Legislature(2009 - 2010)BARNES 124

04/09/2009 03:00 PM House ENERGY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Testimony <Invitation Only> --
Heard & Held
-- Testimony <Invitation Only> --
Moved Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
HB 163-ALASKA NATURAL GAS DEVELOPMENT AUTHORITY                                                                               
CO-CHAIR EDGMON announced that the  first order of business would                                                               
be HOUSE  BILL NO.  163, "An  Act clarifying  the purpose  of the                                                               
Alaska  Natural  Gas  Development   Authority;  and  relating  to                                                               
definitions of certain terms in AS 41.41."                                                                                      
3:08:23 PM                                                                                                                    
JOE  BALASH, Special  Staff Assistant,  Office  of the  Governor,                                                               
informed the committee the governor  introduced HB 163 to broaden                                                               
the  authority of  the Alaska  Natural Gas  Development Authority                                                               
(ANGDA).   The  authority originally  was created  with statutory                                                               
authority  to  take  North  Slope gas  to  tidewater.    Previous                                                               
changes  to the  statutes  in 2004  were made  in  order to  also                                                               
review  Cook Inlet  in  addition  to Prince  William  Sound as  a                                                               
tidewater destination.   This bill would allow  ANGDA to consider                                                               
gas  supplies other  than  the North  Slope  for destinations  in                                                               
Southcentral Alaska.                                                                                                            
The committee took an at-ease from 3:10 p.m. to 3:11 p.m.                                                                       
3:11:44 PM                                                                                                                    
CO-CHAIR  EDGMON asked  Representative  Ramras  to introduce  his                                                               
REPRESENTATIVE  RAMRAS made  a motion  to adopt  Amendment 1,  as                                                               
     Page 1, line 1, following "Authority;":                                                                                  
          Insert "relating to prior approval by the                                                                           
       governor or the commissioner of revenue before the                                                                     
      exercise of certain powers of the Alaska Natural Gas                                                                    
     Development Authority;"                                                                                                  
     Page 2, following line 7:                                                                                                  
     Insert new bill sections to read:                                                                                          
        "* Sec. 3. AS 41.41.200 is amended to read:                                                                         
          Sec. 41.41.200. Powers of the authority. In                                                                         
     furtherance of its corporate purposes, in addition to                                                                      
      its other powers, and subject to the approval by the                                                                  
     governor under AS 41.41.210, the authority may                                                                         
               (1)  sue and be sued;                                                                                            
               (2)  adopt a seal;                                                                                               
               (3)  adopt, amend, and repeal bylaws and                                                                         
               (4)  make and execute contracts and other                                                                        
               (5)  in its own name acquire property,                                                                           
       lease, rent, convey, or acquire real and personal                                                                        
     property; a project site or part of a project site may                                                                     
     be acquired by eminent domain;                                                                                             
               (6)  acquire natural gas supplies;                                                                               
               (7)  issue bonds and otherwise incur                                                                             
     indebtedness   in   accordance  with   AS 41.41.300   -                                                                    
     41.41.410 in order to pay the cost of a project;                                                                           
               (8)  accept gifts, grants, or loans from and                                                                     
     enter  into contracts  or other  transactions regarding                                                                    
     gifts, grants,  or loans  with a  federal agency  or an                                                                    
     agency   or    instrumentality   of   the    state,   a                                                                    
     municipality, private organization, or other source;                                                                       
               (9)  enter into contracts or agreements with                                                                     
     a  federal agency,  agency  or  instrumentality of  the                                                                    
     state,  municipality, or  public or  private individual                                                                    
     or entity, with respect to the exercise of its powers;                                                                     
               (10)  charge fees or other forms of                                                                              
     remuneration for  the use  of authority  properties and                                                                    
               (11)  defend and indemnify a current or                                                                          
     former member of  the board or an employee  or agent of                                                                    
