strong transmission system which would enable new generation
projects to integrate into the grid. He said that investing in
transmission and infrastructure - and unifying assets - would
enable the long-term goal of diversifying railbelt generation.
2:47:17 PM
MR. IZZO briefly discussed the differences between investor-
owned utilities and cooperatives and the system that resulted
from this structure. He explained how the GRIP funding would
solve some of the problems by creating an electron highway.
2:49:41 PM
CHAIR BJORKMAN asked what type of savings utilities like
Matanuska Electric Association would experience by eliminating
part of the spending reserve.
2:50:00 PM
MR. IZZO answered that he does not have a calculation. He said
this would be a low-cost operation, managed by the utilities.
Each utility brings its labor in kind. He expressed concern
about the ERO projected costs. He said that SB 257 needs to
separate the transmission in a utility from the backbone - e.g.
what is the transmission for MEA, with over 4800 miles of line -
104 miles is transmission serving the purpose of moving power
north and south. He said that if these assets were combined with
the state - and combined with large scale renewable energy
sources - the material benefit would come from lower-cost power
in the future.
2:51:58 PM
CHAIR BJORKMAN asked if there is broad agreement on the 104 mile
number.
2:52:07 PM
MR. IZZO replied that this is the number for Matanuska Electric
and he does not know what the other utilities' components will
be. He asserted that no utilities should be financially harmed
in this process and emphasized that the taskforce was very
specific that it was not taking from utilities, that no debt
covenants would be violated, and that revenue requirements must
be met. However, utilities would need to split out their
"backbone" from the rest of transmission. He shared his belief
that a third-party engineering firm would be best suited to
define what this is. He added that MEA would recover its revenue
requirement on the 104 miles through the backbone and the rest
would be made up through membership.
2:53:19 PM
JOHN BURNS, President and CEO, Golden Valley Electric
Association, Fairbanks, Alaska, testified by invitation on SB
257. He said that he is in support of this legislation and that
its comprehensive nature aligns with the recommendations of the
Alaska Energy Security Taskforce. Specifically, it relates to
priority A of the Railbelt Transmission, Generation, and Storage
subcommittee. He shared some of the benefits noted by the
subcommittee, including reducing transmission constraints on the
railbelt grid while allowing for faster integration of clean
energy generation; system redundancy resilience; benefitting
utilities and ratepayers by sharing power throughout the region;
and reducing cost and promoting job creation, among other
benefits. He said that the goal of SB 257 is to ensure that the
lowest cost electron - from whatever source - can be transmitted
across the railbelt to wherever it is needed, unconstrained, and
at a single flat rate. He asserted that this is the only way to
lower costs across the railbelt. He noted that this legislation
is modeled after Iceland and pointed out that Iceland went from
economically challenged and importing much of its power to a
thriving country where younger generations choose to stay. He
summed up by saying that SB 257 provides not only the structure,
but also the funding and planning mechanisms - along with the
powers and duties - of the railbelt organization.
2:57:06 PM
CURTIS THAYER, Executive Director, Alaska Energy Authority
(AEA), Anchorage, Alaska, testified by invitation on SB 257. He
said that many of the transmission lines were constructed 40-60
years ago. Since their construction, the demands on the power
grid have increased significantly - and total energy sales for
the railbelt have nearly tripled over the past 20 years. He also
pointed to concerns about the availability of Cook Inlet natural
gas. He surmised that growth in total energy sales will continue
- and renewable energy sources will be needed. He stated that a
robust, resilient, and reliable electrical transmission grid is
essential for the future of Alaska. He added that a well-
functioning transmission system depends on several basic
characteristics: reliability and resilience (to reduce and avoid
outages); ability to meet growing energy demands; flexibility to
adapt to changing loads; and cost-effectiveness.
2:58:35 PM
CHAIR BJORKMAN said that it is imperative that customers get the
lowest cost power possible, in order to move the economy
forward. He added that it is also imperative that all of the
utilities work together to make the utility system better. This
would also empower the gains made from a GRIP match into a
system like the one in SB 257. He surmised that if the utilities
are asking Alaskans to allocate $100s of millions over the next
ten years for a project that creates redundancy and security
from Homer to Healy, it is fair for the Alaskan people to ask
for accountability, modernization, and for all the utilities to
work together. He expressed his understanding that natural gas
is preferred by many; however, he expressed doubt about this
possibility, particularly in the short or medium-term. He stated
that something needs to be done and he would like to see all
utilities working together on this project and added that if no
action is taken, homes will be cold and have no lights because
there is not enough fuel. He stated that the current system is
not capable of moving the energy that is needed. He opined that
the time to act is now and emphasized that doing nothing is not
an option. He noted that there are principles in place that must
be kept in mind and costs should be fairly distributed. He said
that open access means open access for cheap generation and
these benefits should be available to everyone. He asserted that
these conversations need to happen and encouraged everyone to
participate. He stressed the need for accountability during this
process.
3:02:32 PM
[CHAIR BJORKMAN held SB 257 in committee.]
3:02:43 PM
There being no further business to come before the committee,
Chair Bjorkman adjourned the Senate Labor and Commerce Standing
Committee meeting at 3:02 p.m.