Legislature(2019 - 2020)SENATE FINANCE 532

01/29/2020 03:30 PM ENERGY

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Audio Topic
03:34:16 PM Start
03:35:25 PM SB123|| HB151
03:37:59 PM Reap
04:54:20 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time & Location Change --
-- Teleconference <Listen Only> --
+ Joint with Senate RBE TELECONFERENCED
+= HB 151 ELECTRIC RELIABILITY ORGANIZATIONS TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
**Streamed live on AKL.tv**
           SB 123-ELECTRIC RELIABILITY ORGANIZATIONS                                                                        
           HB 151-ELECTRIC RELIABILITY ORGANIZATIONS                                                                        
                                                                                                                                
3:35:25 PM                                                                                                                    
CHAIR  COGHILL announced  the consideration  of  SENATE BILL  NO.                                                               
123, "An  Act relating  to the  regulation of  electric utilities                                                               
and  electric reliability  organizations;  and  providing for  an                                                               
effective date."                                                                                                                
                                                                                                                                
The  House Special  Committee on  Energy had  in its  possession,                                                               
HOUSE  BILL  NO. 151,  "An  Act  relating  to the  regulation  of                                                               
electric  utilities and  electric reliability  organizations; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
^REAP                                                                                                                           
3:37:59 PM                                                                                                                    
CHAIR  COGHILL   asked  Mr.  Rose   with  REAP  to   present  his                                                               
PowerPoint.                                                                                                                     
                                                                                                                                
CHRIS ROSE,  Executive Director, Renewable Energy  Alaska Project                                                               
(REAP)  thanked the  committees for  hearing the  legislation and                                                               
the  Regulatory Commission  of Alaska  (RCA), the  utilities, and                                                               
all other stakeholders  for their work on this  effort. He stated                                                               
support for both SB 123 and HB 151.                                                                                             
                                                                                                                                
He reported that  REAP, a nonprofit founded in 2004,  has over 75                                                               
dues-paying  members. Each  year 21  members are  elected to  the                                                               
board  representing  businesses,   utilities,  NGOs,  educational                                                               
institutions, and at-large members. He  said REAP's mission is to                                                               
increase   renewable  energy   development  and   promote  energy                                                               
efficiency in Alaska.                                                                                                           
                                                                                                                                
MR. ROSE described  REAP's focus on education  and programs. Each                                                               
year  STEM  educators  reach   700  classrooms  promoting  Alaska                                                               
EnergySmart and Wind for Schools.  They work throughout the state                                                               
giving presentations,  workshops, and conferences.  Their focused                                                               
effort is to increase energy literacy in all areas of the state.                                                                
                                                                                                                                
3:39:09 PM                                                                                                                    
MR.  ROSE  displayed a  timeline  showing  30 years  of  Railbelt                                                               
energy reform  efforts from  1986 when  Railbelt Energy  Fund was                                                               
established through 2014 when  the legislature appropriated money                                                               
for the RCA to study the  Railbelt system. During that time there                                                               
were many  efforts to reorganize  the Railbelt grid. He  said the                                                               
Railbelt  utilities have  done a  terrific job  over the  last 70                                                               
years  but things  changed over  time  and there  are issues  now                                                               
about how to operate as a whole.                                                                                                
                                                                                                                                
3:39:52 PM                                                                                                                    
REPRESENTATIVE SPOHNHOLZ joined the meeting.                                                                                    
                                                                                                                                
MR.  ROSE  displayed a  timeline  that  shows REAP's  involvement                                                               
since 2011  when it  became a member  of the  Railbelt Integrated                                                               
Resource  Plan  (RIRP)  Citizen   Advisory  Committee.  Once  the                                                               
legislature appropriated  money for  a study  and the  RCA opened                                                               
docket I-15-001, REAP became more  heavily involved. In 2015 REAP                                                               
urged the  legislature to introduce  House Bill 187 to  create an                                                               
independent system  operator (ISO).  This effort was  repeated in                                                               
2018 with  House Bill  382. Both bills  looked at  an independent                                                               
board of  directors with three  or four representatives  from the                                                               
utilities. Over  the last year and  a half REAP has  been helping                                                               
the utilities  develop a memorandum  of understanding  (MOU) that                                                               
they have now all signed. A  primary driver has been to make many                                                               
of the functions mandatory.                                                                                                     
                                                                                                                                
He stated that REAP supports  the legislation as proposed as well                                                               
as the four pillars:                                                                                                            
                                                                                                                                
   1. To allow  the  RCA  to  oversee   the  new  RRC  if  it  is                                                               
     successfully established voluntarily.                                                                                      
   2. To allow the RCA to establish something like the RRC on its                                                               
     own, if current voluntary efforts to do so fail.                                                                           
   3. To call on the RRC to execute  regional integrated resource                                                               
     planning that would  allow a broad public  process to decide                                                               
     the  future  generation  and   transmission  needs  for  the                                                               
     Railbelt.                                                                                                                  
   4. To give the RCA the  authority to preapprove all  large new                                                               
     generation  and transmission  projects  to protect  Railbelt                                                               
     consumers.                                                                                                                 
                                                                                                                                
3:41:47 PM                                                                                                                    
MR. ROSE listed the following problems:                                                                                         
                                                                                                                                
   • There is no regional  economic dispatch.  The RCA  pointed                                                                 
     this out  in their 2015  and 2020  letters. Each of  the six                                                               
     utilities is  balancing supply and  demand within  their own                                                               
     suboptimal   balancing  area.   This   is  problematic   for                                                               
     renewable energy  because it limits  the space  the variable                                                               
     electrons from wind and solar can go.                                                                                      
   • There is no regional planning, which the bill does address.                                                                
   • The RCA does not  have pre-approval  authority, which  the                                                                 
     bill does address.                                                                                                         
   • There are no regional reliability standards, which the bill                                                                
     does address.                                                                                                              
   • There are no  regional  nondiscriminatory  interconnection                                                                 
     standards, which the bill does address.                                                                                    
   • There is no regional transmission  tariff, which  can make                                                                 
     the  cost  of  moving  power  uneconomic.  The  open  access                                                               
     transmission tariff  in the bill will  hopefully address the                                                               
     regional transmission tariff.                                                                                              
                                                                                                                                
3:42:54 PM                                                                                                                    
MR.  ROSE stated  that REAP  sees  electric grid  reform as  risk                                                               
management. Establishing an  ERO will help the  Railbelt with the                                                               
existing  challenges  associated   with  fuel  price  volatility,                                                               
climate risk, technology innovation,  changing customer needs and                                                               
desires, and grid resiliency and security.                                                                                      
                                                                                                                                
He related  that in  Cook Inlet, one  producer controls  about 85                                                               
percent  of the  production.  Natural gas  is virtually  monopoly                                                               
controlled  in Cook  Inlet.  There  is flat  demand  and a  small                                                               
market for that gas in  the Railbelt. The infrastructure is aging                                                               
and the  production costs for  the gas are  high. A lot  of state                                                               
subsidies have been supporting the  production of that gas, which                                                               
is a risk for the region.                                                                                                       
                                                                                                                                
MR. ROSE displayed an excerpt from  a 2015 letter from five large                                                               
oil companies  to the  United Nations  to illustrate  the climate                                                               
risk.                                                                                                                           
                                                                                                                                
     Pricing carbon obviously adds a  cost to our production                                                                    
     and   our  products   -  but   carbon  pricing   policy                                                                    
     frameworks  will contribute  to provide  our businesses                                                                    
     and their  many stakeholders  with a clear  roadmap for                                                                
     future  investment,  a  level  playing  field  for  all                                                                
     energy sources  across geographies and a  clear role in                                                                    
     securing a more sustainable future.                                                                                        
                                                                                                                                
