Legislature(2015 - 2016)CAPITOL 17

04/05/2016 05:00 PM House ENERGY

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05:19:13 PM Start
05:19:29 PM HB363
05:50:49 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time --
Scheduled but Not Heard
Moved HB 363 Out of Committee
         HB 363-EXTEND EXEMPTION FOR SMALL POWER PLANTS                                                                     
5:19:29 PM                                                                                                                    
CO-CHAIR  VAZQUEZ  announced that  the  first  order of  business                                                               
would  be HOUSE  BILL NO.  363, "An  Act extending  the exemption                                                               
from  regulation  by  the Regulatory  Commission  of  Alaska  for                                                               
certain  facilities or  plants generating  energy from  renewable                                                               
energy resources."                                                                                                              
[CO-CHAIR VAZQUEZ passed the gavel to Co-Chair Colver.]                                                                         
5:20:43 PM                                                                                                                    
MATT  DEAN, staff  to Representative  Vazquez, sponsor,  informed                                                               
the committee HB 363 extends  the sunset date of AS 42.05.7119(r)                                                               
to January 1, 2025.  The purpose  of the bill is to encourage the                                                               
continued exploration of  renewable resources, private investment                                                               
into  the use  of renewable  resources to  produce power,  and to                                                               
lower  the barrier  costs of  entry  into power  production.   In                                                               
order  to  qualify for  the  exemption,  interested parties  must                                                               
produce power  from renewable resources, produce  65 megawatts or                                                               
less  per  year,  sell  power   to  utilities  regulated  by  the                                                               
Regulatory  Commission  of  Alaska   (RCA),  and  must  not  have                                                               
received  a  grant  or  tax  credit  that  supports  the  use  of                                                               
renewable  resources.   The bill  has received  support from  the                                                               
renewable energy sector, and the bill has a zero fiscal note.                                                                   
CO-CHAIR  VAZQUEZ   stated  her   support  for  the   bill  which                                                               
encourages renewable energy production.                                                                                         
CO-CHAIR COLVER opened public testimony on HB 363.                                                                              
5:23:46 PM                                                                                                                    
DUFF  MITCHELL,  Executive  Director,  Alaska  Independent  Power                                                               
Producers  Association (AIPPA),  stated AIPPA  fully supports  HB
363  as  an  extension  of 2010  legislation  which  resulted  in                                                               
increased  development  by  small,  independent  power  producers                                                               
(IPPs).   He noted that  permitting for hydropower takes  as long                                                               
as ten years, as  do wind and solar regimes.   Alaska is the only                                                               
state  that regulates  power producers  under 80  megawatts, thus                                                               
the bill simply  extends the sunset of  the previous legislation,                                                               
and he urged for the committee's support.                                                                                       
CO-CHAIR COLVER asked whether there is a project underway.                                                                      
MR. MITCHELL said yes.                                                                                                          
CO-CHAIR VAZQUEZ  questioned whether the bill  is consistent with                                                               
federal statute.                                                                                                                
5:25:50 PM                                                                                                                    
MR.  MITCHELL said  yes, and  added  that prior  to the  existing                                                               
exemption, Fishhook  Renewable Energy spent thousands  of dollars                                                               
on regulation.                                                                                                                  
5:26:08 PM                                                                                                                    
ETHAN   SCHUTT,   Senior   Vice  President,   Land   and   Energy                                                               
Development, Cook Inlet  Region, Inc. (CIRI) said he  is also the                                                               
president of  CIRI's wholly-owned  subsidiary, Fire  Island Wind.                                                               
Mr. Schutt expressed  CIRI's support for HB 363,  noting that the                                                               
legislation makes common sense,  encourages private investment in                                                               
small-  or  modest-sized  renewable  power  projects  in  Alaska,                                                               
benefits the  public, and does  not burden the  state government,                                                               
but simply  provides a more  certain path for  project developers                                                               
related to regulation.                                                                                                          
5:27:50 PM                                                                                                                    
