Legislature(2015 - 2016)BARNES 124

04/13/2015 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 12 MORTGAGE LENDING AND LOAN ORIGINATORS TELECONFERENCED
Heard & Held
*+ HB 169 RCA: RAILBELT ELECTRIC UTILITY REPORT TELECONFERENCED
Heard & Held
+= HB 66 INS. FOR DEPENDENTS OF DECEASED TEACHERS TELECONFERENCED
Heard & Held
-- Public Testimony --
*+ HB 122 CORPORATION/LLC/PARTNERSHIP REPORTS TELECONFERENCED
Heard & Held
          HB 169-RCA: RAILBELT ELECTRIC UTILITY REPORT                                                                      
                                                                                                                                
3:19:45 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the first  order of business  would be                                                              
HOUSE BILL  NO. 169, "An Act  directing the Regulatory  Commission                                                              
of  Alaska to  provide a  report  to the  legislature relating  to                                                              
electrical  transmission  in  certain  areas  of  the  state;  and                                                              
providing for an effective date."                                                                                               
                                                                                                                                
3:20:20 PM                                                                                                                    
                                                                                                                                
KONRAD  JACKSON, Staff,  House  Labor &  Commerce,  Representative                                                              
Kurt  Olson,   Chair,  stated  that   HB  169  would   direct  the                                                              
Regulatory  Commission   of  Alaska  (RCA)  to  review   and  make                                                              
recommendations  regarding   a  process  whereby   an  Independent                                                              
Railbelt  Transmission Operator  would be  created.  The  Railbelt                                                              
energy   system   consists   of   an   interconnected   electrical                                                              
transmission system  in Southcentral Alaska which  encompasses the                                                              
Bradley  Lake  hydroelectric  plant  on Kachemak  Bay  near  Homer                                                              
north to  Fairbanks.   The interconnection  of the communities  by                                                              
these  transmission  lines  helps  keep a  significant  number  of                                                              
people of Alaskans  safe and secure.  With long  distances between                                                              
utility   companies   and   their   generation   facilities,   the                                                              
interconnected system  is of great  importance.   The interconnect                                                              
system helps bring  reliable electricity to a large  percentage of                                                              
Alaskans should not to be taken lightly, he said.                                                                               
                                                                                                                                
MR.  JACKSON  said  the  transmission  authority  proposed  to  be                                                              
evaluated by the  RCA would act as more of a  "craigslist" type of                                                              
authority.   Instead of  mandating utilities  pledge their  assets                                                              
to  one controlling  entity, this  concept  would allow  continued                                                              
local control  of assets  while at  the same  time maximizing  the                                                              
value and  reliability of the  interconnected system.   Using this                                                              
approach,  excess  power  could  be posted  as  available  and  be                                                              
purchased as needed  by any utility.  This would  promote usage of                                                              
the most economical  power along the interconnected  system at all                                                              
times.  Without  local control of assets, some  utilities stand to                                                              
be  losers  while   others  stand  to  gain  from   these  losses.                                                              
Consumer pricing  and reliability across the Railbelt  is critical                                                              
for any transmission company to work in the long-term.                                                                          
                                                                                                                                
3:22:35 PM                                                                                                                    
                                                                                                                                
MR. JACKSON  said that willing  participation and  continued local                                                              
control of  assets should  also be  considered critical  as Alaska                                                              
continues  to look towards  an ISO  [Independent System  Operator]                                                              
concept along  the Railbelt.   Last year  the RCA was  tasked with                                                              
the  job of  reporting  to  the legislature  whether  creating  an                                                              
independent  system operator was  the best  option to provide  for                                                              
effective  and efficient  electrical  transmission.    The RCA  is                                                              
nearing completion  on its work  and the intent  of HB 169  is not                                                              
to interrupt the  foregoing work, but to allow  the legislature to                                                              
consider any  further direction to  the RCA.  He  characterized HB
169  as   a  first  step   in  that  regard.     In   response  to                                                              
Representative   Kito,  he   stated  that   House  Bill  340   was                                                              
considered  by the legislature  in  2014 and directed  the  RCA to                                                              
look  at a  similar concept  with an  independent system  operator                                                              
(ISO) and report  back to the legislature.  This  bill refers to a                                                              
slightly  different ISO  and  the reporting  date  falls one  year                                                              
later, he said.                                                                                                                 
                                                                                                                                