He emphasized that a federal carbon price is inevitable.                                                                        
                                                                                                                                
3:44:09 PM                                                                                                                    
MR. ROSE  turned to the  slide that lists  technology innovations                                                               
and other disruptors.  He highlighted that wind  and solar prices                                                               
are  falling dramatically.  They are  market disruptors  in other                                                               
places because they oftentimes cost  less than generation by coal                                                               
and  natural gas.  Electric transportation  is another  disruptor                                                               
that is gaining  traction. Electricity is being  used for heating                                                               
and batteries  and other energy  storage devices are  dropping in                                                               
price.  He  said it's  important  to  have  a regional  forum  to                                                               
address these changes.                                                                                                          
                                                                                                                                
He displayed  a slide  that depicted  a wind  and solar  farm and                                                               
highlighted  that  according  to  a  December  2019  analysis  by                                                               
Lazard,  wind energy  prices  have fallen  70  percent and  solar                                                               
photovoltaics have fallen  89 percent, on average,  over the last                                                               
decade. Those prices are predicted  to continue to decrease going                                                               
forward.  He  displayed  a  recent slide  from  the  U.S.  Energy                                                               
Information Administration that states:                                                                                         
                                                                                                                                
     According    to    the    U.S.    Energy    Information                                                                    
     Administration's  (EIA)  latest inventory  of  electric                                                                    
     generators,  EIA  expects  42  gigawatts  (GW)  of  new                                                                    
     capacity  additions to  start  commercial operation  in                                                                    
     2020. Solar  and wind represent  almost 32 GW,  or 76%,                                                                    
     of  these  additions.  Wind accounts  for  the  largest                                                                    
     share of these additions at  44%, followed by solar and                                                                    
     natural  gas   at  32%   and  22%,   respectively.  The                                                                    
     remaining  2% comes  from hydroelectric  generators and                                                                    
     battery storage.                                                                                                           
                                                                                                                                
3:45:43 PM                                                                                                                    
MR. ROSE  displayed Lazard's most  recent estimates  of Levelized                                                               
Cost of  Energy Comparison of renewable  and conventional energy.                                                               
It is  an unsubsidized  analysis, so it  is comparing  "apples to                                                               
apples"  and   shows  a  cost   range  for  each   renewable  and                                                               
conventional resource. He noted the  range for solar is 3.2 cents                                                               
to 4.2 cents  per kilowatt hour. The range for  wind is 2.8 cents                                                               
to 5.4  cents per kilowatt hour.  He said these are  the cheapest                                                               
resources available right now.                                                                                                  
                                                                                                                                
MR.  ROSE  directed  attention  to   the  graph  that  shows  the                                                               
trajectory of solar photovoltaic  deployment and cost since 2009.                                                               
The  superimposed red  line shows  that  as the  cost goes  down,                                                               
generation  increases considerably.  He noted  that more  than 60                                                               
gigawatts of solar was installed in 2018.                                                                                       
                                                                                                                                
The  next graph  shows  a  similar graph  for  U.S. Onshore  Wind                                                               
deployment  & Cost.  He highlighted  that  the price  of wind  is                                                               
dropping  so dramatically,  an additional  90  gigawatts of  wind                                                               
generation  is anticipated  this year.  The next  graphic of  the                                                               
Lower 48 shows that the states  colored dark blue have passed 100                                                               
percent clean energy  policies and those colored  light blue have                                                               
renewable  energy targets.  He  pointed out  that  Alaska is  not                                                               
colored because  it does not  have a codified goal  for renewable                                                               
energy.                                                                                                                         
                                                                                                                                
3:47:19 PM                                                                                                                    
MR. ROSE emphasized that customer  needs and desires are changing                                                               
quickly. People  are installing  solar on  their roofs  but, more                                                               
importantly, 63  percent of  the Fortune  500 companies  have set                                                               
one or  more climate change  or clean energy targets.  This means                                                               
they will  not move into  communities that do not  have renewable                                                               
energy  for   their  customers.  He  highlighted   that  this  is                                                               
important to Alaska as it  tries to encourage companies to invest                                                               
in the state.                                                                                                                   
                                                                                                                                
He  reported that  Apple's next  U.S. data  center will  be built                                                               
near Des Moines, Iowa, his  hometown. [Apple's investment of $1.3                                                               
billion  is projected  to create  550 constructions  jobs in  the                                                               
area, and  the company is  contributing up  to $100 million  to a                                                               
newly created  Public Improvement  Fund.] He said  the tremendous                                                               
economic investment  in this area  can be attributed to  the fact                                                               
that  100 percent  of the  power that  Apple purchases  will come                                                               
from  wind  generation.  Statewide,   40  percent  of  the  power                                                               
generated in Iowa is from wind.                                                                                                 
                                                                                                                                
3:48:16 PM                                                                                                                    
CHAIR HOPKINS asked  if the wind farms are located  in Iowa or in                                                               
another state  and available through  the interconnection  in the                                                               
Lower 48.                                                                                                                       
                                                                                                                                
MR. ROSE  responded that  he wasn't sure,  but his  assumption is                                                               
that it  comes from Iowa.  On a per  capita basis, Iowa  has more                                                               
electricity coming from wind than  any other state. More power is                                                               
generated than  Iowans use so  the excess is delivered  to places                                                               
like Kansas City and Chicago.                                                                                                   
                                                                                                                                
CHAIR  HOPKINS  commented  that   the  electricity  is  delivered                                                               
through the interconnection among  utilities and the transmission                                                               
system in the Lower 48.                                                                                                         
                                                                                                                                
MR. ROSE agreed. He added  that the transmission system acts like                                                               
a  storage  system  for  this  large  grid  so  there  is  always                                                               
someplace for  the electrons  to go. It's  different than  in the                                                               
Railbelt where there  isn't a regional grid  to deliver electrons                                                               
regardless of  where they're produced.  He continued to  say that                                                               
grid resiliency and security is a large issue for the RCA.                                                                      
                                                                                                                                
3:49:48 PM                                                                                                                    
REPRESENTATIVE  SPOHNHOLZ questioned  his  statement that  Alaska                                                               
doesn't have  the policy regarding  renewable energy  because the                                                               
governor  mentioned  on  Monday  that the  legislature  passed  a                                                               
policy in 2010 that required 50  percent of energy in Alaska come                                                               
from renewables. She asked for  an explanation of the discrepancy                                                               
between statements.                                                                                                             
                                                                                                                                
MR. ROSE explained that the  governor was referring to House Bill                                                               
306 that passed in 2010. It had  the 50 percent by 2025 goal, but                                                               
it was  not codified. Therefore,  it is  neither a mandate  nor a                                                               
goal. He noted that he mentioned this to the governor yesterday.                                                                
                                                                                                                                
REPRESENTATIVE   SPOHNHOLZ    described   the    legislation   as                                                               
aspirational.                                                                                                                   
                                                                                                                                
MR. ROSE agreed  it is an aspirational goal. He  then pointed out                                                               
that other states that only have goals have codified them.                                                                      
                                                                                                                                
3:51:13 PM                                                                                                                    
MR.  ROSE turned  to  the  slide that  states  that western  grid                                                               
integration  could be  a boon  for  wind. He  read the  following                                                               
quote from  Stephen Beuning, Director of  Market Operations, Xcel                                                               
Energy:                                                                                                                         
                                                                                                                                