     the authority  against the costs,  expenses, judgments,                                                                    
     and liabilities  as a result  of actions taken  in good                                                                    
     faith on behalf of the authority; and                                                                                      
               (12)  purchase insurance to protect its                                                                          
     assets,  services,  and employees  against  liabilities                                                                    
     that   may   arise   from  authority   operations   and                                                                    
        *  Sec.  4. AS 41.41  is  amended  by adding  a  new                                                                  
     section to article 2 to read:                                                                                              
          Sec. 41.41.210. Required approval. (a) The                                                                          
     authority    may   not    exercise    the   power    in                                                                    
     AS 41.41.200(5),  (6), (7),  (8),  or  (9) without  the                                                                    
     prior  written  approval  of  the  governor  after  the                                                                    
     governor  finds  that  the project  proposed  or  being                                                                    
     developed by the  authority is in the  best interest of                                                                    
     the state.  The governor  shall give written  notice to                                                                    
     the authority of the approval or denial of approval.                                                                       
          (b)  The authority may not exercise the power in                                                                      
     AS 41.41.200(4) without  the prior written  approval of                                                                    
     the commissioner  of revenue after the  commissioner of                                                                    
     revenue  finds that  the execution  of the  contract or                                                                    
     other instrument is in the  best interest of the state.                                                                    
     The commissioner  of revenue shall give  written notice                                                                    
     to  the   authority  of  the  approval   or  denial  of                                                                    
          (c)  The written approval or denial of approval                                                                       
     in   (a)  or   (b)   of  this   section   is  a   final                                                                    
     administrative  action for  purposes of  appeal to  the                                                                    
     superior court."                                                                                                           
     Renumber the following bill sections accordingly.                                                                          
CO-CHAIR EDGMON objected for the purpose of discussion.                                                                         
3:11:58 PM                                                                                                                    
REPRESENTATIVE  RAMRAS  expressed  increasing  alarm  at  ANGDA's                                                               
recklessness  and  inability to  "play  well  with others."    He                                                               
offered his support for Governor  Palin's efforts for an in-state                                                               
bullet line.   He opined the  state faces a unique  situation, in                                                               
which the governor's  project manager, Harry Noah,  and the chief                                                               
executive officer of ANGDA, Harold  Heinz, seem to disagree since                                                               
Harold  Heinze  seems to  want  to  "pull  the state  in  another                                                               
direction."   He explained that  HB 163 clarifies the  purpose of                                                               
ANGDA, but  also expands its  authority.  He referred  members to                                                               
proposed section 4 of Amendment 1, and read:                                                                                    
     The  authority  may  not  exercise   the  power  in  AS                                                                    
     41.41.200(5),(6),(7),(8),  or  (9)  without  the  prior                                                                    
     written  approval of  the governor  after the  governor                                                                    
     finds that  the project proposed or  being developed by                                                                    
     the authority  is in  the best  interest of  the state.                                                                    
     The  governor   shall  give   written  notice   to  the                                                                    
     authority of the approval or denial of approval.                                                                           
REPRESENTATIVE RAMRAS  described ANGDA as a  dysfunctional group,                                                               
and one that is not following  the instructions of the state.  He                                                               
opined  ANGDA  has a  spotty  record  of following  its  specific                                                               
instructions  in the  past six  months.   He suggested  that this                                                               
amendment would give more control  to the governor and represents                                                               
good public policy.  With  respect to other sections of Amendment                                                               
1,  section  3  would  address  the  Beluga  to  Fairbanks  (B2F)                                                               
project.  He recalled hearing  pipeline safety staff's concern at                                                               
a  recent  energy convention  over  proposed  black plastic  pipe                                                               
being buried in the ground from  Glenallen to Beluga.  Thus, this                                                               
amendment will  prevent the state from  taking responsibility for                                                               
