Legislature(2015 - 2016)CAPITOL 17

03/31/2015 10:15 AM ENERGY

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Audio Topic
10:21:17 AM Start
10:21:54 AM HB78
10:40:20 AM Presentation: American Transmission Company
11:02:00 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation: TELECONFERENCED
"Transmission Companies & Alaska's Grid" by Eric
Myers, Manager of Business Development, American
Transmission Company
+= HB 78 REGULATORY COMMISSION OF ALASKA TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
             HB  78-REGULATORY COMMISSION OF ALASKA                                                                         
                                                                                                                                
10:21:54 AM                                                                                                                   
                                                                                                                                
CO-CHAIR COLVER announced that the  first order of business would                                                               
be HOUSE  BILL NO.  78, "An  Act bearing the  short title  of the                                                               
'Alaska  Competitive Energy  Act of  2015'; and  relating to  the                                                               
Regulatory Commission of Alaska."                                                                                               
                                                                                                                                
10:22:09 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE TAMMIE WILSON,  Alaska State Legislature, sponsor,                                                               
informed  the committee  the proposed  committee substitute  (CS)                                                               
for HB  78 was a  much leaner bill, and  comments on the  CS have                                                               
been solicited from  affected parties.  The first part  of the CS                                                               
allows independent power producers (IPPs)  to know what the costs                                                               
are to generate  electricity, and to request  from the Regulatory                                                               
Commission of  Alaska (RCA)  how those  costs were  calculated by                                                               
the utility.   The  second part relates  to transmission  and the                                                               
costs   to    transmit   power   through    transmission   lines.                                                               
Representative  Wilson reminded  the committee  of the  situation                                                               
regarding [Fire  Island Wind Phase  2], which was discussed  at a                                                               
previous hearing, and  that IPPs need to know  these costs before                                                               
financing  can be  obtained.   Further, if  a utility  refuses to                                                               
provide   this  information,   as  a   last  resort,   RCA  would                                                               
adjudicate.   She  expressed  her hope  that  during the  hearing                                                               
process  there will  be positive  progress regarding  discussions                                                               
between utilities and IPPs.                                                                                                     
                                                                                                                                
CO-CHAIR COLVER requested a sectional analysis.                                                                                 
                                                                                                                                
REPRESENTATIVE  WILSON began  a  sectional analysis:   section  2                                                               
creates  a new  section to  implement requirements  applicable to                                                               
electric utilities  with respect to qualifying  facilities (QFs),                                                               
small renewable  energy, and cogeneration facilities  as required                                                               
under federal statutes and regulations.   Subsection (a) requires                                                               
electric  utilities  to  comply with  Federal  Energy  Regulatory                                                               
Commission (FERC) rules related to  purchasing power from QFs and                                                               
other  related  obligations.   Subsection  (b)  exempts QFs  from                                                               
certain  state laws  and regulations  as  required under  federal                                                               
law.   Subsection (c)  authorizes RCA  to issue  orders requiring                                                               
electric  utilities   to  comply  with  obligations   under  this                                                               
section.    Subsection (d)  limits  the  applicability   of  this                                                               
section  to  electric  utilities  that are  subject  to  the  RCA                                                               
ratemaking authority - this language  was drawn directly from the                                                               
federal  statute.    Subsection  (e)(  1)  defines  avoided  cost                                                               
according to  federal law.  Subsection  (e)(2) defines qualifying                                                               
facility by  referring to definitions  specified in  federal law.                                                               
Representative  Wilson   pointed  out  that   the  aforementioned                                                               
reduces the number  of costly requirements of  the utilities, and                                                               
thus is  "a much friendlier  version to the utilities."   Section                                                               
3,  new  subsections  (d)-(f), assure  open  access  to  electric                                                               
transmission facilities  as provided  on a fair,  reasonable, and                                                               
nondiscriminatory  basis.     Subsection  (d)  requires  electric                                                               
utilities   to   establish    joint   use   interconnection   and                                                               
transmission service within a reasonable  time and for reasonable                                                               
compensation.   Subsection (e) confirms the  electric utility may                                                               
recover from connecting entities  costs incurred in providing for                                                               
joint use,  interconnection, and  transmission service,  while at                                                               
the  same  time  ensuring  that the  charges  imposed  are  fair,                                                               
reasonable,  and nondiscriminatory.    Subsection (f)(1)  defines                                                               
reasonable compensation,  subsection (f)(2)-(3) define  the terms                                                               
transmission  and distribution.   She  advised this  change "puts                                                               
the  studies  on the  backs  of  the  IPP, versus  the  utility."                                                               
Lastly, section 4 amends AS  42.05.321 to improve consistency and                                                               
to  make clear  that  RCA oversight  authority encompasses  joint                                                               
use, interconnection,  and transmission service.   Representative                                                               
Wilson noted that  the sponsors worked closely with  RCA to align                                                               
the bill with federal law, and  to make it possible for Alaska to                                                               
produce its own electricity at  low cost and with less dependence                                                               
on oil.                                                                                                                         
                                                                                                                                
