Legislature(2015 - 2016)BELTZ 105 (TSBldg)

03/26/2015 03:30 PM SPECIAL CMTE ON ENERGY

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Audio Topic
03:34:53 PM Start
03:35:34 PM SB50
04:06:30 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSB 50(NRG) Out of Committee
-- Public Testimony --
        SB 50-AIDEA: BONDS; PROGRAMS; LOANS; LNG PROJECT                                                                    
3:35:34 PM                                                                                                                    
CO-CHAIR  MICCICHE announced  that the  purpose of  the committee                                                               
meeting is  to have the second  hearing on SB 50,  the Governor's                                                               
bill on  the Alaska Industrial  Development and  Export Authority                                                               
(AIDEA). He  noted that  a committee  substitute (CS)  was before                                                               
the committee for consideration.                                                                                                
3:35:44 PM                                                                                                                    
SENATOR HOFFMAN joined the committee meeting.                                                                                   
3:35:51 PM                                                                                                                    
CO-CHAIR BISHOP moved that the committee  adopt the CS for SB 50,                                                               
version: W, as the committee's working document.                                                                                
CO-CHAIR MICCICHE objected for purposes of discussion.                                                                          
3:37:23 PM                                                                                                                    
LYNNE SMITH,  Staff, Senator Micciche, Alaska  State Legislature,                                                               
Juneau, Alaska, explained the CS changes as follows:                                                                            
     Section 2, page  2, line 17, changes the  word "law" to                                                                    
     the "Legislature" for approval.                                                                                            
     Section  4,  there  is  new   language  in  there,  the                                                                    
     definition of  a qualified energy development.  Page 4,                                                                    
     lines  22-25,  it  now   reads  in  the  sub-paragraph,                                                                    
     "Distribution  does  not  include  a  natural  gas-line                                                                    
     project  for transporting  natural gas  from the  North                                                                    
     Slope or Cook Inlet to  market, unless the pipeline has                                                                    
     a  diameter of  12-inches or  less, and  transports the                                                                    
     natural gas to Interior Alaska."                                                                                           
     Section 5,  page 5, lines  3-6, it now reads,  "And the                                                                    
     state will provide natural gas  to Interior Alaska as a                                                                    
     primary   market   and   natural   gas   delivery   and                                                                    
     distribution  systems,  and  affiliated  infrastructure                                                                    
     that will provide natural gas to Interior Alaska."                                                                         
3:37:28 PM                                                                                                                    
CO-CHAIR MICCICHE  removed his objection  and announced  that the                                                               
CS was before the committee. He  said he supports the project and                                                               
proclaimed that it  is time for the Interior to  have a realistic                                                               
and lower cost solution. He  shared with Senator Hoffman that the                                                               
bill  is a  first step  and  that he  has always  focused on  his                                                               
district as well.  He remarked that in the future,  a pipeline is                                                               
a better solution, but the bill  allows the project to go forward                                                               
while allowing  AIDEA to continue  considering the pipeline  as a                                                               
viable option.                                                                                                                  
CO-CHAIR  MICCICHE addressed  the Alaska  LNG Project  (AKLNG) as                                                               
     If AKLNG  goes through,  if this  route were  the other                                                                    
     way,  it could  assist with  a pipeline  to Glennallen,                                                                    
     Copper Center, Fort Greely,  Delta Junction, areas that                                                                    
     most likely  would not  be covered  by a  pipeline from                                                                    
     I  guess  when  I  think  about  whether  or  not  this                                                                    
     solution would be a waste  in the future, there's still                                                                    
     very viable  uses for a  pipeline route. Again,  I want                                                                    
     to just make sure that we are not applying a Band-Aid.                                                                     
     I  am  strongly  requesting  that  AIDEA  process  this                                                                    
     solution even if  the cost is slightly more  to look at                                                                    
     the long  term needs of  the region and I  believe that                                                                    
     it is a  better solution; this allows  that solution to                                                                    
     be considered  and continued, but still  doesn't get in                                                                    
     the  way of  AIDEA for  moving forward  on the  project                                                                    
     they are looking at right now.                                                                                             
CO-CHAIR BISHOP commended  Co-Chair Micciche's office's diligence                                                               
in adding the pipeline option into  the bill. He concurred that a                                                               
pipeline provides the cheapest gas.  He summarized that AIDEA has                                                               
all of  the tools in  its toolbox to  bring the project  over the                                                               
3:40:42 PM                                                                                                                    
EUGENE THERRIAULT,  Director, Energy Policy and  Outreach, Alaska                                                               
Energy  Authority  (AEA),  Anchorage,  Alaska, said  the  CS  was                                                               
appreciated and its language was acceptable.                                                                                    
MR. THERRIAULT  pointed out that on  page 5 of the  language that                                                               
was  adopted honors  some  language that  was  considered by  the                                                               