     When  utilities   pool  their  generation   assets  and                                                                    
     dispatch  [them] together,  you get  greater efficiency                                                                    
     and  flexibility.  Those  two things  combine  to  help                                                                    
     renewable integration.                                                                                                     
                                                                                                                                
He  highlighted  that  XL  Energy   has  come  full  circle  from                                                               
initially  fighting Colorado's  Renewable  Portfolio Standard  to                                                               
now being  the largest utility in  the country to say  it will go                                                               
100 percent renewable electricity.                                                                                              
                                                                                                                                
MR.  ROSE  stated  that  REAP   has  a  few  concerns  about  the                                                               
governance structure  of the proposed  RRC. First,  the governing                                                               
board outlined in the RRC  memorandum of understanding (MOU) that                                                               
the utilities negotiated is not  independent. REAP and other non-                                                               
utility  stakeholders worked  with the  utilities to  tighten the                                                               
language but didn't have any  leverage to encourage the utilities                                                               
to change the  governance structure in their MOU.  He pointed out                                                               
that if AEA (Alaska Energy  Authority) weren't a state entity, it                                                               
would be classified  as a utility because it  owns generation and                                                               
transmission.  From   that  standpoint,   the  board   has  seven                                                               
utilities and five non-utilities. He  said REAP would like to see                                                               
a  requirement  that  minority  positions   of  the  RRC  in  the                                                               
Integrated  Resource Planning  process are  reported to  the RCA.                                                               
Then the RCA  could consider that when it decides  whether or not                                                               
to  modify or  approve an  IRP. He  said REAP  would also  like a                                                               
commitment  from the  utilities  that the  governance board  will                                                               
evolve over the next 5-10 years to become truly independent.                                                                    
                                                                                                                                
3:54:08 PM                                                                                                                    
MR. ROSE  reviewed five points  that REAP believes  are important                                                               
going forward. First  is that the local  planning and reliability                                                               
criteria in existing  statute do not create  loopholes that would                                                               
defeat  the purpose  of the  Integrated  Resource Planning  (IRP)                                                               
process  or  the ability  of  the  RCA to  pre-approve  projects.                                                               
Second is  to ensure  that the legislation  makes it  possible to                                                               
move toward  a universal transmission  tariff in the  Railbelt so                                                               
there are not pancaking transmission  tariffs. The third point is                                                               
that REAP  would like a  commitment to transition  to merit-order                                                               
economic dispatch  at a  future time certain.  He noted  that the                                                               
MOU simply says  that when established the RRC  will study merit-                                                               
order economic dispatch.                                                                                                        
                                                                                                                                
3:54:59 PM                                                                                                                    
CHAIR COGHILL  pointed out  that the MOU  is very  different than                                                               
the statutory rule and it's important that they aren't crossed.                                                                 
                                                                                                                                
MR. ROSE  replied he wanted  the committee to understand  some of                                                               
the issues involved with the MOU process.                                                                                       
                                                                                                                                
He continued to say that REAP  wants to make certain that the RRC                                                               
develops protocols  to allow  for non-discriminatory  open access                                                               
to both  individual utility networks  and the  wider transmission                                                               
system. He  said the  last point is  that the  legislation should                                                               
reflect the needs  of Alaskans, not necessarily the  needs of the                                                               
utilities' MOU to  form the RRC. He noted the  testimony from the                                                               
utilities on Monday  was that they would like  the legislation to                                                               
comport to the  MOU whereas REAP believes  the legislation should                                                               
protect Alaskans first.                                                                                                         
                                                                                                                                
3:56:19 PM                                                                                                                    
MR. ROSE said  the following points summarize  what REAP believes                                                               
Railbelt reform would do for Alaska:                                                                                            
                                                                                                                                
        • Create a more level playing field for renewable                                                                       
          energy producers                                                                                                      
        • Stabilize  energy   prices,    including   rural                                                                      
          electricity, and diversify the fuel mix                                                                               
        • Decrease greenhouse gas emissions                                                                                     
        • Attract investment                                                                                                    
        • Diversify the economy and create jobs                                                                                 
        • Prepare Alaska for a better future that will                                                                          
          likely include both electric transportation and                                                                       
          heating                                                                                                               
                                                                                                                                
MR. ROSE  emphasized that  REAP is moving  forward in  good faith                                                               
with the utilities.  Meetings over the last year and  a half have                                                               
been very  productive. However, the  recent effort  to completely                                                               
rewrite  SB 123  was not  a good  process. The  hope is  that the                                                               
processes will  be less rapid  when the  Implementation Committee                                                               
and the Railbelt Reliability Council are formed, he said.                                                                       
                                                                                                                                
3:57:26 PM                                                                                                                    
CHAIR COGHILL  asked if he  would agree that  integrated resource                                                               
planning  with   a  number  of  utilities   that  have  different                                                               
geographic  economies is  very different  than a  single utility.                                                               
When these utilities  are on an integrated council,  they bring a                                                               
very disparate point of view.                                                                                                   
                                                                                                                                
MR. ROSE said  yes; it makes sense that the  utilities want to be                                                               
on the  implementation committee and  the RRC. He added  that the                                                               
resources and needs vary in  different parts of the Railbelt, but                                                               
they aren't  that different and the  non-utility stakeholders may                                                               
bring up  issues that the  utilities may not consider  if they're                                                               
alone in the room.                                                                                                              
                                                                                                                                
CHAIR  COGHILL  referenced  the   statement  that  utilities  are                                                               
interested in utility business whereas  REAP is interested in the                                                               
public good. He  pointed out that utilities are  required to have                                                               
a certificate  of public  convenience and  the RCA  requires that                                                               
they operate in the public  interest. Their mandate is to deliver                                                               
reliable power at the lowest cost service.                                                                                      
                                                                                                                                
MR. ROSE  said he agrees  and believes  the utilities do  a great                                                               
job  of   meeting  that  mandate.   However,  when  the   ERO  is                                                               
certificated,  REAP wants  broad  assurance that  there is  broad                                                               
consensus and the ERO is working for the public interest.                                                                       
                                                                                                                                
4:00:40 PM                                                                                                                    
CHAIR COGHILL thanked Mr. Rose  and invited Mr. Thayer to provide                                                               
his testimony.                                                                                                                  
                                                                                                                                
4:00:54 PM                                                                                                                    
CURTIS  THAYER,  Executive   Director,  Alaska  Energy  Authority                                                               
(AEA),   Department   of   Commerce,   Community   and   Economic                                                               
Development (DCCED),  Anchorage, Alaska,  stated that  AEA's goal                                                               
is  to  lower  the  cost  of  energy  in  Alaska.  The  authority                                                               
accomplishes  this through  its  assets,  primarily Bradley  Lake                                                               
Hydroelectric Project and the  Alaska Intertie transmission line,                                                               
but also the Battle Creek Diversion Project.                                                                                    
                                                                                                                                
The AEA also operates rural  programs in 195 communities in terms                                                               
of Power Cost  Equalization and is primarily  responsible for the                                                               
powerhouses,  bulk fuel,  and upgrades.  The  AEA supports  rural                                                               
communities  by  administering  grants, including  the  Renewable                                                               
Energy Fund (REF) and Power Project Fund (PPF).                                                                                 
                                                                                                                                
