Legislature(2009 - 2010)BARNES 124

03/09/2010 03:00 PM ENERGY

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Heard & Held
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Heard & Held
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Heard & Held
                   HB 411-POWER PROJECT FUND                                                                                
4:44:20 PM                                                                                                                    
CO-CHAIR MILLETT announced that the  next order of business would                                                               
be HOUSE  BILL NO.  411, "An  Act relating  to the  power project                                                               
fund;  authorizing  the Alaska  Energy  Authority  to charge  and                                                               
collect fees relating to the  power project fund; authorizing the                                                               
Alaska  Energy  Authority  to sell  and  authorizing  the  Alaska                                                               
Industrial Development and Export  Authority to purchase loans of                                                               
the power  project fund; providing  legislative approval  for the                                                               
sale and  purchase of loans of  the power project fund  under the                                                               
memorandum  of   understanding  dated  February  17,   2010;  and                                                               
providing for an effective date."                                                                                               
4:44:41 PM                                                                                                                    
SARA  FISHERGOAD, Deputy  Director-Operations, Alaska  Industrial                                                               
Development  &   Export  Authority  (AIDEA)  and   Alaska  Energy                                                               
Authority (AEA),  Department of  Commerce, Community,  & Economic                                                               
Development  (DCCED), informed  the committee  that HB  411 deals                                                               
with  two power  project  fund issues.   The  first  issue is  to                                                               
authorize the sale of power project  fund loans from AEA to AIDEA                                                               
in  order to  provide approximately  $20.6 million  to the  power                                                               
project fund  for new loans.   She noted that AEA  and AIDEA have                                                               
executed a  memorandum of understanding  (MOU) that  outlines the                                                               
terms for  the purchase and sale.   To address the  second issue,                                                               
the  bill allows  AEA to  adopt  regulations to  establish a  fee                                                               
structure for the power project  fund.  Her department recommends                                                               
the  collection of  application and  loan origination  fees in  a                                                               
manner  similar  to other  AEA  loan  programs.   Ms.  FisherGoad                                                               
pointed out that  the loans to be sold are  current, and AEA will                                                               
continue to assume the risk for future delinquent loans.                                                                        
4:47:20 PM                                                                                                                    
CO-CHAIR MILLETT asked for a sectional analysis.                                                                                
MS.  FISHERGOAD advised  that section  1  of the  bill amends  AS                                                               
42.45.010(a) to  allow the proceeds  of the sale to  be deposited                                                               
into the  power project fund.   Section 2 amends  AS 42.45.010(d)                                                               
to repeal  and reenact  AEA authority to  adopt a  fee structure.                                                               
Section 3  adds new  subsections that provide  that the  fees are                                                               
deposited  into the  general fund,  and  provides AEA  authority,                                                               
with  legislative approval,  to  sell and  repurchase the  loans.                                                               
Section  4 amends  AS 44.88.080  to allow  AIDEA to  purchase the                                                               
loans from AEA  as an investment of the revolving  fund.  Section                                                               
5 provides  for legislative approval  for AEA to sell,  and AIDEA                                                               
to purchase,  the power  project fund  loans, and  references the                                                               
2/17/10 MOU between  AIDEA and AEA.  Finally,  section 6 provides                                                               
for an immediate effective date.                                                                                                
4:49:50 PM                                                                                                                    
CO-CHAIR  MILLETT asked  for  the current  balance  of the  power                                                               
project fund.                                                                                                                   
4:49:55 PM                                                                                                                    
MS.  FISHERGOAD  said that  available  funds  are currently  $5.4                                                               
million, with two  pending loan applications.  She  said, "We are                                                               
short of cash."                                                                                                                 
4:50:56 PM                                                                                                                    
CO-CHAIR  MILLETT assumed  the sale  of existing  loans will  add                                                               
$20.6 million.                                                                                                                  
MS. FISHERGOAD said that is an approximate amount.                                                                              
4:51:20 PM                                                                                                                    
CO-CHAIR MILLETT asked whether there  are other loan applications                                                               
4:51:36 PM                                                                                                                    
MS.   FISHERGOAD  explained   that  there   are  no   other  loan                                                               
applications  pending; however,  her department  expects grantees                                                               
for the renewable  energy fund will be  looking for opportunities                                                               
for match  requirements, and there  is less money  available from                                                               
the  Denali Commission.   She  anticipated more  activity in  the                                                               
loan program for powerhouse upgrades,  bulk fuel upgrades, energy                                                               
efficiency upgrades, and  the renewable energy fund.   In further                                                               
response to  Co-Chair Millett, she  said applicants  for matching                                                               
funds are  required to complete  a loan application  process with                                                               
due diligence.                                                                                                                  
4:53:11 PM                                                                                                                    
CO-CHAIR  EDGMON expressed  his interest  in learning  more about                                                               
the fund.                                                                                                                       
4:53:44 PM                                                                                                                    
MS. FISHERGOAD called attention to  the MOU between AEA and AIDEA                                                               
that outlines the  purpose of the fund.  She  noted the agreement                                                               
section  specifies  the  discount   rate  is  6.02  percent,  and                                                               
outlines  the repurchase  requirements  for AEA  in  case a  loan                                                               
defaults.   Ms. FisherGoad  discussed one risk  to AIDEA  in that                                                               
there may be a delay in the  repurchase if AEA is short of funds.                                                               
Finally,  the last  recital  outlines some  of  the details  that                                                               
would need to be followed in case a loan is repurchased by AEA.                                                                 
4:57:03 PM                                                                                                                    
MS. FISHERGOAD,  in response to Representative  Tuck, pointed out                                                               
that the  last page of  the MOU is  Exhibit A, that  outlines the                                                               
loans   that  are   to  be   sold.     In  further   response  to                                                               
Representative Tuck,  she explained that after  a repurchase, AEA                                                               
would be  the agency  collecting on the  loan.   Furthermore, the                                                               
purpose  of the  repurchase agreement  is to  reduce the  risk to                                                               
AIDEA, thus  the purchase  price of the  loans remains  closer to                                                               
the paramount  of the loans outstanding.   The intent was  to not                                                               
transfer the risk of a loan defaulting from AEA to AIDEA.                                                                       
4:57:49 PM                                                                                                                    
CO-CHAIR EDGMON  referred to  the amount of  money set  aside for                                                               
the governor's  scholarship program, and questioned  why an equal                                                               
amount of money  is not set aside for energy  projects around the                                                               
4:58:46 PM                                                                                                                    
CO-CHAIR  MILLETT observed  there is  support from  the committee                                                               
for the power project fund.                                                                                                     
4:59:36 PM                                                                                                                    
[Although  not  formally  stated,  HB 411  was  held  for  public                                                               

