Legislature(2019 - 2020)CAPITOL 17

01/23/2020 10:15 AM ENERGY

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10:17:55 AM Start
10:19:48 AM HB151
10:46:09 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 151 ELECTRIC RELIABILITY ORGANIZATIONS TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
-- Teleconference <Listen Only> --
           HB 151-ELECTRIC RELIABILITY ORGANIZATIONS                                                                        
                                                                                                                                
10:19:48 AM                                                                                                                   
                                                                                                                                
CHAIR HOPKINS announced that the  only order of business would be                                                               
HOUSE  BILL  NO.  151  "An  Act relating  to  the  regulation  of                                                               
electric  utilities and  electric reliability  organizations; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
10:20:18 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE SPOHNHOLZ  moved to  adopt the  proposed committee                                                               
substitute (CS)  for HB  151, labeled  31-LS0870\U, Klein/Fisher,                                                               
12/20/19, as  the working  draft.  There  being no  objection, it                                                               
was so ordered.                                                                                                                 
                                                                                                                                
10:20:42 AM                                                                                                                   
                                                                                                                                
JOE G.  HARDENBROOK, Staff, Representative Grier  Hopkins, Alaska                                                               
State   Legislature,  paraphrased   from  a   prepared  statement                                                               
[original punctuation provided], which read:                                                                                    
                                                                                                                                
      Mister Chairman  thank you for the opportunity to do                                                                      
      a quick overview on the CS for House Bill 151 and to                                                                      
     update the  committee on some of  the developments that                                                                    
     occurred over the  interim.   We  have Commissioner Bob                                                                    
     Pickett  of  the  RCA  online   today  to  discuss  the                                                                    
     commission's continuing  efforts and their  support for                                                                    
     the  legislation being  crafted by  the Senate  Special                                                                    
     Committee  on  the  Railbelt Electrical  System     the                                                                    
     companion legislation to the bill before us.                                                                               
                                                                                                                                
     The CS  which the  committee has  adopted moves  SB 123                                                                    
     and HB  151 into  total alignment, reflecting  the most                                                                    
     recent   draft  language   vetted  by   the  utilities,                                                                    
     stakeholders   and  advocates   and  endorsed   by  the                                                                    
     Regulatory  Commission.    It   is  our  hope  that  by                                                                    
     combining our efforts  with the other body  we can work                                                                    
     constructively together  on this complex  issue, engage                                                                    
     with the utilities, the RCA  and consumers to craft the                                                                    
     best   legislation  possible   and   to  work   towards                                                                    
     increasing efficiencies in  the Railbelt and ultimately                                                                    
     increasing  reliability  and  reducing cost  to  Alaska                                                                    
     families and businesses.                                                                                                   
                                                                                                                                
     As  Representative  Hopkins   mentioned  earlier,  this                                                                    
     legislation has  come before us  due to the  efforts of                                                                    
     the  RCA   in  addressing  a  question   posed  by  the                                                                    
     legislature  in 2014,  namely,  would electric  utility                                                                    
     customers   from  Fairbanks   to  Homer   benefit  from                                                                    
     increased   cooperation   between  the   interconnected                                                                    
     utilities of the Railbelt?                                                                                                 
                                                                                                                                
     Among  the RCA's  recommendations  was  formation of  a                                                                    
     reliability   organization,  which   would  write   and                                                                    
     enforce   common  standards   for  safe   and  reliable                                                                    
     operation   of   the  interconnected   utilities.   The                                                                    
     Railbelt  electric  utilities   have  made  significant                                                                    
     progress toward collaboration  and cooperation over the                                                                    
     interim.  Most  recently,  all   six  entered  into  an                                                                    
     agreement to  work together to establish  a reliability                                                                    
     organization.                                                                                                              
                                                                                                                                
     The  Memorandum  of   Understanding  establishing  this                                                                    
     organization is in your packet.                                                                                            
                                                                                                                                
     The RCA,  in their  letter of  this month  updating the                                                                    
     Legislature   on    the   utilities'    progress,   has                                                                    
     recommended  statutory changes  that  would affirm  the                                                                    
     RCA's    authority    to   regulate    a    reliability                                                                    
     organization;     define    the     basic    structure,                                                                    
     responsibilities  and  authorities   of  a  reliability                                                                    
     organization;  and  empower  the RCA  to  require  pre-                                                                    
     approval of large  generation and transmission projects                                                                    
     undertaken  by   utilities  that   are  part   of  this                                                                    
     interconnected  network. HB  151  and  SB 123  reflects                                                                    
     these  recommendations and,  if enacted,  would support                                                                    
     the utilities' voluntary work  to develop a reliability                                                                    
     organization.                                                                                                              
                                                                                                                                