MR. THAYER said  his focus today is to  discuss AEA's perspective                                                               
of  SB 123  as an  asset  owner of  Bradley Lake  and the  Alaska                                                               
Intertie. He  related that Bradley  Lake is currently  managed by                                                               
the Railbelt utilities  and AEA participates in  the Battle Creek                                                               
Management   Committee.    The   committee    makes   operational                                                               
maintenance  decisions and  AEA  receives  feedback from  outside                                                               
agencies. The  budget for required  improvements is  not affected                                                               
by SB  123. The  state does  not give away  any of  its fiduciary                                                               
rights  or  responsibilities,  but  still  has  clear  rights  on                                                               
budgeting matters  on AEA assets.  The Alaska Intertie  still has                                                               
the maximum intertie  transfer capacity rights. It  is managed by                                                               
the utilities  through an Intertie Management  Committee, similar                                                               
to  the  Bradley  Project Management  Committee  for  operational                                                               
maintenance decisions.                                                                                                          
                                                                                                                                
4:03:18 PM                                                                                                                    
MR.  THAYER,  in response  to  Chair  Hopkins, advised  that  the                                                               
acronym BPMC stands for the  Bradley Project Management Committee                                                               
which is composed  of participants from all six  of the utilities                                                               
and AEA.                                                                                                                        
                                                                                                                                
He  opined  that  the  less  prescriptive  and  more  intentional                                                               
approach in SB 123 for  energy policy is preferable, particularly                                                               
when  looking back  at legislative  intent. It  ensures that  the                                                               
Regulatory  Commission  of  Alaska   (RCA)  will  play  a  proper                                                               
regulatory role  and allows maximum flexibility  for the electric                                                               
reliability  organization to  create rules  of the  road to  meet                                                               
Alaska's specific situations.                                                                                                   
                                                                                                                                
MR. THAYER  suggested that planning  functions should  be closely                                                               
aligned with a statewide effort  and flexibility, and bifurcation                                                               
should be maintained. Institutional  reform has long been sought.                                                               
A  combination   of  new  technologies  and   Railbelt  utilities                                                               
synergies currently exist, so SB 123  is the right vehicle at the                                                               
right time.  The AEA  has worked  very closely  in the  past year                                                               
with utilities in addressing the  issues related to the Swan Lake                                                               
fire  and  the  SQ  line [Soldotna  Substation  to  Quartz  Creek                                                               
Substation].                                                                                                                    
                                                                                                                                
He  reported that  the  Swan  Lake fire  cost  utilities and  the                                                               
ratepayers north  of Homer approximately  $12 million  during the                                                               
four-month period when  the line was down.  Collectively, the AEA                                                               
and the utilities learned a lot  during that process, not only on                                                               
that  section of  line, but  also regarding  the need  to improve                                                               
transmission lines throughout the state.  SB [123] will provide a                                                               
very  deliberate  consideration of  the  right  mix of  technical                                                               
expertise  and  regulatory  oversight.  If  successful,  it  will                                                               
benefit ratepayers and lower energy costs.                                                                                      
                                                                                                                                
CHAIR COGHILL asked him to submit his comments in writing.                                                                      
                                                                                                                                
MR. THAYER agreed to provide them.                                                                                              
                                                                                                                                
4:06:03 PM                                                                                                                    
SENATOR GIESSEL requested an explanation  of why the RCA does not                                                               
regulate Bradley Lake.                                                                                                          
                                                                                                                                
MR.  THAYER explained  replied  it was  an  agreement related  to                                                               
project  bonding that  was reached  during construction.  He said                                                               
the bonds will  be paid off next  year so there will  likely be a                                                               
conversation about regulation  at that time. He  related that the                                                               
AEA and utilities  are currently improving Bradley  Lake with the                                                               
$47 million  Battle Creek Diversion Project,  which will increase                                                               
Bradley Lake  hydroelectric production  by about ten  percent. He                                                               
pointed out that  while Bradley Lake bonds will be  paid off next                                                               
year, the  Battle Creek bonds  will continue.  The AEA is  in the                                                               
very beginning stages of repaying those bonds, he said.                                                                         
                                                                                                                                
4:07:07 PM                                                                                                                    
SENATOR MICCICHE said the committee  needs to understand that HEA                                                               
(Homer Electric Association, Inc.) did  not benefit from the Swan                                                               
Lake  fire. HEA  was forced  to use  generation capacity  that it                                                               
planned to  use this spring, so  it will need to  supplement fuel                                                               
gas  in  the system,  he  said.  No  one  benefitted; it  was  an                                                               
unfortunate situation that affected everyone negatively.                                                                        
                                                                                                                                
CHAIR COGHILL commented  that the ratepayers on  the northern end                                                               
of the Alaska Intertie are very well aware of that.                                                                             
                                                                                                                                
MR.  THAYER  said  it  was  not  his  intention  to  suggest  HEA                                                               
benefitted  when   he  highlighted  the  figures   for  the  five                                                               
utilities on  the north end that  were cut off from  power. Homer                                                               
was affected by  a completely different set  of circumstances. He                                                               
said  the  issue  at  hand  was   that  the  line  was  down  and                                                               
hydroelectric was not available to  the utilities north of Homer.                                                               
He  noted   that  hydroelectric  costs  approximately   $.04  per                                                               
kilowatt  compared  to  gas  at $.08  per  kilowatt.  He  assured                                                               
Senator Micciche it was not his  intention to slight Homer in any                                                               
way.                                                                                                                            
                                                                                                                                
SENATOR MICCICHE said he understood.                                                                                            
                                                                                                                                
4:08:28 PM                                                                                                                    
CHAIR COGHILL asked  about the tension created by  AEA being part                                                               
of a  reliability group when  it works as  both a utility  and in                                                               
energy management.                                                                                                              
                                                                                                                                
MR. THAYER answered that AEA's role  is as a state entity viewing                                                               
the process  holistically. The  state owns  Bradley Lake  and the                                                               
Alaska Intertie, so the AEA must  keep its distance, he said. The                                                               
AEA is part of the process  and has worked with the utilities but                                                               
chose not to  be a party to the Memorandum  of Understanding. Nor                                                               
did the utilities ask the AEA to be a party to the MOU, he said.                                                                
                                                                                                                                
CHAIR  COGHILL  said   he  thinks  that  all   those  things  are                                                               
considered as an ERO is formed.                                                                                                 
                                                                                                                                
4:09:57 PM                                                                                                                    
CHAIR HOPKINS  recognized that  Representative Pruitt  had joined                                                               
the committee.                                                                                                                  
                                                                                                                                
He  asked  if the  AEA,  as  owner  and  operator of  the  Alaska                                                               
Intertie  from  Anchorage  to  Fairbanks, sees  a  need  for  any                                                               
upgrades  to   the  system  to  allow   for  better  reliability,                                                               
especially  as  the  Golden Valley  Electric  Association  (GVEA)                                                               
mentioned earlier about the power line  going down in the dead of                                                               
winter.                                                                                                                         
                                                                                                                                
MR.  THAYER clarified  that AEA  has  the portion  of the  Alaska                                                               
Intertie   from  Willow   to   Healy.   Golden  Valley   Electric                                                               
Association has the portion from  Healy to Fairbanks. He referred                                                               
to a  10-year old study that  considered the Railbelt needs  as a                                                               
whole.  It identified  close to  $1 billion  in overall  projects                                                               
needed for  upgrades or  improvements. He  stated that  AEA would                                                               
like  to reevaluate  that study  since  a number  of things  have                                                               
happened  in the  intervening time.  Technology  has changed  and                                                               
potential ownership  has changed in Anchorage  utilities, too. He                                                               
suggested  that that  AEA  needs to  consider  the Railbelt  from                                                               
Homer  to Fairbanks  since  Bradley  Lake hydroelectric  provides                                                               
power  to  Fairbanks.  That  is  a key  component  but  there  is                                                               
potential line  loss up to 40  percent, depending on the  time of                                                               
year  and the  constraints on  the transmission  line. He  opined                                                               
that the  AEA needs to find  ways to un-constrain the  power from                                                               
Bradley  Lake. It  is the  largest hydroelectric  project in  the                                                               
state and it provides the cheapest source of power.                                                                             
                                                                                                                                