KEITH  COMSTOCK said  he is  President/CEO  of Juneau  Hydropower                                                               
Inc.,  (JHI) which  is a  private hydropower  developer based  in                                                               
Juneau.    His company  is  committed  to  the IPP  model,  where                                                               
private capital and industry are  used to develop energy projects                                                               
such as the Sweetheart Lake  Hydroelectric Project and the Juneau                                                               
District Energy  System project.   Sweetheart  Lake Hydroelectric                                                               
Project (Sweetheart  Lake) was begun  in 2009, and  final permits                                                               
and  licenses  are expected  this  summer,  with construction  to                                                               
begin  this fall.   Mr.  Comstock stated  that JHI  would benefit                                                               
from the  bill, and the  legislation is also important  to future                                                               
projects  by lowering  risk  and  encouraging outside  investors.                                                               
Along  with  clarification  on regulations  from  RCA,  the  bill                                                               
should encourage needed economic investment.                                                                                    
CO-CHAIR COLVER asked about the financing for the project.                                                                      
MR.  COMSTOCK responded  that during  the regulatory  process the                                                               
project has  been privately  funded.   After receiving  a license                                                               
from  the   Federal  Energy  Regulatory  Commission   (FERC)  and                                                               
permits,  financing will  be a  combination of  equity investment                                                               
and loans.   Proposed HB  143 would enable the  Alaska Industrial                                                               
Development   and  Export   Authority   (AIDEA),  Department   of                                                               
Commerce, Community  & Economic Development, to  consider bonding                                                               
for the project, and the rest  is possible with good credit and a                                                               
20  percent  down  payment.   In  further  response  to  Co-Chair                                                               
Colver, Mr.  Comstock said  the project is  about six  miles from                                                               
state-owned AIDEA  transmission line  facilities, thus  six miles                                                               
of  overland  and underwater  new  transmission  is needed.    In                                                               
further  response,  he explained  Sweetheart  Lake  is a  storage                                                               
project  which involves  raising  a five  and one-half  mile-long                                                               
lake by one  hundred feet, unlike many  hydroelectric projects in                                                               
Alaska that have high levels of  power in the summer and problems                                                               
with production in the winter.   The project was first identified                                                               
in  1906  for its  hydropower  potential;  in 1975,  the  federal                                                               
government decided  to build the larger  Snettisham Hydroelectric                                                               
Project,  and  now market  conditions  are  right for  Sweetheart                                                               
Lake.   The project  will store a  lot of water  and will  run at                                                               
level operations to  produce the same amount of  power summer and                                                               
5:33:56 PM                                                                                                                    
CO-CHAIR COLVER  asked whether the  project will supply  power to                                                               
the  Kensington  Gold Mine  and  to  the  proposed heat  loop  in                                                               
MR. COMSTOCK  explained that  about 60  percent of  the project's                                                               
output will  supply the Kensington  Gold Mine and the  balance of                                                               
power will go  to the Juneau District Energy System  project.  In                                                               
further response to Co-Chair Colver,  he said the District Energy                                                               
System project  is being  developed by a  subsidiary and  will be                                                               
the first seawater  heat pump in North America  or South America;                                                               
there are several  in Europe and projects are  underway in Norway                                                               
and Scotland, but "we'll be the  third in the world who basically                                                               
will heat  a town  with seawater."   In  further response  to Co-                                                               
Chair Colver,  Mr. Comstock said the  intent is to bring  the two                                                               
projects online  concurrently.  The  technology was  developed by                                                               
Emerson and its subsidiary Vilter,  and a seawater heat pump runs                                                               
like  a  refrigerator  on  an  industrial  scale.    Advances  in                                                               
refrigerant technology and metallurgy  now allow higher pressures                                                               
and higher  heat.   Previous seawater  installations have  used a                                                               
low-heat   system  which   has  little   value  in   retrofitting                                                               