that project.   He reiterated that proposed section  4 will place                                                               
ANGDA under the governor, at least  during a period of time until                                                               
the  state has  more  clarity of  how ANGDA  will  function as  a                                                               
productive quasi-entity within the state.                                                                                       
3:15:47 PM                                                                                                                    
MR. BALASH  reviewed the amendment.   He cautioned that  he would                                                               
not speak for the administration  or the governor on Amendment 1.                                                               
He pointed  out that rarely does  the governor make a  finding in                                                               
statute,  that   those  are  typically   duties  assigned   to  a                                                               
commissioner with expertise in the matters at hand.                                                                             
3:16:43 PM                                                                                                                    
REPRESENTATIVE RAMRAS  stressed that  in this  instance it  is in                                                               
the best  interest of  the state  for the  governor to  have more                                                               
authority in this  regard.  He recalled a news  report that ANGDA                                                               
failed to  recognize the  direction the state  is headed  on this                                                               
issue.  He feared that ANGDA  was trying to set energy policy for                                                               
the state.   He preferred the governor provide  leadership on the                                                               
issue of an in-state gas pipeline and not a committee.                                                                          
3:17:45 PM                                                                                                                    
CO-CHAIR EDGMON pointed  out that HB 163 has  two more committees                                                               
of referral.  He stated  that he allowed Representative Ramras to                                                               
introduce   Amendment  1   as   a  concept.      He  then   asked                                                               
Representative Ramras to withdraw the amendment.                                                                                
3:18:19 PM                                                                                                                    
REPRESENTATIVE RAMRAS withdrew Amendment 1.                                                                                     
CO-CHAIR EDGMON withdrew his objection.                                                                                         
3:18:38 PM                                                                                                                    
BOB FAVRETTO,  Member, Alaska  Natural Gas  Development Authority                                                               
(ANGDA) Board of Directors, Department  of Revenue (DOR), related                                                               
that  he   felt  somewhat  disturbed  by   Representative  Ramras                                                               
comments.  He  stressed the importance of recent  dialogue at the                                                               
ANGDA board meetings.  He  wished Representative Ramras had heard                                                               
dialogue  the   ANGDA  board  had   at  those   recent  meetings.                                                               
Additionally he suggested that Mr.  Heinze could echo comments to                                                               
the board.                                                                                                                      
3:19:38 PM                                                                                                                    
MR.  FAVRETTO, in  response  to  Representative Ramras,  answered                                                               
that  the statutes  clearly state  that ANGDA  has the  authority                                                               
over the  proposed in-state  natural gas  pipeline and  not Harry                                                               
Noah,  who is  a representative  appointed by  the governor.   He                                                               
explained that it was somewhat  unclear initially at the meetings                                                               
as to the authority,  but by the end of the  meeting it was clear                                                               
that moving  the pipeline forward  is a  shared goal of  both Mr.                                                               
Heinze and Mr. Noah.                                                                                                            
3:20:32 PM                                                                                                                    
HAROLD  HEINZE,  Chief  Executive  Officer,  Alaska  Natural  Gas                                                               
Development  Authority  (ANGDA),  Department  of  Revenue  (DOR),                                                               
stated that he has  not seen Amendment 1.  He  said that he takes                                                               
exception to  the characterization by Representative  Ramras with                                                               
respect to ANGDA.   He offered that the past  several months have                                                               
been  difficult due  to  a  number of  restrictions  made by  the                                                               
administration.  He  explained that ANGDA has  evolved from 2003,                                                               
and  especially  last  year  with  the  governor's  challenge  to                                                               
provide  energy relief  to communities  in the  Interior.   Thus,                                                               
ANGDA's efforts to  modify the spur line to  Fairbanks using Cook                                                               
Inlet natural  gas.  Additionally, ANGDA  revisited its long-term                                                               
plan  with  respect  to  propane,  in an  effort  to  develop  an                                                               
opportunity to transport  North Slope gas in the  form of propane                                                               
from the  Beaufort Sea to  western Alaska, and along  the highway                                                               