other  body's  Interior  delegation  to not  lose  focus  on  the                                                               
Interior as the primary market  to anchor the infrastructure when                                                               
"North Slope" was  removed by the bill. He stated  that there was                                                               
concern  that   focusing  on  the   Interior  might   make  other                                                               
geographic   areas  feel   precluded.  He   explained  that   the                                                               
Department  of  Law advised  that  adding  "The Interior  is  the                                                               
primary market," suggests that there  could be secondary markets.                                                               
He  detailed  that  adding secondary  markets  increases  overall                                                               
volume and ultimately lowers the per unit price for everyone.                                                                   
3:43:18 PM                                                                                                                    
SENATOR  HOFFMAN  stated  that   he  fully  appreciates  Co-Chair                                                               
Micciche's  comments. He  pointed out  that  on page  5, line  4,                                                               
"Interior  Alaska as  a primary  market" is  noted and  suggested                                                               
that "an affiliated infrastructure  that will provide natural gas                                                               
to  Alaska" be  included starting  on line  5. He  explained that                                                               
"Interior"  is already  mentioned on  line  4 and  by saying  "to                                                               
Alaska"   would  fulfill   and  strengthen   Co-Chair  Micciche's                                                               
comments regarding Southeast and the rest of Alaska.                                                                            
CO-CHAIR MICCICHE remarked  that the bill would  have passed last                                                               
year if  there wasn't a focus  on one area. He  asserted that the                                                               
language in SB 50 was better  than what was proposed the previous                                                               
year.  He  said  SB  50  clarifies  a  primary  market,  but  the                                                               
remainder  of the  state is  available. He  stated that  he hears                                                               
what Senator  Hoffman is saying.  He noted his background  in the                                                               
natural   gas  industry   and  opined   that  Senator   Hoffman's                                                               
suggestion may not be a solution  for his community. He set forth                                                               
that  a solution  for Senator  Hoffman's  community is  certainly                                                               
possible in the bill's language.                                                                                                
SENATOR  HOFFMAN  conveyed  acceptance that  Co-Chair  Micciche's                                                               
comment regarding his community was on the record.                                                                              
MR.  THERRIAULT noted  that Senator  Hoffman is  a member  of the                                                               
Senate Finance  Committee. He stated  that when the  bill reaches                                                               
Senate Finance,  he is  willing to work  with Senator  Hoffman on                                                               
its  language  as long  as  the  Interior  demand to  anchor  the                                                               
infrastructure is not lost.                                                                                                     
3:45:53 PM                                                                                                                    
CO-CHAIR MICCICHE opened public testimony.                                                                                      
3:46:16 PM                                                                                                                    
MERRICK PIERCE,  representing himself, Fairbanks,  Alaska, stated                                                               
that  one   important  consideration   is  paying   attention  to                                                               
Fairbanks'  air quality.  He said  there  is compelling  evidence                                                               
that  Fairbanks'  dangerously  polluted  air  is  injuring  human                                                               
beings. He  explained that to  get Fairbanks' air  quality fixed,                                                               
3,000 to  5,000 woodstoves  have to  be eliminated  by converting                                                               
from wood  to propane or  wood to  natural gas. He  detailed that                                                               
propane  and natural  gas are  clean burning  and emit  almost no                                                               
particulates. He  pointed out  that Article 7,  Section 4  of the                                                               
Constitution requires  that the  Legislature promote  and protect                                                               
public health.                                                                                                                  
MR. PIERCE  commended Senator  Micciche for  looking at  a small-                                                               
bore pipeline  coming from Big  Lake or Cook Inlet  to Fairbanks.                                                               
He pointed  out that 305,000  miles of gas  transmission pipeline                                                               
has been laid  across the U.S. because pipelines  are the safest,                                                               
fastest, and cheapest  way to move gas. He suggested  that the CS                                                               
for the bill  change "pipeline" to "pipelines" in  order to allow                                                               
for two pipes to be placed in the trench.                                                                                       
He opined  that $15  gas at-the-meter,  $21 at  the-burner-tip is                                                               
not going to  work when wood is much cheaper.  He stated that $15                                                               
gas  will  not  fix  Fairbanks'   air  quality,  attain  adequate                                                               
conversions, and put Fairbanks in  parity with Anchorage. He said                                                               
you have to have affordable energy  to have industry and you need                                                               
industry to have jobs.                                                                                                          
He proposed  that propane was  a great  fix for rural  Alaska. He                                                               
set forth that  not spending $250 million to do  a full build-out                                                               
of the gas grid will subsequently lower the pipeline's tariff.                                                                  
3:51:31 PM                                                                                                                    
PAMELA  THROOP, representing  herself, Fairbanks,  Alaska, stated                                                               
that  affordable  energy on  par  with  Anchorage is  needed  for                                                               
Fairbanks to attract and retain  businesses. She pointed out that                                                               