CHAIR  COGHILL asked  if that  wouldn't be  part of  the resource                                                               
planning as contemplated in SB 123.                                                                                             
                                                                                                                                
MR. THAYER answered yes.                                                                                                        
                                                                                                                                
4:12:03 PM                                                                                                                    
CHAIR  COGHILL thanked  Mr. Thayer  and invited  Mr. Mitchell  to                                                               
deliver his PowerPoint.                                                                                                         
                                                                                                                                
4:12:40 PM                                                                                                                    
DUFF  MITCHELL,  Executive  Director,  Alaska  Independent  Power                                                               
Producers   Association  (AIPPA),   Juneau,  Alaska,   began  the                                                               
PowerPoint by displaying  the logos of AIPPA's  nine members from                                                               
across  the state.  He explained  that AIPPA  is a  support group                                                               
that shares  lessons learned regarding  how individual  IPPs have                                                               
dealt  with integrating  with  individual  utilities and  working                                                               
with  the  RCA.   He  said  this  very  useful   group  has  been                                                               
instrumental in  moving the needle toward  more competitive power                                                               
in the  state. To  provide context,   he said  42 percent  of the                                                               
nation's  power comes  from independent  power producers  whereas                                                               
it's 4 percent in Alaska, as noted on slide 3.                                                                                  
                                                                                                                                
He  relayed  that  the  model   for  the  ERO  and  the  Railbelt                                                               
organizations  comes from  the  Electric  Reliability Council  of                                                               
Texas (ERCOT)  where 78 percent  of the state's power  comes from                                                               
IPPs. He  opined that IPPs  in Alaska  will continue to  grow and                                                               
play a larger role going forward.                                                                                               
                                                                                                                                
4:15:01 PM                                                                                                                    
MR.  MITCHELL said  he  mentioned  this because  one  of the  key                                                               
recommendations  in  2016  when  the U.S.  Department  of  Energy                                                               
analyzed Alaska's  energy situation was  to increase the  role of                                                               
independent  power   producers  and  other   third-party  service                                                               
providers in  Alaska. He said  the IPPs  have proven they  can do                                                               
this in  Alaska. They  are nimble and  use private  investment to                                                               
accelerate the  option of  innovative technologies.  He described                                                               
Alaska as the  breadbasket of energy nationwide. It  has about 45                                                               
percent of  the nation's untapped  hydropower, two-thirds  of the                                                               
coastline for  offshore wind, rivers available  for hydrokinetic,                                                               
renewable energy resources, and nonrenewable energy resources.                                                                  
                                                                                                                                
4:16:06 PM                                                                                                                    
MR. MITCHELL  said he  worked on Alaska's  Energy Policy  in 2010                                                               
and  it   is  aspirational  rather  than   directional.  When  he                                                               
testified before the Regulatory  Commission of Alaska, he learned                                                               
that the RCA  does not believe it pertains to  the agency because                                                               
the policy is not codified.                                                                                                     
                                                                                                                                
He stated support for  SB 123 and HB 151 on  behalf of AIPPA. The                                                               
bills are  not perfect,  but his  belief is  that the  bills will                                                               
evolve and improve.                                                                                                             
                                                                                                                                
4:18:46 PM                                                                                                                    
MR.  MITCHELL  outlined three  points  on  slide 8  to  highlight                                                               
AIPPA's consistent  position. First, Alaska should  adopt an open                                                               
access  transmission tariff  (OATT)  so those  connecting to  the                                                               
system  would  pay  the  same  tariff  as  the  owners.  He  said                                                               
transmission is the  highway to the market, but it  can also be a                                                               
barrier. For example, when a solar  or wind project cannot get on                                                               
the  transmission line  to market  its power.  The organizational                                                               
development  team  (ODT)  has  recognized  this  dilemma  in  its                                                               
memorandum of  understanding (MOU). It  is also mentioned  in the                                                               
bills, and  as shown in the  language on slide 9.  He expressed a                                                               
preference for changing  the word "may" to  "shall" because "may"                                                               
is aspirational.                                                                                                                
                                                                                                                                
MR.  MITCHELL said  secondly, the  AIPPA supports  an independent                                                               
board  of directors.  He paraphrased  the language  on slide  10,                                                               
"Every Transmission Organization in  the US has strong regulation                                                               
and code of ethics requiring  an Independent Board of Directors."                                                               
He said AIPPA recognizes that  Alaska's population is smaller, so                                                               
it will be  difficult to find people with the  expertise to serve                                                               
on   the  board   and  be   completely  independent   from  their                                                               
organization. He  emphasized the  need for independence  for both                                                               
utilities  and non-utilities.  Board members  should also  have a                                                               
fiduciary responsibility to  the transmission organization rather                                                               
than   their  specific   interests,  he   said.  Without   strong                                                               
independent   organizations,   Alaska    will   risk   unintended                                                               
consequences such as  the creation of oligopolies  or cartels, he                                                               
said.                                                                                                                           
                                                                                                                                
4:20:20 PM                                                                                                                    
MR. MITCHELL said  the AIPPA appreciates the  commitments made by                                                               
the ODT and  utilities to date as shown in  the language on slide                                                               
12:                                                                                                                             
                                                                                                                                
     Regulatory  compact (contractual  commitment) with  the                                                                    
     State of Alaska.                                                                                                           
                                                                                                                                
     Commitment  that the  utilities  will be  bound by  the                                                                    
     decisions of the RRC.                                                                                                      
                                                                                                                                
     Commitment  of  the   utilities  to  support  statutory                                                                    
     language to  provide the RCA authority  to regulate the                                                                    
     RRC as described in the MOU.                                                                                               
                                                                                                                                
     Commitment  of  the  utilities to  be  inclusive  of  a                                                                    
     variety of  perspectives in  decisions relating  to the                                                                    
     Railbelt bulk electric system.                                                                                             
                                                                                                                                
     Commitment  of the  utilities to  participate with  one                                                                    
     another   and  non-utility   stakeholders  to   achieve                                                                    
     benefits for ratepayers across the Railbelt region.                                                                        
                                                                                                                                
                                                                                                                                
4:20:54 PM                                                                                                                    
MR. MITCHELL  reviewed slide 13,  highlighting the  importance of                                                               
cybersecurity,  integrated resource  planning (IRP),  and project                                                               
pre-approval. Because  of the military  bases in Alaska,  he said                                                               
he was pleased  to see the legislation  address cybersecurity. He                                                               
noted that  some schools and  cities in Alaska have  already been                                                               
affected.                                                                                                                       
                                                                                                                                
MR. MITCHELL said the bill  also provides the necessary tools for                                                               
integrated resource  planning (IRP) and project  pre-approval. He                                                               
said integrated  resource planning doesn't need  to be expensive,                                                               
but it does need public  participation. IRPs are commonly used in                                                               
the Lower 48, which results in better decisions.                                                                                
                                                                                                                                
He said  most states have  project pre-approval in code.  The RCA                                                               
does not  have this authority,  but it  is important in  not just                                                               
the  Railbelt   but  statewide.  He  also   suggested  that  some                                                               
reference to  the state energy  policy could be mentioned  in the                                                               
bill.                                                                                                                           
                                                                                                                                