3:25:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO,  referring  to the  fiscal  note,  suggested                                                              
some cost  should be associated with  it, but the fiscal  note was                                                              
identified as indeterminate  through 2021.  He  questioned why the                                                              
report  would still  be ongoing  in 2021  and also  said he  was a                                                              
little  confused  why  the  fiscal note  was  indeterminate.    He                                                              
further asked for  clarification on the source of  funding for the                                                              
report.                                                                                                                         
                                                                                                                                
MR. JACKSON offered  his belief that last year House  Bill 340 had                                                              
a fiscal  note.  He  deferred to  Mr. Patch, RCA  to speak  to the                                                              
fiscal  note.   He  surmised  that  some  of  the funds  might  be                                                              
available  for this  report,  but Mr.  Patch  could better  answer                                                              
questions on the fiscal note.                                                                                                   
                                                                                                                                
3:26:25 PM                                                                                                                    
                                                                                                                                
BRAD  JANORSCHKE,  General  Manager,  Homer  Electric  Association                                                              
(HEA), stated  that the RCA has  been directing a study  which was                                                              
funded during  the last  legislative session  to consider  whether                                                              
creating   an  ISO   or  similar   structure   for  the   Railbelt                                                              
transmission  system   is  the  best  option  for   effective  and                                                              
efficient  use of  the transmission  system.   Although the  RCA's                                                              
efforts  were  appreciated, he  offered  his  belief that  HB  169                                                              
would  provide  additional  direction  and clarity  on  the  RCA's                                                              
analysis.    This  bill  would direct  the  RCA  to  evaluate  the                                                              
creation  of an  independent  entity  to manage  the  transmission                                                              
system  and  the entity,  regulated  by  the  RCA, and  must  meet                                                              
criteria the  Homer Electric Association  (HEA) has  identified as                                                              
important.  The  entity would be required to attain  a Certificate                                                              
of  Public Convenience  and  Necessity from  the  RCA and  operate                                                              
under a tariff.   Secondly, participation in such  an entity would                                                              
be voluntary,  he said,  which is  a critical  attribute for  HEA.                                                              
While  each utility's  participation  is important,  each  utility                                                              
should voluntarily  enter into the  arrangement since  a voluntary                                                              
model  encourages   cooperation  and  reduces  the   magnitude  of                                                              
winners  and  losers.    He said  he  recently  talked  to  Alaska                                                              
Municipal Light &  Power's (AML&P) chair, Jim Trent,  who couldn't                                                              
participate  today   since  he  was  attending  an   RCA  hearing.                                                              
However, Mr.  Trent advised  him that he  also felt very  strongly                                                              
that any  entity created  should be voluntary  in order  to better                                                              
allow for  consensus on a common  set of principles  and standards                                                              
and to  mitigate any losers  in the process.   Lastly,  the entity                                                              
envisioned in  HB 169  will allow for  continued local  control of                                                              
assets, while  at the  same time  it will  maximize the  value and                                                              
reliability of an interconnected system, he said.                                                                               
                                                                                                                                