     For the information of the  committee, we have provided                                                                    
     in the bill packet the following items:                                                                                    
   • The letter from the RCA to the legislature dated                                                                           
     January 15, 2020 detailing progress to date on this                                                                        
     issue and updating the legislature on progress towards                                                                     
     the five goals listed in the RCA's 2015 letter to the                                                                      
     legislature.                                                                                                               
   • A copy of the 2015 RCA letter to the legislature                                                                           
   • A copy of the MOU establishing the Railbelt                                                                                
     Reliability Council signed December 6, 2019                                                                                
   • An article from the Alaska Journal of Commerce dated                                                                       
     12/31/19 which provides a good synopsis of efforts to                                                                      
     date and details the significance of the MOU which was                                                                     
     signed.                                                                                                                    
                                                                                                                                
     It is  the hope  of the  chairman that  these documents                                                                    
     will provide the  committee with a full  picture of how                                                                    
     the legislation  before the committee  has come  to be.                                                                    
     Commissioner  Pickett will  go into  greater detail  on                                                                    
     the efforts  undertaken by the  RCA, and  the voluntary                                                                    
     efforts, timelines  and data collection  the commission                                                                    
     has  requested,  directed  and overseen  from  Railbelt                                                                    
     utilities.                                                                                                                 
                                                                                                                                
     Mister Chairman,  I would like  to note  and appreciate                                                                    
     the  efforts  of the  RCA,  Legislative  Legal and  the                                                                    
     leadership  of  the  Senate Special  Committee  on  the                                                                    
     Railbelt   Electrical    System   in    crafting   this                                                                    
     legislation.                                                                                                               
                                                                                                                                
     I  anticipate  that  the  committee's  review  of  this                                                                    
     legislation in conjunction with  the other body will be                                                                    
     thorough,  and that  these  entities  will continue  to                                                                    
     play a key role in  our understanding of this issue and                                                                    
     our actions  to bring  about a more  cost-effective and                                                                    
     resource-efficient   electrical   system  in   Alaska's                                                                    
     Railbelt.                                                                                                                  
                                                                                                                                
                                                                                                                                
10:24:44 AM                                                                                                                   
                                                                                                                                
MR. HARDENBROOK paraphrased the Sectional Analysis to HB 151,                                                                   
version U, which read [original punctuation provided]:                                                                          
                                                                                                                                
     House  Bill 151  establishes clear  statutory authority                                                                    
     for the  Regulatory Commission of Alaska  (RCA) over an                                                                    
     electric  reliability  organization   (ERO).  The  bill                                                                    
     defines participation in  a reliability organization as                                                                    
     well as the  requirements, responsibilities, powers and                                                                    
     oversight of a reliability organization.                                                                                   
                                                                                                                                
     Section 1  Adds  new  sections   to  AS  42.05,  Alaska                                                                    
     Public Utilities Regulatory Act.                                                                                           
          New    Sec.   42.05.292:    Electric   reliability                                                                    
     organizations                                                                                                              
                                                                                                                                
     Requires interconnected  utilities in a  network served                                                                    
     by   a   certificated   reliability   organization   to                                                                    
     participate in  the reliability  organization. Provides                                                                    
     standard   for   RCA    approval   of   a   reliability                                                                    
     organization.    Directs    reliability    organization                                                                    
     governance.  If  no  entity applies  as  a  reliability                                                                    
     organization by October 2020, the RCA must form one.                                                                       
     Charges  a  reliability   organization  for  developing                                                                    
     standards for  reliable operation of the  power system.                                                                    
     Standards must be  filed with the RCA as  a tariff; the                                                                    
     RCA   may  approve   standards   if   they  are   just,                                                                    
     reasonable,  not  unduly  discriminatory,  and  in  the                                                                    
     public  interest. The  RCA retains  enforcement powers.                                                                    
     Allows  the   RCA  to  require  certain   standards  or                                                                    
     changes.                                                                                                                   
     Enables   the   reliability  organization   to   impose                                                                    
     penalties as  necessary and  describes the  process for                                                                    
     penalties.  Establishes  a  process   for  the  RCA  to                                                                    
     require compliance  with standards and to  hear appeals                                                                    
     of penalties.                                                                                                              
     Requires the  RCA to  write regulations,  including for                                                                    
     conflict  resolution  and organization  cost  recovery.                                                                    
     Regulations may be written  to require the organization                                                                    
     obtain   a  certificate   of  public   convenience  and                                                                    
     necessity, and for issuing  an open access transmission                                                                    
     tariff to a reliability organization.                                                                                      
                                                                                                                                