4:22:57 PM                                                                                                                    
MR.  MITCHELL  summarized the  six  points  on slide  14.  First,                                                               
Alaska  has abundant  resources. Second,  Alaskans deserve  lower                                                               
cost  power.  Third, Alaskans  deserve  diversity  of sources  of                                                               
electrical  generation  for  energy  security.  Fourth,  Alaskans                                                               
deserve  open access  transportation tariffs  (OATT) to  create a                                                               
level playing  field. Fifth,  Alaskans need the  RCA to  have the                                                               
statutory tools  including integrated resource  planning, project                                                               
pre-approval,  and cybersecurity.  Finally,  the  AIPPA views  SB                                                               
123/HB 151  and the  establishment of the  ERO as  a foundational                                                               
road  map to  achieve lower  electrical costs.  While significant                                                               
work  still needs  to be  done, he  suggested that  the state  is                                                               
moving beyond gridlock.                                                                                                         
                                                                                                                                
MR.  MITCHELL   concluded  that  collaboration   and  cooperation                                                               
represent the new approach and he hopes it will continue.                                                                       
                                                                                                                                
4:24:13 PM                                                                                                                    
CHAIR COGHILL questioned  whether the open tariff  would come out                                                               
of the ERO through integrated planning  or if it would need to be                                                               
a statutory requirement.                                                                                                        
                                                                                                                                
MR. MITCHELL responded that the  bill says "may" and IPPA prefers                                                               
stronger  language  to  ensure   open  access  to  eliminate  any                                                               
barriers. Most utilities agree, he said.                                                                                        
                                                                                                                                
CHAIR  COGHILL asked  if  he  sees that  the  ERO will  structure                                                               
itself to have input from IPPs.                                                                                                 
                                                                                                                                
MR.  MITCHELL  answered   yes.  He  said  he   sees  the  current                                                               
commitment,  but if  that commitment  wanes in  three years,  the                                                               
current language  will not provide  the same  statutory strength.                                                               
He said  there were  problems in  the past and  he wants  to move                                                               
beyond fractiousness.                                                                                                           
                                                                                                                                
CHAIR  COGHILL suggested  that  the bill  reduces  the number  of                                                               
"doors" from six  or eight plus the  RCA to just one  to knock on                                                               
for approval.                                                                                                                   
                                                                                                                                
MR.  MITCHELL replied  he  agrees,  so long  as  the open  access                                                               
covers the entire grid and isn't a two-step process.                                                                            
                                                                                                                                
CHAIR  COGHILL said  he favors  that approach.  He added  that he                                                               
would like the listening public  to understand that the committee                                                               
wants to take all the input, yet  still come up with a simple and                                                               
discrete way to accomplish it.                                                                                                  
                                                                                                                                
4:26:53 PM                                                                                                                    
CHAIR COGHILL thanked  Mr. Mitchell and invited Ms.  di Suvero to                                                               
testify.                                                                                                                        
                                                                                                                                
4:27:19 PM                                                                                                                    
VERI  DI  SUVERO,  Executive  Director,  Alaska  Public  Interest                                                               
Research  Group  (AKPIRG),  paraphrased  the  following  prepared                                                               
testimony: [Original punctuation provided.]                                                                                     
                                                                                                                                
     Introduction                                                                                                             
                                                                                                                                
     To the  chair and  the committee,  hello and  thank you                                                                    
     for inviting  me to  speak. My name  is Veri  di Suvero                                                                    
     and I  am the Executive  Director of the  Alaska Public                                                                    
     Interest Research Group (AKPIRG).                                                                                          
                                                                                                                                
     We were founded  in 1974 and are the  State's only non-                                                                    
     partisan     non-profit     organization     advocating                                                                    
     specifically  in   the  interest  of  the   public  and                                                                    
     consumers. We  are a 501(c)3,  state-wide organization.                                                                    
     As  part  of  our  work,   we  advocate  on  behalf  of                                                                    
     ratepayers.  I  recently  found a  filing  from  AKPIRG                                                                    
     petitioning  to intervene  in a  rate case  to the  RCA                                                                    
     from  1976. In  1986, we  were canvassing  about least-                                                                    
     cost energy planning with utilities.                                                                                       
                                                                                                                                
     I started  as Director  a little over  a year  ago, and                                                                    
     have  had a  bunch  of very  patient  teachers, from  a                                                                    
     range of  stakeholders on this  issue. I want  to start                                                                    
     by  expressing   my  gratitude  to   themfrom   utility                                                                    
     representatives   in   each   service  area,   to   the                                                                    
     Regulatory  Commission,  to  non-utility  stakeholders,                                                                    
     and  once  again  to  this  body  for  helping  Alaskan                                                                    
     ratepayers.                                                                                                                
                                                                                                                                
     I am  not here as  a technical expert.  I am here  as a                                                                    
     consumer  representative,  and  it is  AKPIRG's  belief                                                                    
     that  I do  not need  to know  everything that  goes on                                                                    
     behind my light switch to  know that my utility bill is                                                                    
     one of the highest in the nation.                                                                                          
                                                                                                                                
     In  addition  to   advocating  for  cost-effective  and                                                                    
     reliable  service,  AKPIRG  advocates in  the  public's                                                                    
     interest.   That  entails   a  few   things,  including                                                                    
     transparency and  accessible information  to consumers.                                                                    
     As a research group,  accessible information means both                                                                    
     transmitting  information already  presented, and  also                                                                    
     compiling  some of  our ownfrom   going to  the RCA  to                                                                    
     look  at tariffs  for  residential  consumer rates,  to                                                                    
     explaining  various   acquisition  or   other  electric                                                                    
     utility proceedings  to stakeholders. It's  critical to                                                                    
     start  with the  basic numbers,  with actual  consumers                                                                    
     and the direct impacts of rate changes.                                                                                    
                                                                                                                                
     As Commissioner Scott  testified last Friday, consumers                                                                    
     could  save $17  million  in a  yearly aggregate,  with                                                                    
     just an efficiency increase of 2%.                                                                                         
                                                                                                                                
     SB  123 and  HB 151  could not  be coming  at a  better                                                                    
     time.  This is  a critical  first  step, and  to me  it                                                                    
     underscores   the   timeliness    of   ensuring   these                                                                    
     efficiency increases are possible.                                                                                         
                                                                                                                                
     Integrated Resource Planning                                                                                             
                                                                                                                              
     Along with transparency  and accessible information, it                                                                    
     is  necessary   to  ensure  a  planning   process  that                                                                    
     benefits  not just  one utility's  membership, but  all                                                                    
     consumers. Plans  are important for  their cost-savings                                                                    
     purposes, and also  for the important sake  of having a                                                                    
     plan,  ensuring a  more  certain  and predictable  path                                                                    
     forward.                                                                                                                   
                                                                                                                                
     As  a  consumer  interest  organization,  it  would  be                                                                    
     inappropriate  to speak  for  all  consumers and  their                                                                    
     needs. But helping develop a  plan and thereby ensuring                                                                    
     predictability,  as well  as substantial  opportunities                                                                    
     to participate  in that  planning process,  is AKPIRG's                                                                    
     role in this space.                                                                                                        
                                                                                                                                
     Right now,  that predictability  is a big  question. As                                                                    
     the price of  fuel is fluctuating, a  consumer does not                                                                    
     have  an  easy time  of  budgeting.  And with  emerging                                                                    
     technologies like  new battery storage, there  are many                                                                    
     exciting paths forward.                                                                                                    
                                                                                                                                