3:29:20 PM                                                                                                                    
                                                                                                                                
MR. JANORSCHKE  said  that the entity  envisioned  in HB 169  will                                                              
manage and  create a  voluntary and  transparent wholesale  energy                                                              
market without  adding significant administrative  overhead, which                                                              
will be  the most  economical distribution  of wholesale  power on                                                              
the Railbelt.  He  said that HEA has worked with  other utilities,                                                              
without a middle  man, to ask for  bids on short term  spot market                                                              
energy  needs, which  has been  fairly successful.   The  Railbelt                                                              
has been going  through some increases and ratepayers  and members                                                              
have had  to shoulder most  of those rising  costs.  Thus  the HEA                                                              
has tried  to mitigate circumstances  that will add to  the costs.                                                              
Last  September,  all  the  Railbelt   utilities  signed  a  [MOU]                                                              
Memorandum  of  Understanding  adopting guiding  principles  of  a                                                              
Railbelt "transco"  [or transmission company].  This  bill appears                                                              
to be  entirely consistent  with those principles,  he said.   The                                                              
entity   envisioned   by  HB   169   would  be   transparent   and                                                              
nondiscriminatory   and  adhere   to   established  planning   and                                                              
reliability  standards.    He  stated  that  these  standards  and                                                              
protocols would  be based  on established objective  transmission,                                                              
operating,  maintenance,   planning,  and  design   principles  to                                                              
promote  safety,  reliability, and  economic  efficiencies  across                                                              
the Railbelt grid.                                                                                                              
                                                                                                                                
3:31:16 PM                                                                                                                    
                                                                                                                                
T.W. PATCH, Commissioner,  Chair, Regulatory Commission  of Alaska                                                              
(RCA), Department  of Commerce,  Community & Economic  Development                                                              
(DCCED), stated he  is a commissioner and Chair  of the Regulatory                                                              
Commission of Alaska.                                                                                                           
                                                                                                                                
3:31:58 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:31 p.m. to 3:34 p.m.                                                                       
                                                                                                                                
3:34:33 PM                                                                                                                    
                                                                                                                                
MR.  PATCH stated  that the  RCA recently  got a  new state  phone                                                              
system.  [Mr.  Patch  was  unable  to  testify  due  to  technical                                                              
difficulties with the audio.]                                                                                                   
                                                                                                                                
3:35:46 PM                                                                                                                    
                                                                                                                                
The committee took  an at-ease from 3:35 p.m. to  3:36 p.m. due to                                                              
technical difficulties.                                                                                                         
                                                                                                                                
3:36:54 PM                                                                                                                    
                                                                                                                                
CORY   BORGESON,  President   &   CEO,  Golden   Valley   Electric                                                              
Association (GVEA),  stated that the  GVEA has 34,000  members and                                                              
provides  electric service  as an  electric  cooperative owned  by                                                              
its  members in  Interior Alaska.   He  spoke in  support HB  169.                                                              
The GVEA  has faith  in the RCA,  he said,  noting that  Mr. Patch                                                              
has  done a  phenomenal job.   Most  Railbelt utilities  generally                                                              
support changes  in how the Railbelt  interties are operated.   He                                                              
related his  understanding  that how the  Railbelt dispatches  its                                                              
energy needs  to be reevaluated, which  is exactly what  HB 169 is                                                              
intended to do.   As Mr. Janorschke mentioned,  the composition of                                                              
the  Railbelt utilities  has changed  in  the past  few years  and                                                              
will continue  to evolve as  Matanuska Electric Association  (MEA)                                                              
becomes  a  self-generating   utility.    He  reported   that  the                                                              
Railbelt   consists  of   five   utilities   that  produce   third                                                              
generation   and  there   needs   to  be   additional  rules   and                                                              
regulations   as   the   Railbelt   becomes   "a   bigger   club."                                                              
Historically,  three  utilities  primarily  produced  all  of  the                                                              
energy,  but   as  the  Railbelt   has  grown  and   matured  some                                                              
additional   rules,   organizations,   and  structures   will   be                                                              
necessary.  The  Railbelt utilities have been  discussing the need                                                              
for change over the past few years.                                                                                             
                                                                                                                                