          New Sec. 42.05.293: Integrated resource planning                                                                      
                                                                                                                                
     Charges  a  reliability  organization with  creating  a                                                                    
     plan for reliable,  cost-effective operations. The plan                                                                    
     must cover generation,  transmission, and conservation.                                                                    
     After  a  hearing,  the RCA  can  approve,  reject,  or                                                                    
     modify  a  plan, and  can  allow  utilities to  recover                                                                    
     planning costs  in their rates.  The cost  of resources                                                                    
     and other  expenditures reflected in the  approved plan                                                                    
     may also be recovered in utility rates.                                                                                    
                                                                                                                                
          New Sec. 42.05.294: Project preapproval                                                                               
                                                                                                                                
     Requires    RCA   approval    for   public    utilities                                                                    
     interconnected with  a bulk  power system  to construct                                                                    
     large generation and transmission facilities.                                                                              
     RCA approval  would require findings that  the facility                                                                    
     is  a  necessary  component  of  the  system  it  would                                                                    
     connect with; complies  with reliability standards; and                                                                    
     is  the  most  cost-effective way  to  serve  connected                                                                    
     utilities  that would  be substantially  served by  the                                                                    
     facility.                                                                                                                  
     A  facility included  in the  most recent  RCA-approved                                                                    
     integrated resource  plan is presumed  approved, unless                                                                    
     the  RCA  finds  otherwise with  clear  and  convincing                                                                    
     evidence.                                                                                                                  
                                                                                                                                
                                                                                                                                
MR. HARDENBROOK continued his presentation of the Sectional                                                                     
Analysis, which read:                                                                                                           
                                                                                                                                
     Section 2  Adds new paragraphs  to AS 42.05.990, Alaska                                                                    
     Public Utilities Regulatory Act, Definitions.                                                                              
     Defines  bulk  power  system;  cybersecurity  incident;                                                                    
     electric  reliability  organization; electric  utility;                                                                    
     interconnected  electric  energy transmission  network;                                                                    
     load-serving entity; and reliable operation.                                                                               
                                                                                                                                
     Section 3  Adds a  section to uncodified  law requiring                                                                    
     the RCA to  adopt regulations to implement  the bill by                                                                    
     July 1, 2020.                                                                                                              
                                                                                                                                
     Section 4  Sets   an  immediate   effective  date   for                                                                    
     Section   3,  enabling   the   RCA   to  proceed   with                                                                    
     regulations to implement the bill.                                                                                         
                                                                                                                                
     Section 5  Sets an effective date of  July 1, 2020, for                                                                    
     all other sections.                                                                                                        
                                                                                                                                
     Thank  you,   Mister  Chairman.    This   concludes  my                                                                    
     presentation.                                                                                                              
                                                                                                                                
10:29:13 AM                                                                                                                   
                                                                                                                                
ROBERT  PICKETT, Chair,  Regulatory Commission  of Alaska  (RCA),                                                               
offered some background and context  to bring the committee up to                                                               
date,  and stated  that, at  the  direction of  the Alaska  State                                                               
Legislature in  2014, the Regulatory  Commission of  Alaska (RCA)                                                               
was  told to  take  a  year-long look  at  the Railbelt  Electric                                                               
System and  then offer recommendations.   He reported  that there                                                               
were many  contentious relationships  among the  utilities, which                                                               
were  balkanized and  fragmented.   He said  that even  with $1.5                                                               
billion of new  Railbelt generation in a short  period, there was                                                               
concern that  the system  was not  being operated  as efficiently                                                               
and effectively as it could.   He noted that Alaska was not under                                                               
the  jurisdiction  of  the   North  American  Energy  Reliability                                                               
Corporation  (NAERC)   which  created  some   concerns  regarding                                                               
enforceable liability standards.  In  the June 30, 2015 report to                                                               
the Alaska State Legislature, he  pointed out that there were two                                                               
competing full liability standards in  the Railbelt.  He reported                                                               
that the RCA came up  with five findings and five recommendations                                                               
which were  articulated in the  2015 letter.   He noted  that the                                                               
letter  from  the  RCA  to  Senator  Giessel  and  Representative                                                               
Edgmon,  dated January  15, 2020  [Included in  members' packets]                                                               
repeated those  recommendations and what progress  had been made.                                                               
He paraphrased  those recommendations  and the progress  on each,                                                               
which read [original punctuation provided]:                                                                                     
                                                                                                                                