Document Name Date/Time Subjects
HB411-CED-AEA-3-2-10.pdf HENE 3/9/2010 3:00:00 PM
HENE 3/16/2010 3:00:00 PM
HB 411
HB411-CED-AIDEA-3-2-10.pdf HENE 3/9/2010 3:00:00 PM
HENE 3/16/2010 3:00:00 PM
HB 411
Sectional for HB 411 and SB 301.pdf HENE 3/9/2010 3:00:00 PM
HENE 3/16/2010 3:00:00 PM
HB 411
SB 301
2-17-2010_MOU_AIDEA_AEA.pdf HENE 3/9/2010 3:00:00 PM
FINAL House Transmittal Letter LL0974.pdf HENE 3/9/2010 3:00:00 PM
HB0411A.pdf HENE 3/9/2010 3:00:00 PM
HENE 3/16/2010 3:00:00 PM
HB 411
Energy Committee Agenda 03092010.pdf HENE 3/9/2010 3:00:00 PM
HB0278A.pdf HENE 3/9/2010 3:00:00 PM
HB 278
HB 278 Kawerak Letter.PDF HENE 3/9/2010 3:00:00 PM
HB 278
HB 278 Sectional.PDF HENE 3/9/2010 3:00:00 PM
HB 278
HB 278 Sponsor Statement.PDF HENE 3/9/2010 3:00:00 PM
HB 278
HB278-REV-AHFC-3-8-10 Energy Efficiency Loans.pdf HENE 3/9/2010 3:00:00 PM
HB 278
HB 278 Q&A.PDF HENE 3/9/2010 3:00:00 PM
HB 278
HB 278 letters of Support.PDF HENE 3/9/2010 3:00:00 PM
HB 278
MOU AEA-AIDEA HB 411.PDF HENE 3/9/2010 3:00:00 PM
HENE 3/16/2010 3:00:00 PM
HB 411
Sample Home Energy Voucher Language for HB 278.pdf HENE 3/9/2010 3:00:00 PM
HB 278
Tuck Energy Committtee Hearing Testimony 030910.pdf HENE 3/9/2010 3:00:00 PM