     As it  stands now,  without a  planning body  to create                                                                    
     longer-term  integrated  resource  planning,  consumers                                                                    
     are footing the bill  of that uncertainty. Building out                                                                    
     long-term   economic  models   is   crucial,  so   that                                                                    
     individual consumers  as well  as larger  consumers can                                                                    
     budget correctly for their future.                                                                                         
                                                                                                                                
     4:31:28 PM                                                                                                               
     AKPIRG  is  not  here  to speak  negatively  about  how                                                                    
     electrical   utilities  have   taken   care  of   their                                                                    
     ratepayers--we are  very lucky  in the  railbelt region                                                                    
     to  have  cooperatives  that   are  so  responsive  and                                                                    
     dedicated  to  their  members. And  although  the  grid                                                                    
     could  now be  most efficiently  served, if  built from                                                                    
     scratch  today, by  just one  utility, the  history and                                                                    
     formation  of these  utilities is  reflective of  their                                                                    
     dedication to their consumers.                                                                                             
                                                                                                                                
     In  fact, ensuring  their members  are best  served has                                                                    
     been  a big  reason why,  as a  statewide organization,                                                                    
     AKPIRG is excited for  an additional, regional approach                                                                    
     to planning. This is because  regional planning has not                                                                    
     been  consistently   done  together.  As   an  example,                                                                    
     through  the  past  decade there  have  been  four  new                                                                    
     generation  plants  built   on  the  railbelt,  costing                                                                    
     ratepayers an estimated $1.49 billion.  And this is for                                                                    
     a  population size,  as Commissioner  Scott said,  that                                                                    
     could be  served by one utility--and  by the equivalent                                                                    
     of a half of one power plant in the lower 48.                                                                              
                                                                                                                                
     This increased spending  creates costly inefficiencies,                                                                    
     higher rates, and  a higher barrier to  enter an energy                                                                    
     market that doesn't need more  energy producers. To our                                                                    
     estimation, none of these  things serves the consumers'                                                                    
     interests. The  costs of this infrastructure  have been                                                                    
     pushed  to  the  end-user,  or  the  consumer.  And  by                                                                    
     building  non-renewable sources  in  a small  balancing                                                                    
     area, renewables are prevented  from attaching from the                                                                    
     grid--preventing  a diversity  of energy  sources which                                                                    
     would stabilize costs in the  region. As it stands, 85%                                                                    
     of  our energy  portfolio is  made up  of non-renewable                                                                    
     sources.                                                                                                                   
                                                                                                                                
     These inefficiencies  are part  of what pushed  the RCA                                                                    
     and   legislature  to   investigate  what   a  regional                                                                    
     planning body--and  specifically an  Independent System                                                                    
     Operator--would look like. And  the RCA's work, as well                                                                    
     as  the legislature's,  to  ensure greater  cooperation                                                                    
     between  utilities,  as  well as  cost-savings  through                                                                    
     greater  efficiency and  integrated resource  planning,                                                                    
     is impressive and necessary.                                                                                               
                                                                                                                                
     That's partly why SB 123/HB  151 and the RRC, while not                                                                    
     solving everything, will  introduce a regional planning                                                                    
     approach  (or Integrated  Resource Planning)  and we're                                                                    
     incredibly excited  to see this necessary  step happen.                                                                    
     I want  to thank and  give my appreciation  to everyone                                                                    
     who has spent decades  on seeing this important process                                                                    
     to an almost-reality.                                                                                                      
                                                                                                                                
     AKPIRG's involvement                                                                                                     
                                                                                                                                
     AKPIRG  does  a  lot  of public  outreach  on  electric                                                                    
     utility issues, and I go  through this railbelt history                                                                    
     and  this  need  for   energy  efficiency  in  AKPIRG's                                                                    
     consumer  forums.  I also  talk  about  how we  have  a                                                                    
     pretty incredible model in  Alaska, with utilities that                                                                    
     are really  in it for  their members. Part of  the work                                                                    
     AKPIRG does is  to talk with and  educate members about                                                                    
     what  it means  to  participate  in their  utilitymuch                                                                     
     like   the  public   arena,   participation  may   seem                                                                    
     daunting,   but   is    critical   to   ensuring   that                                                                    
     representative    bodies    can   hear    from    their                                                                    
     constituents.                                                                                                              
                                                                                                                                
     As a little more  background about our involvement with                                                                    
     electric utilities:  we endorse  candidates regionally,                                                                    
     we have staff in Fairbanks  working on energy issues as                                                                    
     well as volunteers on the  Kenai, and AKPIRG has a seat                                                                    
     on   the   Chugach   Reliability  Group--a   group   of                                                                    
     ratepayers   advocating   for  safe   work   practices,                                                                    
     reliability,  and  increased   renewables  at  Chugach.                                                                    
     Through  member  education  events  as  well  as  these                                                                    
     elections, we  are able to  help translate some  of the                                                                    
     wonkier happenings across the  railbelt.  This includes                                                                    
     participating at the RCA and  with the utilities on the                                                                    
     MOU as requested.                                                                                                          
                                                                                                                                
     Through  our regional  work, we  consider the  needs of                                                                    
     all  the consumers  on the  railbelt, not  just members                                                                    
     (not everyone who has to  budget for utility bills is a                                                                    
     registered  member)  and  we don't  just  consider  the                                                                    
     needs of each local  cooperative. We recognize there is                                                                    
     an  important   balance  to   strike  to   ensure  that                                                                    
     cooperatives maintain local  control and responsiveness                                                                    
     to their members,  but without a body  to also consider                                                                    
     the needs of the  entire region, members and ratepayers                                                                    
     can  lose out  on cost-effective  and energy  efficient                                                                    
     decisions, especially in the longer term.                                                                                  
                                                                                                                                
     AKPIRG Pillars                                                                                                           
                                                                                                                              
     The  good news  is  that we  have  incredible need  for                                                                    
     changes  to  be made,  and  in  response we  have  seen                                                                    
     historic  movement  on  this  front.  We  don't  always                                                                    
     expect   the  kind   of  current   cooperation  between                                                                    
     utilities, but  I am grateful and  more hopeful because                                                                    
     of it.                                                                                                                     
                                                                                                                                
     Given this,  AKPIRG has  identified the  following top-                                                                    
     level needs:  the creation  of an  Electric Reliability                                                                    
     Organization,     successful    cooperation     between                                                                    
     utilities,   input   from   other   stakeholders   (and                                                                    
     especially the public),  and accountability within this                                                                    
     process in the public's interest.                                                                                          
                                                                                                                                
     To  that  end,  AKPIRG's  comments on  SB  123  are  as                                                                    
     follows:                                                                                                                   
                                                                                                                                
     - The  RRC should  not be  drafting regulations.  It is                                                                  
     critical  that the  RCA maintain  control over  the RRC                                                                    
     decision-making   process.    As   Commissioner   Scott                                                                    
     testified,  the  RRC will  have  available  to it  many                                                                    
     experts on  technical and  process matters.  That said,                                                                    
     the RRC has  been established, as provided  in the MOU,                                                                    
     to "ensure  reliability benefits to  electric consumers                                                                    
     in   the  Railbelt."   Reliability   benefits  do   not                                                                    
     encompass a public  interest determination--that is the                                                                    
     purview of the RCA. At  the RCA, anyone can be involved                                                                    
     in a  rulemaking process. Right now,  the formation and                                                                    
     structure  of the  RRC is  uncertain, and  sowith  that                                                                    
     question  of stability  in mindit   is in  the public's                                                                    
     interest to  have regulations made where  they can have                                                                    
     the most direct input: at the RCA.                                                                                         
                                                                                                                                