Fairbanks'   foreclosure   rates   have   increased   while   the                                                               
university,  state  offices,  and businesses  have  relocated  to                                                               
3:54:19 PM                                                                                                                    
LUKE  HOPKINS, Mayor,  Fairbanks North  Star Borough,  Fairbanks,                                                               
Alaska, thanked  the committee  for having  SB 50  moving forward                                                               
with a  CS. He opined that  the CS adds flexibility  for AIDEA to                                                               
find the  lowest or  the most economical  project that  can bring                                                               
low cost  energy to Fairbanks.  He referenced  previous testimony                                                               
regarding Fairbanks' air quality  conditions and economic stress.                                                               
He asserted that the cost of  energy in Alaska's Interior area is                                                               
certainly  hampering   Fairbanks'  economy.  He   suggested  that                                                               
"secondary  markets" be  referenced in  the bill,  but noted  Co-                                                               
Chair Micciche's  intention to  focus on what  can be  solved and                                                               
solved soon. He  summarized that he looks forward  to natural gas                                                               
coming to Fairbanks and then the secondary markets.                                                                             
3:57:57 PM                                                                                                                    
LISA HERBERT,  Executive Director,  Greater Fairbanks  Chamber of                                                               
Commerce, Fairbanks,  Alaska, noted the difficulty  in advocating                                                               
on behalf  of businesses without affordable  energy. She revealed                                                               
that  the Greater  Fairbanks Chamber  of  Commerce's board  voted                                                               
unanimously to  support HB 105  and SB 50 with  the understanding                                                               
that the legislation provides the  necessary flexibility to AIDEA                                                               
in advancing a  natural gas project that  will address Fairbanks'                                                               
high cost of energy.                                                                                                            
3:59:38 PM                                                                                                                    
DAVID  PRUHS, Council  Member, Fairbanks  City  Council, City  of                                                               
Fairbanks, Fairbanks,  Alaska, stated that the  City of Fairbanks                                                               
and the Fairbanks  North Star Borough welcomes SB 50  as a way to                                                               
get affordable energy to Fairbanks and the Interior.                                                                            
4:01:22 PM                                                                                                                    
JOMO   STEWART,  Energy   Project  Manager,   Fairbanks  Economic                                                               
Development  Corporation, Fairbanks,  Alaska, said  the Fairbanks                                                               
Economic  Development  Corporation  is  in favor  of  SB  50.  He                                                               
pointed out  that 50  percent of  the state's  population suffers                                                               
from the  high cost  of energy. He  revealed that  when Fairbanks                                                               
moved forward on  the Interior Energy Project, the  intent was to                                                               
create a  system that could  be replicated in  other communities.                                                               
He explained that  the end result was creating a  utility to help                                                               
move gas  around town that  was funded  by a low  grant-high loan                                                               
system. He detailed that the  loan system would be replenished by                                                               
a  revolving loan  fund that  would make  funds available  in the                                                               
future for other  communities when gas became  available to them.                                                               
He stated  that gas from the  Cook Inlet and other  sources might                                                               
help  Fairbanks attain  the  goal of  $10/MCF  at the  city-gate,                                                               
$15/MCF to the burner-tip. He  summarized that good work has been                                                               
done that  not only  benefits Fairbanks, but  if done  right, can                                                               
serve as a model that can serve other communities as well.                                                                      
4:04:15 PM                                                                                                                    
SENATOR HOFFMAN said the project to  get gas to Fairbanks is very                                                               
good. He opined  that Bethel could receive  energy transported on                                                               
the Yukon and Kuskokwim rivers.                                                                                                 
SENATOR  EGAN thanked  Senator Hoffman  for legislation  from the                                                               
previous year that benefited Southeast Alaska as well.                                                                          
CO-CHAIR MICCICHE summarized that politics  was allowed to get in                                                               
the way and two years was  wasted on getting gas to Fairbanks. He                                                               
declared that the Legislature needs  to look at conversion rates,                                                               
air quality,  and increasing  cargo levels  on the  railroad with                                                               
lower  cost refinery  fuels. He  opined that  during the  time of                                                               
lower oil  prices, AIDEA should  use their time wisely.  He asked                                                               
for the  best solution to be  found for everyone along  the route                                                               
that will remain in service after AKLNG is in service someday.                                                                  
4:05:45 PM                                                                                                                    
CO-CHAIR  BISHOP moved  that the  committee  pass CS  for SB  50,                                                               
version:    29-GS1019\W    from   committee    with    individual                                                               
recommendations and attached zero fiscal note(s).                                                                               
4:06:07 PM                                                                                                                    
CO-CHAIR  MICCICHE  announced  that hearing  no  objection,  CSSB
50(NRG)    has   passed    from    committee   with    individual                                                               
recommendations and the attached zero fiscal note.                                                                              

Document Name Date/Time Subjects
SB 50 CS NRG version W dated 3-26-15.PDF SNRG 3/26/2015 3:30:00 PM
SRES 4/10/2015 3:30:00 PM
SB 50