MR. BORGESON acknowledged  that some information that  has come to                                                              
the legislature  has been  from independent  power producers,  who                                                              
have  had  some  issues  with their  ability  to  connect  to  the                                                              
intertie for  their own projects.   As utilities have  become more                                                              
complex,  they  realize that  an  evolution  is necessary  in  the                                                              
Railbelt.   He  stated  that  Golden Valley  Electric  Association                                                              
(GVEA) supports  the study  that is contemplated  in HB 169.   All                                                              
six  utilities   have  signed  the  "guiding   principles,"  which                                                              
indicates  the   cooperative  spirit  that  has   evolved  in  the                                                              
Railbelt towards  this issue.   The  guiding principles  have been                                                              
filed  with the  RCA  so they  are  also available  for  committee                                                              
members to  review.  One  concept in the  bill is for  a voluntary                                                              
organization.  As  Homer Electric Association stated,  that aspect                                                              
is important  to them.   The GVEA believes  that the  markets will                                                              
prevail  and as the  new system  is developed,  the Railbelt  will                                                              
have  a  better  economic  dispatch   of  energy  that  will  save                                                              
Alaskans  on electric  costs.   He  appreciated  this bill  coming                                                              
into play.   He  anticipated that  discussions will continue  over                                                              
the summer.                                                                                                                     
                                                                                                                                
3:41:01 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  hoped the  committee could  work on  HB 169  over the                                                              
legislative interim.                                                                                                            
                                                                                                                                
3:42:33 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON left public testimony open.                                                                                         
                                                                                                                                
[HB 169 was held over.]                                                                                                         
                                                                                                                                
The committee took an at-ease from 3:42 p.m. to 3:44 p.m.                                                                       
                                                                                                                                

Document Name Date/Time Subjects
HB169 ver A.PDF HL&C 4/13/2015 3:15:00 PM
HB 169
HB169 Sponsor Statement.pdf HL&C 4/13/2015 3:15:00 PM
HB 169
HB169 Fiscal Note-DCCED-RCA-04-13-15.pdf HL&C 4/13/2015 3:15:00 PM
HB 169
HB12 ver A.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Sponsor Statement.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Section Analysis.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Flow Chart and Explanation 4-10-2015 (2).pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Letter Allie Hewitt-3-25-15.PDF HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Letter Curtis Green-3-24-15.PDF HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Letter Doug McCann-3-26-15.PDF HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Letter Justin Goodman-3-26-2015.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Letter Kris Yoder-3-26-15.PDF HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Letter Kristie Babcock-3-25-2015.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Letter Nancy Field-3-24-15.PDF HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Letter Randy Rhodes-3-26-2015.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Letter Rueben Willis-3-26-15.PDF HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Letter Shannon Fortune-3-24-15.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Letter State Farm Agents 3-9-2015.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Letter Troy Sayer 3-26-2015.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Letters Tyler Randolph 3-26-2015.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-Letter-Todd Jackson-3-26-15.PDF HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-SAFE Act.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Supporting Documents-State Farm Corporation-Vote YES.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Opposing Documents-Email John Carman-3-31-15.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Opposing Documents-Letter AK Bankers Assoc-Joe Schierhorn-4-10-15.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Opposing Documents-Letter Alaska Bankers Assoc-Steve Lundgren 4-10-15.PDF HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Draft Proposed Blank CS ver H.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Sponsor Statement ver H.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB12 Section Analysis ver H.pdf HL&C 4/13/2015 3:15:00 PM
HB 12
HB122 ver A.pdf HL&C 4/13/2015 3:15:00 PM
HB 122
HB122 Sponsor Statement.pdf HL&C 4/13/2015 3:15:00 PM
HB 122
HB122 Sectional Analysis.pdf HL&C 4/13/2015 3:15:00 PM
HB 122
HB122 Fiscal Note-DCCED-CBPL-03-27-15.pdf HL&C 4/13/2015 3:15:00 PM
HB 122
HB122 Supporting Documents-Letter NFIB 3-06-15.pdf HL&C 4/13/2015 3:15:00 PM
HB 122
HB12 Fiscal Note-DCCED-DBS-04-11-15.pdf HL&C 4/13/2015 3:15:00 PM
HB 12