     -Increased  opportunities   for  public  participation.                                                                  
     AKPIRG suggestsand  did so to  the utilities last week,                                                                    
     without  oppositionto   add 'public  participation  and                                                                    
     comment' wherever 'public comment'  occurs, in order to                                                                    
     allow for  as open, engaged, and  transparent a process                                                                    
     as possible.                                                                                                               
                                                                                                                                
4:37:49 PM                                                                                                                    
MS.DI SUVERO  referenced Senator  Coghill's earlier  question and                                                               
said   she  agrees   that  the   utilities  represent   some  the                                                               
stakeholder  needs but  thus far  the process  has been  utility-                                                               
driven, at  least at the RRC  level. She opined that  that is the                                                               
distinction  between the  process so  far in  terms of  involving                                                               
stakeholders  on the  same  plane,  and what  it  could be  going                                                               
forward.                                                                                                                        
                                                                                                                                
CHAIR COGHILL  asked if she  sees a  healthy tension in  that the                                                               
ERO has  to answer  to the RCA  for its  organizational structure                                                               
and integrated resource planning.                                                                                               
                                                                                                                                
MS.DI SUVERO answered absolutely and  she is pleased that the RRC                                                               
is  not mixed  in SB  123.  She noted  that  the RRC  has two  ex                                                               
officio  members, one  from the  Regulatory Commission  of Alaska                                                               
(RCA)  and  the  other  from  the  Regulatory  Affairs  &  Public                                                               
Advocacy (RAPA).                                                                                                                
                                                                                                                                
4:40:15 PM                                                                                                                    
CHAIR  COGHILL  pointed out  that  the  RRC  may  or may  not  be                                                               
ultimately  be  certified  as  the ERO.  He  suggested  that  her                                                               
testimony  could be  misinterpreted  that the  decision had  been                                                               
made, but it has not.                                                                                                           
                                                                                                                                
MS.DI SUVERO said she didn't intend to make that assumption.                                                                    
                                                                                                                                
4:41:04 PM                                                                                                                    
CHAIR HOPKINS  asked how she sees  it working in practice  if the                                                               
language "public  participation and comment" were  to replace the                                                               
term "public comment" whenever it occurs.                                                                                       
                                                                                                                                
MS.  DI  SUVERO  said  she  didn't want  to  influence  how  that                                                               
language  could be  seen in  the future  but in  other models  it                                                               
includes robust  public participation at meetings  and during the                                                               
formation of  policy and planning.  She said the idea  of hosting                                                               
consumer forums  and having other  types of input in  the process                                                               
is critical, even  with the RCA as the backstop  for whatever ERO                                                               
is formed.  She shared  that AKPIRG is  applying to  the consumer                                                               
seat if the Railbelt Reliability Council is approved.                                                                           
                                                                                                                                
CHAIR  COGHILL emphasized  that the  reliability organization  is                                                               
structured  to have  various different  voices and  that includes                                                               
healthy  public  input.  He  added   that  whenever  the  RCA  is                                                               
involved, public input is required.                                                                                             
                                                                                                                                
4:44:09 PM                                                                                                                    
MS. DI SUVERO returned to AKPIRG's comments on SB 123:                                                                          
                                                                                                                                
     -Pass  SB 123.  Most  importantly, AKPIRG  feels it  is                                                                  
     necessary  to pass  this bill.  Without the  ability to                                                                    
     move   forward   with   the   RRC   under   the   RCA's                                                                    
     jurisdiction, this  will cost consumers  millions. This                                                                    
     past  summer, the  transmission line  Bradley Lake  was                                                                    
     out  of  commission  from  August  until  recently,  in                                                                    
     December. That left all  utilities except Homer without                                                                    
     the cheapest  source of  power on  the grid:  Hydro. It                                                                    
     cost  Southcentral  and   Interior  ratepayers  roughly                                                                    
     $11.8  million,   according  to  reporting   by  Elwood                                                                    
     Brehmer.  This  legislation  will help  create  a  more                                                                    
     resilient  and redundant  system  as  our region  faces                                                                    
     increasing wildfires and other severe weather events.                                                                      
                                                                                                                                
     Pass the bill as is.  We feel that too many substantive                                                                  
     changes will  slow down this process  and undermine the                                                                    
     years-long  efforts  thus  far   of  the  six  electric                                                                    
     utilities, other  stakeholders (including  AKPIRG), the                                                                    
     Regulatory Commission,  and this body. This  bill is an                                                                    
     outgrowth  of what  the RCA  has  learned and  reflects                                                                    
     their   recommendations  based   on  2015   substantive                                                                    
     recommendations  for reform.  There  are clear  topical                                                                    
     changes   needed,  like   dates,  but   our  worst-case                                                                    
     scenario   is  for   this  body   to   spend  so   long                                                                    
     incorporating  and deliberating  over the  changes that                                                                    
     the  utilities are  proposing that  the  bill does  not                                                                    
     pass. To our  estimation, as it is written,  SB 123 and                                                                    
     HB 151 substantially serves  consumers and the public's                                                                    
     interest,  and   is  a  necessary  and   critical  step                                                                    
     forward.                                                                                                                   
                                                                                                                                
     I am remarkably  grateful to be invited  to testify and                                                                    
     want to  express my  appreciation for  your undertaking                                                                    
     this important step forward in  a way that will provide                                                                    
     major benefits to consumers, and the public.                                                                               
                                                                                                                                
                                                                                                                                
4:46:18 PM                                                                                                                    
CHAIR  COGHILL  thanked  Ms.  di Suvero  for  her  testimony  and                                                               
consistent policy push for the  consumer. He asked her to briefly                                                               
describe AKPIRG's membership.                                                                                                   
                                                                                                                                
MS. DI  SUVERO reported  that AKPIRG has  four paid  employees in                                                               
addition  to  herself,  one  of  which  is  in  Fairbanks.  Their                                                               
membership base in the Railbelt region  is about 50, they work in                                                               
partnership  with about  20  affiliated  organizations, and  they                                                               
reach about 10,000 people statewide.                                                                                            
                                                                                                                                
4:48:10 PM                                                                                                                    
CHAIR COGHILL asked Mr. Rose to describe REAP's membership.                                                                     
                                                                                                                                
4:48:37 PM                                                                                                                    
MR. ROSE stated that REAP  has about 77 paid member organizations                                                               
that fall into  one or more categories as  businesses or electric                                                               
utilities. They have electric utilities  in both the Railbelt and                                                               
rural  Alaska. Homer  Electric, Chugach  Electric, and  Matanuska                                                               
Electric serve  on the REAP Board  of Directors. Non-governmental                                                               
organizations,  educational  institutions,  Native  corporations,                                                               
and   developers  represent   are  also   represented  in   their                                                               
membership.  Additionally,  there  are  hundreds  of  people  who                                                               
support REAP through donations.  Their mailing list reaches about                                                               
3,500 people. It  is a broad, statewide group  that's been around                                                               
for 16 years.                                                                                                                   
                                                                                                                                
CHAIR COGHILL  highlighted that both  REAP and AKPIRG  speak from                                                               
broad perspectives.                                                                                                             
                                                                                                                                
[SB 123 was held in committee.]                                                                                                 

Document Name Date/Time Subjects
2020-01-29 - AKPIRG - HB 151 testimony.pdf HENE 1/29/2020 3:30:00 PM
HB 151