     Recommendation No. 1:                                                                                                    
                                                                                                                                
     An independent  transmission company should  be created                                                                    
     to  operate   the  transmission  system   reliably  and                                                                    
     transparently   and   to   plan   and   execute   major                                                                    
     maintenance,  transmission  system  upgrades,  and  new                                                                    
     transmission  projects   necessary  for   the  reliable                                                                    
     delivery of electric power  to Railbelt customers. This                                                                    
     independent    transmission     company    should    be                                                                    
     certificated and  regulated as  a public  utility under                                                                    
     AS 42.05.  The RCA  should be granted  siting authority                                                                    
     for  new  generation   and  transmission,  and  granted                                                                    
     explicit  authority  to  regulate  integrated  resource                                                                    
     planning in the Railbelt electrical system.                                                                                
                                                                                                                                
     Progress on Recommendation No. 1:                                                                                        
                                                                                                                                
     Since  the submission  of the  2015 RCA  report to  the                                                                    
     Alaska  Legislature,  the Railbelt  electric  utilities                                                                    
     have  over  the  past  four  years  worked  toward  the                                                                    
     creation of a  Railbelt transmission company (Transco).                                                                    
     A number  of filings have  been made with the  RCA that                                                                    
     describe  the  voluntary   efforts  toward  creating  a                                                                    
     Transco.  The  Alaska  Railbelt  Transmission,  LLC,  a                                                                    
     proposed   new  investor   owned   Transco,  filed   an                                                                    
     application  for a  certificate  of public  convenience                                                                    
     and necessity  (certificate) on February 25,  2019. The                                                                    
     RCA   received   notice   from  the   Alaska   Railbelt                                                                    
     Transmission,  LLC that  it  would  be withdrawing  its                                                                    
     certificate  application on  June  20,  2019. The  more                                                                    
     than  four   year  voluntary   efforts  to   create  an                                                                    
     independent, certificated Transco in  the Rail belt was                                                                    
     not successful.                                                                                                            
                                                                                                                                
     Recommendation No. 2:                                                                                                    
                                                                                                                                
     System-wide merit  order economic dispatch of  the Rail                                                                    
     belt's  electrical  generation  units  will  bring  the                                                                    
     maximum benefit  to ratepayers. The RCA  should use all                                                                    
     the  regulatory and  statutory  authority it  currently                                                                    
     has to strongly promote  economic dispatch and seek new                                                                    
     statutory  authority as  needed to  promote this  goal.                                                                    
     Voluntary  efforts by  the utilities  to utilize  loose                                                                    
     power  pools should  be encouraged  as an  interim step                                                                    
     toward a  tighter power pooling system.  As actual data                                                                    
     is  generated  concerning  costs, benefits,  and  other                                                                    
     outcomes   of  voluntary   power  pooling   strategies,                                                                    
     quarterly reports  shall be filed  with the  RCA. These                                                                    
     reports  will be  analyzed and  reviewed to  assess the                                                                    
     organizational and  governance structure needed  for an                                                                    
     independent consolidated system  operator. If voluntary                                                                    
     efforts fail,  the RCA will  work with  the Legislature                                                                    
     and  the   Administration  to  develop   and  implement                                                                    
     specific action  steps to  institutionalize system-wide                                                                    
     merit order dispatch.                                                                                                      
                                                                                                                                
     Progress on Recommendation No. 2:                                                                                        
                                                                                                                                