buildings, however, the new technology  allows for conversions in                                                               
existing facilities  at a low cost.   He described the  design of                                                               
the  boiler, and  urged the  committee to  visit a  similar power                                                               
system at the Ted Stevens Marine Research Institute Laboratory.                                                                 
CO-CHAIR COLVER inquired as to the billing system.                                                                              
MR.  COMSTOCK said  the systems  are metered  by British  thermal                                                               
units  (Btus) in  a manner  similar to  that of  oil or  electric                                                               
metered  systems.   In further  response to  Co-Chair Colver,  he                                                               
responded that the  heat loop works well in  Juneau because there                                                               
is  a  densely-compacted  customer   base  which  makes  a  cost-                                                               
effective  and ideal  central loop  of  approximately two  miles.                                                               
Experts  have recommended  a  focus on  the  downtown area,  with                                                               
possible expansion to West Juneau and  Douglas, but not as far as                                                               
Bartlett Regional Hospital.                                                                                                     
5:43:06 PM                                                                                                                    
CO-CHAIR  VAZQUEZ asked  for the  projected  timeframe to  supply                                                               
power to the Kensington Gold Mine.                                                                                              
MR.  COMSTOCK estimated  2018, assuming  the  receipt of  federal                                                               
permits  and  mild weather.    In  further response  to  Co-Chair                                                               
Vazquez, he  advised that the  power will replace diesel  fuel at                                                               
the mine and in Juneau, as  78 percent of Juneau homes are heated                                                               
with diesel fuel.                                                                                                               
5:44:51 PM                                                                                                                    
CO-CHAIR  COLVER  after ascertaining  no  one  further wished  to                                                               
testify on HB 363, closed public testimony.                                                                                     
REPRESENTATIVE WOOL  observed that  the maximum generation  of 65                                                               
megawatts is more than that  generated by any plant in Fairbanks,                                                               
and seems like a large production facility to not be regulated.                                                                 
MR. DEAN answered that 65 megawatts  was a compromise made in the                                                               
legislation passed  in 2010; under  federal standards,  any power                                                               
plant generating under 80 megawatts is not regulated.                                                                           
MR. MITCHELL  added that the bill  is an extension of  the sunset                                                               
to  existing  legislation.    He  restated  that  the  regulatory                                                               
process is  expensive, and it  is unlikely that future  IPP power                                                               
plants  would  be  that  large,   however,  the  state  is  "more                                                               
restrictive than what the federal government is."                                                                               
REPRESENTATIVE WOOL surmised that in  the Lower 48 there are many                                                               
large power plants; Healy [Unit 2]  plant is 50 megawatts, and in                                                               
Alaska, 65 megawatts is a big power plant.                                                                                      
REPRESENTATIVE TALERICO  reminded the committee the  bill relates                                                               
to power  generated by  renewable energy  resources and  does not                                                               
affect power plants utilizing coal, gas, or oil.  He observed                                                                   
that the state - but not the federal government - considers                                                                     
hydroelectric power as a renewable source of energy.                                                                            
MR. MITCHELL agreed.                                                                                                            
REPRESENTATIVE NAGEAK expressed his support for the bill.                                                                       
5:49:59 PM                                                                                                                    
REPRESENTATIVE TALERICO moved  to report HB 363  out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.  There being no objection,  HB 363 was reported out of the                                                               
House Special Committee on Energy.                                                                                              

Document Name Date/Time Subjects
HB363 Sponsor Statement.pdf HENE 4/5/2016 5:00:00 PM
HB 363
HB363 ver A.PDF HENE 4/5/2016 5:00:00 PM
HB 363
HB363 Supporting Documents-Letter CIRI 3-4-2016.pdf HENE 4/5/2016 5:00:00 PM
HB 363
HB363 Supporting Documents-Letter AIPPA 3-4-2016.pdf HENE 4/5/2016 5:00:00 PM
HB 363
HB363 Supporting Documents-Letter APA 3-4-2016.pdf HENE 4/5/2016 5:00:00 PM
HB 363
HB363 Supporting Documents-Letter Juneau Hydropower 4-4-16.pdf HENE 4/5/2016 5:00:00 PM
HB 363
HB363 Fiscal Note-DCCED-RCA-04-01-16.pdf HENE 4/5/2016 5:00:00 PM
HB 363
HB363 Supporting Documents-Letter FRE 4-4-16.PDF HENE 4/5/2016 5:00:00 PM
HB 363