system to Fairbanks.   Additionally, ANGDA's main  focus has been                                                               
to continue to  work with Denali and TransCanada  on the proposed                                                               
gas  pipeline.    He  expressed ANGDA's  focus  and  emphasis  on                                                               
capturing the  benefits of  the intrastate  commerce and  for the                                                               
state  achieve the  best consumer  terms for  intrastate commerce                                                               
requires the ANGDA  participate in the open season.   Further, he                                                               
opined that the routes under  consideration for natural gas would                                                               
require  intermediate   steps  to   bridge  the  gap   until  the                                                               
availability  of  North  Slope  gas.   He  characterized  ANGDA's                                                               
efforts as being on target with  the governor's program.  He said                                                               
he  found  it   difficult  to  understand  how   ANGDA  could  be                                                               
considered unresponsive to the needs of the governor.                                                                           
3:24:33 PM                                                                                                                    
MR. HEINZE  stated the purpose  of HB  163 is to  clarify ANGDA's                                                               
long-term  broad  authority.    He  specified  that  many  people                                                               
believe  ANGDA's  purpose  is  to  build  a  project.    However,                                                               
although it  has that  ability, ANGDA's emphasis  is to  move the                                                               
project forward in the early  stages, reduce risk for the private                                                               
sector,  and  provide opportunities  for  financing  so that  the                                                               
ultimate consumer receives the benefit.                                                                                         
3:25:18 PM                                                                                                                    
REPRESENTATIVE  RAMRAS   asked  Mr.  Heinze  to   define  ANGDA's                                                               
relationship  with the  governor's in-state  gas pipeline  chief,                                                               
Harry Noah.                                                                                                                     
MR. HEINZE answered  that Mr. Noah has been charged  to work on a                                                               
project for the  governor that links the North  Slope directly to                                                               
areas  inside the  state without  any  dependence on  gas from  a                                                               
large pipeline.   He underscored ANGDA's  cooperation and support                                                               
for the in-state gas pipeline chief.                                                                                            
3:26:50 PM                                                                                                                    
REPRESENTATIVE  RAMRAS  refined  his  question  and  specifically                                                               
asked  whether he  was  "working  with Mr.  Noah"  or  if he  was                                                               
"deferential  to  Mr. Noah  and  the  governor" with  respect  to                                                               
building the proposed in-state gas bullet line.                                                                                 
MR. HEINZE answered  that ANGDA has not been working  on a bullet                                                               
line or  a line directly to  the North Slope, but  ANGDA supports                                                               
that effort.   He offered that the bullet line  is one of several                                                               
important options  for the state.   At the same time,  ANGDA will                                                               
pursue on  a parallel track other  efforts it has begun,  such as                                                               
to pursue  the spur  line, which  would tap into  a main  line to                                                               
Canada  to bring  some  of  the North  Slope  gas  to markets  in                                                               
Southcentral  Alaska.   He  conceded  that a  spur  line may  not                                                               
benefit  communities such  as Fairbanks  but  will benefit  other                                                               
communities  in   the  Cook  Inlet  area   providing  significant                                                               
advantages  over  a   bullet  line.    In   further  response  to                                                               
Representative Ramras, Mr. Heinze said  it seems that AS 41.41 is                                                               
clear on authority.   He referred to a memorandum  dated April 7,                                                               
2009 from Lisa  Weissler and Larry Ostrovsky,  Department of Law,                                                               
that clarifies  the actions ANGDA  has taken are well  within the                                                               
statutory  authority.     He  said  he  was  not   aware  of  any                                                               
instructions from  the governor that  are counter to  anything in                                                               
the statutes.                                                                                                                   
3:28:12 PM                                                                                                                    
REPRESENTATIVE RAMRAS  repeated his  question, and  asked whether                                                               
Mr. Heinze is deferential to Mr. Noah.                                                                                          
3:29:33 PM                                                                                                                    
MR.  HEINZE,  in  further   response  to  Representative  Ramras,                                                               
explained  he personally  reports to  the Board  of Directors  of                                                               
ANGDA.   He highlighted that the  board has been very  clear that                                                               