     Some   limited    progress   was   made    toward   the                                                                    
     establishment  of a  tight power  pool between  Chugach                                                                    
     Electric   Association,   Inc.    (Chugach)   and   the                                                                    
     Municipality  of  Anchorage  d/b/a  Municipal  Light  &                                                                    
     Power Department (ML&P). This  effort was halted in the                                                                    
     fall  of  2018, pending  the  outcome  of the  proposed                                                                    
     acquisition   of   ML&P's   assets  by   Chugach.   The                                                                    
     opportunity to  realize $10  million in  annual natural                                                                    
     gas  savings from  more  efficient generation  dispatch                                                                    
     between  the  two  utilities was  suspended.  Voluntary                                                                    
     commercial   settlement  arrangements   could  not   be                                                                    
     reached.  Additional  savings   were  not  realized  by                                                                    
     incorporating  Matanuska   Electric  Association,  Inc.                                                                    
     into the tight pool.                                                                                                       
                                                                                                                                
     Recommendation No. 3:                                                                                                    
                                                                                                                                
     Though  history  strongly  indicates that  the  current                                                                    
     voluntary   transmission  restructuring   and  economic                                                                    
     dispatch  efforts by  the utilities  may fail,  the RCA                                                                    
     believes the  utilities must  be given  the opportunity                                                                    
     to  succeed.  Failure  of  the  voluntary  efforts  and                                                                    
     initiatives   will   trigger   the   compulsory   steps                                                                    
     identified in Recommendation Nos. 1 and 2.                                                                                 
                                                                                                                                
     Progress on Recommendation No. 3:                                                                                        
                                                                                                                                
     Voluntary  efforts by  the Railbelt  electric utilities                                                                    
     have  failed   to  produce   sustainable  institutional                                                                    
     change under Recommendation Nos. 1  and 2. On March 15,                                                                    
     2019,  the  RCA  issued  an   order  seeking  input  on                                                                    
     possible  statutory  changes:   We  invite  comment  on                                                                    
     legislative   language  that   would  provide   express                                                                    
     statutory authority for this  agency to certificate and                                                                    
     regulate an  electric reliability organization,  and to                                                                    
     oversee integrated  resource planning and  project pre-                                                                    
     approval of large  electric generation and transmission                                                                    
     facilities.  After the  receipt of  public comments  on                                                                    
     the  proposed statutory  language by  the RCA,  several                                                                    
     bills  were introduced  in the  Alaska Legislature.  On                                                                    
     May 3,  2019, the House Committee  on Energy introduced                                                                    
     HB 151. On  May 14, 2019, the  Senate Special Committee                                                                    
     on  the Railbelt  Electric  System  introduced SB  123.                                                                    
     Both  bills  were  titled  "An   Act  relating  to  the                                                                    
     regulation   of   electric   utilities   and   electric                                                                    
     reliability   organizations;  and   providing  for   an                                                                    
     effective  date.  "  Both bills  are  very  similar  in                                                                    
     language and intent.  At the Public Meeting  of the RCA                                                                    
     held December  11, 2019, the  RCA voted  unanimously to                                                                    
     support SB 123.                                                                                                            
                                                                                                                                
     Recommendation No.4:                                                                                                     
                                                                                                                                
     Enforceable  and  consistent   Railbelt  operating  and                                                                    
     reliability  standards  are necessary  for  consistent,                                                                    
     safe,   reliable,  and   efficient  operation   of  the                                                                    
     Railbelt electric  system. The RCA  strongly encourages                                                                    
     the  lntertie Management  Committee and  Homer Electric                                                                    
     Association,  Inc.  to  resolve their  differences  and                                                                    
     develop  a common  Railbelt  operating and  reliability                                                                    
     standard.  In  January 2016  the  RCA  will initiate  a                                                                    
     process  to determine  if it  should adopt  regulations                                                                    
     concerning    Railbelt   operating    and   reliability                                                                    
     standards.                                                                                                                 
                                                                                                                                
     Progress on Recommendation No. 4:                                                                                        
                                                                                                                                
