Legislature(2009 - 2010)

04/09/2010 04:42 PM Senate FIN

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 220                                                                                                           
     "An Act declaring a state energy policy; relating to                                                                       
     energy efficiency and alternative energy; establishing                                                                     
     the energy efficiency grant fund, an emerging energy                                                                       
     technology fund, a renewable energy production tax                                                                         
     credit, and an energy use index; and relating to a                                                                         
     fuel purchasing cooperative, to energy codes and                                                                           
     efficiency standards, to energy conservation targets                                                                       
     in public buildings, to a state agency energy use                                                                          
     reduction plan, to the alternative energy revolving                                                                        
     loan fund, and to the renewable energy grant fund."                                                                        
Co-Chair Stedman noted that this was the second hearing.                                                                        
Co-Chair Hoffman  MOVED to ADOPT  the work draft to  SB 220,                                                                    
labeled  26-LS1197\B, Kane,  4/8/10,  as  the work  document                                                                    
before the committee.                                                                                                           
Co-Chair Stedman OBJECTED.                                                                                                      
4:50:47 PM                                                                                                                    
DARWIN PETERSON, STAFF, CO-CHAIR  STEDMAN, spoke of multiple                                                                    
changes  in  the CS.  The  new  CS removes  the  legislative                                                                    
policy section that  was found in Section 2  of the previous                                                                    
version. He  referred to page  7 where previous  Sections 11                                                                    
and   12  were   removed.   These   sections  required   the                                                                    
administration to consider  using alternative energy systems                                                                    
in   the  construction   of  public   facilities  and   when                                                                    
purchasing equipment  that uses energy. These  sections were                                                                    
removed by  the request  of the administration  because this                                                                    
work is already being done.                                                                                                     
Mr. Peterson addressed  Section 10 on page 9,  a new section                                                                    
which  refers  to  the contractual  agreements  between  the                                                                    
state and a lessee of state  land. If the lessee is a public                                                                    
utility engaged  in the production of  renewable energy, the                                                                    
state may  not negotiate  an increased  lease rate  based on                                                                    
percentage of gross revenue from  a renewable energy source.                                                                    
Section  11,  page  9,  creates  a  Southeast  Energy  Fund.                                                                    
Subsection 5  on lines 21 and  22 of page 9  is new language                                                                    
making the Department of Revenue  the fiduciary of the fund.                                                                    
Subsection   (c)   was   amended  to   specify   that   only                                                                    
municipalities,  joint  action   agencies,  or  member-owned                                                                    
electric cooperatives  are eligible  to receive  grants from                                                                    
this fund. Grants can only  be used to finance hydroelectric                                                                    
projects  or electric  transmission lines  and they  must be                                                                    
wholly owned by the grantee.                                                                                                    
Mr. Peterson reported  that the last change  in this section                                                                    
is on page  10, line 1. The previous  version required grant                                                                    
money to  lapse back into the  fund if on-going work  to the                                                                    
project  had not  begun within  5 years.  This change  bumps                                                                    
that up to 7 years.                                                                                                             
4:53:03 PM                                                                                                                    
Mr. Peterson highlighted  the removal of Sections  15 and 16                                                                    
from the previous CS. These  sections reference the existing                                                                    
renewable energy fund  and cause concern that  it would have                                                                    
shifted the focus of the  program to projects in urban areas                                                                    
with better economies  of scale. Section 17  of the previous                                                                    
version  of the  bill  would  have added  a  new section  to                                                                    
AS.42.45  requiring the  Alaska  Energy  Authority (AEA)  to                                                                    
facilitate  the  organization   of  a  statewide  purchasing                                                                    
cooperative. That section has been  deleted in the new CS at                                                                    
the request of the administration  due to concerns about the                                                                    
state's   involvement   in   private   sector   competition.                                                                    
Furthermore, nothing in statute  prevents AEA from providing                                                                    
technical assistance if requested.                                                                                              
Mr. Peterson  continued to detail  changes to the  CS. There                                                                    
are  changes in  Section 12,  page 10,  the Emerging  Energy                                                                    
Technology  Fund, beginning  with  the  first sentence.  The                                                                    
language  "in  order  to promote  the  expansion  of  energy                                                                    
sources available to Alaskans"  was added. The second change                                                                    
is  found  on lines  16-22  on  page  10. The  new  language                                                                    
narrows  the focus  of  what  the grants  can  be used  for.                                                                    
Grants  can only  be awarded  for demonstration  projects of                                                                    
technologies  that have  a reasonable  expectation of  being                                                                    
commercially viable within 5 years  and are designed to test                                                                    
emerging  technology  and   prove  existing  technology,  or                                                                    
deploy  existing technology  that  has  not been  previously                                                                    
demonstrated  in the  state. The  reason for  the change  is                                                                    
because  the purpose  of  the  fund is  to  test and  deploy                                                                    
equipment, not  to support  theoretical research  or studies                                                                    
that don't result in demonstration projects.                                                                                    
Mr.  Peterson turned  to  the third  change  in Section  12,                                                                    
found  on page  11,  lines 1  and 2.  The  CS instructs  the                                                                    
university  to  provide  data acquisition  and  analysis  of                                                                    
projects  to the  advisory committee.  The fourth  change is                                                                    
the deletion  of subsection (f)  from the  previous version.                                                                    
That  section was  old language  taken from  the now-defunct                                                                    
Alaska   Science   and   Technology   Foundation.   It   was                                                                    
appropriate for  a grant that  funds basic research  that is                                                                    
high  risk  to investors.  Now  the  program excludes  these                                                                    