ANGDA is  to work in  full cooperation with the  governor's chief                                                               
of  the  in-state   pipeline.    He  understood   that  Mr.  Noah                                                               
represents  the project  to go  to the  North Slope  directly for                                                               
gas.  At the same time, the  board has not accepted that Mr. Noah                                                               
has authority  over matters  that are  prescribed in  statute for                                                               
ANGDA's  authority.   He  offered  his belief  that  AS 41.41  is                                                               
clear,  that  he also  submitted  a  memorandum (memo)  from  the                                                               
attorney general  that ascertains  that ANGDA actions  are within                                                               
its authority.                                                                                                                  
3:30:24 PM                                                                                                                    
MR.  HEINZE  then  drew attention  to  the  previously  mentioned                                                               
memorandum from  the assistant attorneys  general dated  April 7,                                                               
2009.   He offered his belief  that the memo makes  it clear that                                                               
ANGDA  has  operated  within its  statutory  authority  and  will                                                               
continue to do  so.  He said  in the long run that  the bill will                                                               
be helpful with  respect to the bonding  and banking instruments.                                                               
He asked members to consider passing HB 163.                                                                                    
3:31:41 PM                                                                                                                    
TOM LAKOSH  began his  testimony by first  qualifying that  he is                                                               
representing himself and is not  an attorney.  He understood that                                                               
ANGDA  has determined  it is  an undue  burden for  ratepayers in                                                               
Southcentral Alaska to  build a bullet line.   He also understood                                                               
that Representative  Ramras is  interested in  a subsidy  for his                                                               
constituents prior to building the  main gas pipeline.  He opined                                                               
that the  public interest and  ratepayers would be  better served                                                               
to stop the export of natural  gas and developing the rest of the                                                               
gas from Cook Inlet and  still provide free propane to Fairbanks.                                                               
He  suggested  state exploration  and  production  in Cook  Inlet                                                               
would be  much cheaper  than a spur  line or a  bullet line.   He                                                               
further  suggested  exploring  other options  for  Fairbanks  for                                                               
heating and gas supply.                                                                                                         
3:35:23 PM                                                                                                                    
PAUL D.  KENDALL commented that  all Alaskans seem to  talk about                                                               
is  natural gas.    He  said he  thinks  that  Anchorage and  the                                                               
Matanuska-Susitna area  could be  converted to electric  by using                                                               
water  and wind  technology.   He offered  that if  the state  is                                                               
going to  propose a gas  pipeline that he  would like to  see the                                                               
specific  proposal.     He  stated  he  would  like   to  see  an                                                               
itemization of the name of each  user, the amount of the use, and                                                               
certify the  use, such  as a  list of schools  and the  amount of                                                               
usage.  This would show the public  who is using the gas and then                                                               
the entities  can pay for  it.  If  school districts want  to use                                                               
fossil fuels,  then he should  not have to  pay for their  use of                                                               
outdated technology, he opined.   Additionally, he further stated                                                               
he would like to see  the total revenue and itemized expenditures                                                               
for the costs  of securing natural or piped gas.   In closing, he                                                               
said  he thinks  the  overall  problem stems  from  not having  a                                                               
defined energy policy.   He recommended a four to  five day forum                                                               
to  assess wind,  electric, and  solar energy.   He  stressed the                                                               
importance of  an open  process and not  to allow  proprietary or                                                               
secret information.                                                                                                             
3:40:39 PM                                                                                                                    
PAUL FUHS stated  that he is representing himself,  as a consumer                                                               
of gas  in Southcentral.   He presented written  information from                                                               
the Western  Alaska Energy Corridor,  which was presented  as the                                                               
reason  for the  drafting of  HB  163.   He related  that he  had                                                               
discussed an  idea with some  people at  the Donlin Creek  LLC, a                                                               
Barrick NovaGold company  with respect to running a  spur line to                                                               