     The  area with  the most  progress is  the adoption  of                                                                    
     mandatory  consensus reliability  standards. The  RCA's                                                                    
     June   2015  recommendation   noted  that   reliability                                                                    
     standards   were  voluntary   and   not  all   electric                                                                    
     utilities  had adopted  the  same standards.3  Railbelt                                                                    
     electric utilities agreed to  a single set of mandatory                                                                    
     electric  reliability   standards  for   the  Railbelt,                                                                    
     filing consensus reliability standards  with the RCA on                                                                    
     April  17, 2018,  that bridged  inconsistencies between                                                                    
     the  existing  reliability  standards of  the  IMC  and                                                                    
     HEA/RRO.  The  Rail  belt electric  utilities  proposed                                                                    
     that  implementation  of  the  consensus  standards  be                                                                    
     delayed  until a  year after  adopted by  a reliability                                                                    
     organization.   The  reliability organization  proposed                                                                    
     by  Railbelt  electric  utilities   is  the  Rail  belt                                                                    
     Reliability Council (RRC),  with functions that include                                                                    
     (1) adopting  and enforcing standards  regarding system                                                                    
     reliability, cybersecurity, and  physical security; (2)                                                                    
     conducting   integrated  resource   planning  for   the                                                                    
     Railbelt;  (3)   adopting  and   enforcing  system-wide                                                                    
     interconnection    protocols;   and    (4)   evaluating                                                                    
     security-constrained  economic  dispatch. The  Railbelt                                                                    
     electric   utilities   proposed   that   the   RRC   be                                                                    
     certificated and  regulated by the  RCA. The RRC  is in                                                                    
     the  formative  stages,  with the  Rail  belt  electric                                                                    
     utilities    anticipating    filing    a    certificate                                                                    
     application once  the RRC business plan  and supporting                                                                    
     documents are completed.                                                                                                   
                                                                                                                                
     Recommendation No. 5:                                                                                                    
                                                                                                                                
     The  RCA  will be  hugely  impacted  by these  proposed                                                                    
     Railbelt  electric system  changes. The  initial action                                                                    
     steps will  need to be implemented  within existing RCA                                                                    
     resources. The  RCA is selfsupporting through  RCCs and                                                                    
     does not  rely upon  state undesignated  general funds.                                                                    
     If  the  RCA  receives the  necessary  Legislative  and                                                                    
     Administration  support, the  RCA  budget will  require                                                                    
     the necessary  RCC funded resources to  implement these                                                                    
     proposed recommendations.                                                                                                  
                                                                                                                                
     Progress on Recommendation No. 5:                                                                                        
                                                                                                                                
     The passage  of SB  83, signed into  law on  August 29,                                                                    
     2019,  with an  effective  date of  November 27,  2019,                                                                    
     amended  Section  39.25.110 concerning  Exempt  Service                                                                    
     and the  RCA Chair's authority under  AS 42.04.050 (a).                                                                    
     With these statutory changes, the  Chair of the RCA was                                                                    
     given  authority to  employ up  to five  utility master                                                                    
     analysts.  Highly specialized  and technically  trained                                                                    
     individuals  can  now  be employed  to  assist  in  the                                                                    
     implementation  of   these  Railbelt   electric  system                                                                    
     changes. The  public interest protection  of ratepayers                                                                    
     can  now  be better  balanced  with  the needs  of  the                                                                    
     utilities.                                                                                                                 
                                                                                                                                
10:35:27 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE FIELDS asked if storage  had been addressed in the                                                               
project pre-approval per AS 42.05.294.                                                                                          
                                                                                                                                
MR.  PICKETT offered  his belief  that this  was currently  being                                                               
discussed, and  that the  intent was  for storage  to be  part of                                                               
this, past a  certain scale.  He suggested that  it was necessary                                                               
for the  various utilities  and parties to  figure that  line, as                                                               
the RCA  did not  want to  "get down into  the weeds"  on smaller                                                               
projects.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  FIELDS  asked  if  there  was  contemplation  for                                                               
having a Railbelt  Utility go through RCA approval  for a smaller                                                               
scale storage.                                                                                                                  
                                                                                                                                
MR. PICKETT explained that it  was necessary to separate what had                                                               
a system  wide impact  versus just  for the  utility itself.   He                                                               
pointed  out that  each utility  had  the authority  to make  the                                                               
decisions for  what they needed to  run their utility.   He noted                                                               
that Golden Valley  Electric once had the  largest battery system                                                               
in the world.                                                                                                                   
                                                                                                                                
REPRESENTATIVE FIELDS  asked for  elaboration to the  meaning for                                                               
complying  with reliability  standards,  and if  that would  ever                                                               
give RCA the  ability to not pre-approve a program  for a lack of                                                               
substantial reliability within the grid.                                                                                        
                                                                                                                                