projects  and the  subsection no  longer applies.  The fifth                                                                    
change is  found on page  11 of Section 12,  subsection (i),                                                                    
lines 27  and 28. This  new language states that  members of                                                                    
the advisory  committee cannot award themselves  grants from                                                                    
the fund. The last change in  this section is an addition of                                                                    
a four-year sunset date on page 18, Section 25.                                                                                 
4:56:11 PM                                                                                                                    
Mr. Peterson pointed  out that Sections 20, 21,  and 51 have                                                                    
been deleted  from the  previous version  of the  bill. They                                                                    
would have  created the renewable  energy tax  credit, which                                                                    
requires  more  in-depth  analysis.   Section  23  has  been                                                                    
deleted. It  would have required  the state to  retro-fit at                                                                    
least 25  percent of all  public facilities by 2020.  At the                                                                    
request of  the administration,  it was removed  because the                                                                    
state  is currently  in the  process  of accomplishing  this                                                                    
goal.  Section  24 has  also  been  deleted. It  would  have                                                                    
required  AEA  to conduct  a  public  education campaign  on                                                                    
energy  efficiency. It  was removed  because AEA  is already                                                                    
planning on doing this type of outreach.                                                                                        
Mr. Peterson  continued to explain that  Sections 26-33 have                                                                    
also  been deleted.  These sections  would have  amended the                                                                    
Alternative Energy  Revolving Loan Fund to  provide loans to                                                                    
owners  of   commercial  buildings  for   energy  efficiency                                                                    
improvements. The  administration suggested  this particular                                                                    
loan fund has  not been active since 1987  and would require                                                                    
a thorough review before implementing.                                                                                          
Mr. Peterson  related that Sections 26-28,  beginning at the                                                                    
bottom of  page 18,  have been amended.  Now, the  Office of                                                                    
Management and Budget,  the Office of the  Governor, and the                                                                    
Department of  Transportation will  have sufficient  time to                                                                    
develop  their  required  reports.  The due  dates  for  the                                                                    
reports are  now January 31,  2011. Also in Section  27, the                                                                    
CS  instructs the  governor's energy  report  to include  an                                                                    
examination of the powers, duties,  and structure of AEA and                                                                    
the  Alaska  Industrial  Development  and  Export  Authority                                                                    
(AIDEA).  The  intent  is to  help  the  legislature  decide                                                                    
whether  or not  AEA and  AIDEA could  be more  effective if                                                                    
they had separate boards of directors.                                                                                          
Mr.  Peterson reported  that the  CS has  a new  Section 30,                                                                    
found on  page 21, which  asks the Department of  Revenue to                                                                    
submit a report to the  legislature on January 31, 2011 with                                                                    
recommendations  regarding the  feasibility  of a  municipal                                                                    
energy improvements  financing program.  Sections 31  and 32                                                                    
are also  new sections. Section  31 gives the  Department of                                                                    
Health   and  Social   Services  the   authority  to   adopt                                                                    
transitional   regulations.   Section   32   instructs   the                                                                    
department to  replace the  name "Alaska  Heating Assistance                                                                    
Program" with  "Alaska Affordable Heating Program".  The new                                                                    
CS has an amended title to reflect the changes.                                                                                 
4:59:31 PM                                                                                                                    
Co-Chair Stedman WITHDREW his  OBJECTION to adopting Version                                                                    
B. There being NO further OBJECTION, it was so ordered.                                                                         
Co-Chair  Stedman noted  nine fiscal  notes,  some of  which                                                                    
have to be amended or deleted.                                                                                                  
SENATOR LESIL  MCGUIRE, SPONSOR,  thanked the  committee and                                                                    
their staff  for their work. She  termed the bill a  work in                                                                    
progress and called it a good  start. It is the first energy                                                                    
policy  put  forth  in  the   state  of  Alaska.  There  are                                                                    
provisions  in   the  bill  representing   suggestions  from                                                                    
Alaskans  statewide. She  commended the  Senate and  the bi-                                                                    
partisan working group for addressing the issue.                                                                                
SENATOR BILL WIELECHOWSKI, SPONSOR,  noted that the bill had                                                                    
been pared  back quite a  bit. He  said that he  was looking                                                                    
forward to passage of the bill in the Senate.                                                                                   
5:02:25 PM                                                                                                                    
Co-Chair  Stedman recalled  the  history of  working on  the                                                                    
state energy policy. Quite a  few Senators have participated                                                                    
in this  legislation and have  traveled to various  areas of                                                                    
the state.  It is one  of several pieces of  legislation. He                                                                    
spoke of  the next step  to achieve the outcome.  He thanked                                                                    
the sponsors.                                                                                                                   
Senator McGuire thanked  her staff and others  who worked on                                                                    
the  bill.  Senator Wielechowski  added  his  thanks to  the                                                                    
5:04:18 PM                                                                                                                    
Co-Chair  Hoffman  MOVED  to  REPORT  CSSB  220  (FIN)  from                                                                    
Committee with  individual recommendations and  the attached                                                                    
fiscal notes. There being NO OBJECTION, it was so ordered.                                                                      
CSSB  220 (FIN)  was REPORTED  out of  Committee with  a "do                                                                    
pass" recommendation  and with zero FN  3 DEC, indeterminate                                                                    
FN  6  DHS,  two  new  fiscal notes  by  the  Department  of                                                                    
Commerce, Community, and Economic  Development, two new zero                                                                    
fiscal  notes  by the  Department  of  Revenue, a  new  zero                                                                    
fiscal note by the Administration,  and a new fiscal note by                                                                    
the Department of Transportation and Public Facilities.                                                                         
AT-EASE        5:04:52 PM                                                                                                     
RECONVENED     5:17:01 PM                                                                                                     

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