pick up  the big mines.   [The Donlin Creek LLC  proposes to work                                                               
with the residents of the Yukon  Kuskokwim to develop a gold mine                                                               
13 miles north  of the Middle Kuskokwim River  village of Crooked                                                               
Creek.]  He expanded by explaining  this was a potential means of                                                               
supplying  villages in  Western Alaska  with energy.   He  opined                                                               
that ANGDA's authority was limited  geographically.  Thus, HB 163                                                               
was  drafted to  remedy that  issue.   He stated  that this  bill                                                               
would allow ANGDA to work in  other parts of the state outside of                                                               
the  main pipeline  corridor.   He opined  that another  instance                                                               
might be  if a gas  pipeline goes  through Canada that  a smaller                                                               
pipeline  could be  built to  Haines or  down the  Taku River  to                                                               
Southeast Alaska.   He noted  that the statutes provide  that the                                                               
board is appointed  by the governor.  He also  offered his belief                                                               
that  a problem  of cooperation  between ANGDA  and the  in-state                                                               
pipeline does not exist.                                                                                                        
3:42:44 PM                                                                                                                    
MR.  FUHS,  in response  to  Representative  Johansen, stated  he                                                               
supports HB  163 to  allow ANGDA  to work in  other areas  of the                                                               
state.   He  pointed  out that  the  letter on  the  back of  his                                                               
handout is  from Senator  Lyman Hoffman  asking ANGDA  to analyze                                                               
this proposal  and perform a  baseline analysis  for feasibility.                                                               
He stated that  the Department of Law answered  that the statutes                                                               
do not allow ANGDA to operate outside the pipeline corridor.                                                                    
3:43:10 PM                                                                                                                    
REPRESENTATIVE JOHANSEN  stated he  thought Mr. Fuhs  should have                                                               
provided the  information sooner to  allow members to  digest new                                                               
MR FUHS apologized.                                                                                                             
3:44:02 PM                                                                                                                    
CO-CHAIR EDGMON,  after first determining  no one else  wished to                                                               
testify, closed public testimony on HB 163.                                                                                     
3:44:12 PM                                                                                                                    
REPRESENTATIVE RAMRAS  commented that he  did not hear  an answer                                                               
from  Mr. Heinze.    He  stated that  it  was  unclear how  ANGDA                                                               
operates, but the  bill expands the authority of ANGDA.   He said                                                               
that he would not support HB 163.   He opined that the bill gives                                                               
more   authority  to   ANGDA,  when   ANGDA  has   not  currently                                                               
demonstrated it can move responsibly with the administration.                                                                   
3:45:53 PM                                                                                                                    
REPRESENTATIVE  DAHLSTROM moved  to  report HB  163, Version  26-                                                               
GH1057\A  out of  committee with  individual recommendations  and                                                               
the accompanying fiscal notes.                                                                                                  
3:46:10 PM                                                                                                                    
REPRESENTATIVE RAMRAS objected.                                                                                                 
A  roll call  vote was  taken.   Representatives Johansen,  Tuck,                                                               
Dahlstrom, and Edgmon voted in  favor of HB 163.  Representatives                                                               
Ramras  and Petersen  voted against  it.   Therefore, HB  163 was                                                               
reported out of  the House Special Committee on Energy  by a vote                                                               
of 4-2.                                                                                                                         
3:47:19 PM                                                                                                                    
The committee took an at-ease from 3:46 p.m. to 3:48 p.m.                                                                       

Document Name Date/Time Subjects
CSHB182(ENE) Legal Memo.pdf HENE 4/9/2009 3:00:00 PM
HB 182
Changes from HB191 to CS.pdf HENE 4/9/2009 3:00:00 PM
HB 191
CSHB182(ENE).pdf HENE 4/9/2009 3:00:00 PM
HB 182
HB148 Leg Reseaarch Dec 2008.pdf HENE 4/9/2009 3:00:00 PM
HB 148
HB148 Leg Research Feb 2009.pdf HENE 4/9/2009 3:00:00 PM
HB 148
HB148 Sectional.pdf HENE 4/9/2009 3:00:00 PM
HB 148
HB148 Sponsor Statement.pdf HENE 4/9/2009 3:00:00 PM
HB 148
HB148 Fiscal Note.pdf HENE 4/9/2009 3:00:00 PM
HB 148
HB163 Fiscal Note 1.pdf HENE 4/9/2009 3:00:00 PM
HB 163
HB163 Fiscal Note 2.pdf HENE 4/9/2009 3:00:00 PM
HB 163
HB148 Fiscal Note2.pdf HENE 4/9/2009 3:00:00 PM
HB 148
HB191 Anchorage.pdf HENE 4/9/2009 3:00:00 PM
HB 191
HB191 CS.pdf HENE 4/9/2009 3:00:00 PM
HB 191
HB191 Fiscal Note.pdf HENE 4/9/2009 3:00:00 PM
HB 191
HB191 Fiscal Note2.pdf HENE 4/9/2009 3:00:00 PM
HB 191
Hb191 Generation Reactors.pdf HENE 4/9/2009 3:00:00 PM
HB 191
Hb191 Licensing.pdf HENE 4/9/2009 3:00:00 PM
HB 191
HB191 Power Point.pdf HENE 4/9/2009 3:00:00 PM
HB 191
HB191 Nuclear Waste.pdf HENE 4/9/2009 3:00:00 PM
HB 191
HB191 Sponsor Statement.pdf HENE 4/9/2009 3:00:00 PM
HB 191