MR. PICKETT  offered his belief  that the current  standards were                                                               
just operational standards and did  not address physical or cyber                                                               
security.   He stated  that participation  with the  various IPPs                                                               
and renewable  energy wanted to  ensure the grid was  operated on                                                               
an open, transparent  basis where it was known what  needed to be                                                               
done.    He  suggested  that   reliability  standards  would  not                                                               
preclude this.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  FIELDS  asked  if an  intermittent  power  supply                                                               
would be unreliable.                                                                                                            
                                                                                                                                
MR.  PICKETT replied  that this  would depend  on the  size of  a                                                               
supply and where it was plugging into the grid.                                                                                 
                                                                                                                                
10:38:29 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAUSCHER asked  why  this change  was now  moving                                                               
quickly.                                                                                                                        
                                                                                                                                
MR.  PICKETT offered  his  belief  that there  were  going to  be                                                               
mandatory,  enforceable reliability  standards  in the  Railbelt.                                                               
Whether or not  the RCA was initiating a rule  making docket, RCA                                                               
wanted a system  in which the operators would first  see what was                                                               
necessary  and not  have RCA  to try  to operate  the plant  as a                                                               
regulator.    He reported  that  the  operators were  working  to                                                               
figure  out the  best  cyber security  industrial control  system                                                               
approach.                                                                                                                       
                                                                                                                                
10:40:11 AM                                                                                                                   
                                                                                                                                
CHAIR HOPKINS asked  if there was any  concern for discrimination                                                               
against any type of power  produced along the Railbelt and should                                                               
this be covered in legislation.                                                                                                 
                                                                                                                                
MR.  PICKETT  opined that  the  Railbelt  was already  adequately                                                               
covered with new  generation over the last five years.   He added                                                               
that,  with declining  loads, it  would be  several years  before                                                               
there was substantial  new generation, although there  could be a                                                               
level of renewables  coming into the system.  He  noted that wind                                                               
power  would make  sense in  some  areas, and  he referenced  the                                                               
solar farm in Willow.                                                                                                           
                                                                                                                                
CHAIR  HOPKINS  asked  about   the  similarities  to  reliability                                                               
standards in the Lower 48, and  how those worked.  He asked about                                                               
the  lack  of  those  reliability  standards  in  interconnection                                                               
transmission systems in Alaska.                                                                                                 
                                                                                                                                
MR. PICKETT  opined that the  state political  leadership through                                                               
Senator  Stevens,  Representative  Young, and  Senator  Murkowski                                                               
were  reluctant  for the  NAERC  to  expand its  jurisdiction  to                                                               
Alaska.   He  shared  that he  had studied  many  of the  systems                                                               
throughout  the United  States  in very  large  markets, and  the                                                               
NAERC would  create too  much of  an administrative  overhead and                                                               
burden  for the  relative handful  of  utilities in  Alaska.   He                                                               
reported that there  was an attempt to craft  something that made                                                               
sense for Alaska.                                                                                                               
                                                                                                                                
CHAIR HOPKINS  asked if there  was now  a stronger need  for this                                                               
reliability standard.                                                                                                           
                                                                                                                                
MR.  PICKETT pointed  out that  the power  grid was  a target  of                                                               
cyber-security.    He  noted  that  both  the  military  and  the                                                               
utilities had  concerns, adding that  "the grid is  an attractive                                                               
target."     He  offered   his  belief  that   it  was   a  major                                                               
accomplishment  for  the utilities  to  merge  the two  competing                                                               
reliability standards.  He reiterated  that physical security was                                                               
a concern.                                                                                                                      
                                                                                                                                
10:44:21 AM                                                                                                                   
                                                                                                                                
CHAIR  HOPKINS pointed  out  that the  CS  had adopted  identical                                                               
language to  SB 123,  which was unanimously  endorsed by  the RCA                                                               
and it was the intent of the committee to hold the bill.                                                                        

Document Name Date/Time Subjects
2020-01-17 - RCA Recommendation to the Legislature - 2020.pdf HENE 1/23/2020 10:15:00 AM
HB 151
2020-01-23 - HB 151 Sectional Analysis - Version U.pdf HENE 1/23/2020 10:15:00 AM
HB 151
2019-12-19 - RRC MOU.pdf HENE 1/23/2020 10:15:00 AM
HB 151
HB0151U.pdf HENE 1/23/2020 10:15:00 AM
HB 151
2020-01-23 - HB 151 Bill Overview - Version U.pdf HENE 1/23/2020 10:15:00 AM
HB 151