10:29:50 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  COLVER asked  whether the  legislation uses  the Public                                                               
Utility  Regulatory   Policies  Act   (PURPA)  as  a   model  for                                                               
implementing  joint  use and  provisions  for  buying power  from                                                               
IPPs.                                                                                                                           
                                                                                                                                
REPRESENTATIVE WILSON  said correct.  In further response  to Co-                                                               
Chair Colver, she explained the  avoided cost issue was addressed                                                               
by requiring that the current  averages provided by utilities are                                                               
broken down into the cost of  each source of energy; for example,                                                               
Golden  Valley Electric  Association  (GVEA)  generates power  in                                                               
many ways, and  an IPP needs to  know the cost of  each source in                                                               
order  to compete.    Secondly, IPPs  need to  know  the cost  of                                                               
transmitting  power, so  they can  add that  cost to  their total                                                               
cost, and enter negotiations with a utility.                                                                                    
                                                                                                                                
CO-CHAIR VAZQUEZ  referred to RCA Dockets  I-15-001 and R-13-002,                                                               
and asked how they would affect the proposed legislation.                                                                       
                                                                                                                                
REPRESENTATIVE  WILSON responded  that  pending  RCA rulings  may                                                               
resolve the transmission issue in the bill.                                                                                     
                                                                                                                                
CO-CHAIR  VAZQUEZ said  RCA has  been charged  with completing  a                                                               
related study due 6/15.                                                                                                         
                                                                                                                                
REPRESENTATIVE WILSON said yes.                                                                                                 
                                                                                                                                
CO-CHAIR  COLVER surmised  the  bill  is not  just  an access  to                                                               
transmission  issue  in  regards to  a  transmission  cooperative                                                               
(Transco) or  an independent  system operator  (ISO), but  also a                                                               
framework  for  RCA  to  provide   oversight  for  joint  use  of                                                               
transmission facilities  and power  purchase agreements  in areas                                                               
that are  not on the Railbelt  grid, or that are  not overseen by                                                               
an ISO or a transmission cooperative.                                                                                           
                                                                                                                                
REPRESENTATIVE WILSON agreed, and added  that the bill would also                                                               
allow power  to be sold  in Canada  should there be  excess after                                                               
first serving Alaskans.                                                                                                         
                                                                                                                                
CO-CHAIR  VAZQUEZ  asked  whether the  Alaska  Independent  Power                                                               
Producers  Association  (AIPPA)  is submitting  comments  on  the                                                               
related active RCA dockets.                                                                                                     
                                                                                                                                
10:35:14 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE WILSON said yes.                                                                                                 
                                                                                                                                
CO-CHAIR VAZQUEZ  observed that  the Alaska Power  Association is                                                               
reviewing the CS.                                                                                                               
                                                                                                                                
CO-CHAIR  COLVER  inquired as  to  how  the  approach in  the  CS                                                               
differs from RCA Docket I-15-001.                                                                                               
                                                                                                                                
REPRESENTATIVE WILSON  acknowledged the approach is  similar, but                                                               
until the RCA docket is  adopted, the sponsors' intent remains to                                                               
ensure  that  there  are  opportunities for  IPPs  to  invest  in                                                               
Alaska.                                                                                                                         
                                                                                                                                
CO-CHAIR  VAZQUEZ  appreciated  the   work  accomplished  by  the                                                               
sponsors, RCA,  and IPPs.  She  stated there is value  in waiting                                                               
for RCA  to finish its  work, as there  are many changes  to come                                                               
for the Railbelt transmission system.                                                                                           
                                                                                                                                
REPRESENTATIVE WILSON  reminded the committee that  the bill will                                                               
be vetted in the House  Labor and Commerce Standing Committee for                                                               
RCA issues, and then in the House Finance Committee.                                                                            
                                                                                                                                
10:38:43 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  TALERICO moved  to adopt  the proposed  committee                                                               
substitute for  HB 78, labeled  29-LS0259\N, Nauman,  3/18/15, as                                                               
the working draft.                                                                                                              
                                                                                                                                
10:39:09 AM                                                                                                                   
                                                                                                                                
CO-CHAIR COLVER objected for the purposes of discussion.                                                                        
                                                                                                                                
REPRESENTATIVE  TALERICO   urged  the  committee  to   adopt  the                                                               
proposed CS.                                                                                                                    
                                                                                                                                
10:39:36 AM                                                                                                                   
                                                                                                                                
CO-CHAIR COLVER  removed his objection.   There being  no further                                                               
objection, Version N was before the committee.                                                                                  
                                                                                                                                
HB 78 was held over.                                                                                                            
                                                                                                                                

Document Name Date/Time Subjects
Proposed CS for HB 78 Ver N.pdf HENE 3/31/2015 10:15:00 AM
HB 78