Legislature(2009 - 2010)BUTROVICH 205

03/09/2009 03:30 PM Senate RESOURCES

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Heard & Held
Heard & Held
          SB 121-ENERGY EFFICIENCY BLDGS/PUBLIC WORKS                                                                       
4:21:57 PM                                                                                                                    
CHAIR WIELECHOWSKI  announced the consideration of  SB 121, which                                                               
requires  the  Alaska  Department of  Transportation  and  Public                                                               
Facilities  (DOTPF) to  assess and  retrofit  heated and  lighted                                                               
buildings.  It  encourages performance-based  contracting,  which                                                               
has guaranteed  savings. Representatives  Gara and Thomas  have a                                                               
similar bill in  the House, and Senator Joe Thomas  also has one.                                                               
The  bill could  save hundreds  of millions  of dollars  over the                                                               
years  in fuel  costs.  The state  has done  similar  work on  24                                                               
buildings and  saved $365,000 at  2006 energy rates  and $557,000                                                               
at  2008 rates.  They have  cut natural  gas use  by 15  percent;                                                               
electricity by 22 percent; fuel oil  by 36 percent; and they have                                                               
cut  back on  water  usage.  If the  state  had  done 25  similar                                                               
contracts  the savings  would be  about $13  million per  year at                                                               
2008  rates.  SB 121  is  a  job  creation  bill because  of  the                                                               
retrofitting jobs. It is a win-win bill.                                                                                        
4:23:43 PM                                                                                                                    
SHELLY MORGAN,  Staff to Senator Bill  Wielechowski, Alaska State                                                               
Legislature, said SB  121 will lower the cost  of state buildings                                                               
by reducing energy  use. It requires the  Alaska Energy Authority                                                               
(AEA)  to establish  a database  to identify  energy consumption,                                                               
and  it  will use  that  to  prioritize retrofit  schedules.  The                                                               
buildings that  consume the  most energy can  be first.  The bill                                                               
requires  DOTPF  to  retrofit  buildings when  it  will  be  cost                                                               
effective. Where  there are no  funds, this bill allows  DOTPF to                                                               
use  performance  contracting  with a  qualified  energy  service                                                               
company so  the state  can achieve  energy audits  and efficiency                                                               
upgrades  through  a pay-as-you-save  system.  No  money will  be                                                               
spent out  of pocket. Within 15  years or less all  paybacks will                                                               
be made, and  then the state will be saving  large sums of money.                                                               
Beginning in  2004, DOTPF executed  a performance contract  for 8                                                               
facilities  with  Siemens   Building  Technologies.  Siemens  has                                                               
completed 16  facilities under two contracts.  Each contract took                                                               
about two years to complete,  and energy performance reports were                                                               
provided  for the  first three  years.  The report  on the  first                                                               
contract showed that the state saved $365,991.                                                                                  
4:26:50 PM                                                                                                                    
SENATOR HUGGINS asked about the cost of the retrofits.                                                                          
MS.  MORGAN said  that because  of  the performance  contracting,                                                               
there are  no upfront costs.  The only  costs in the  fiscal note                                                               
are for  staffing and the  database. She said DOTPF  provided two                                                               
fiscal notes  that were based on  the original bill, not  the CS.                                                               
They were based on a 10-year  [pay back]. With it being 15 years,                                                               
there  will be  less costs  per year.  If the  state did  not use                                                               
performance  contracting, it  would cost  about $17  million. The                                                               
fiscal note is about $363,000 for  DOTPF and $100,000 for the AEA                                                               
to put together the energy index database.                                                                                      
4:28:31 PM                                                                                                                    
SENATOR  HUGGINS  asked if  there  is  an  updated code  for  new                                                               
MS. MORGAN  said any  new construction built  to the  most recent                                                               
international energy conservation code  would be less costly than                                                               
retrofitting. The costs of retrofitting are paid by the savings.                                                                
SENATOR HUGGINS  asked if  new buildings have  to be  built under                                                               
new energy codes.                                                                                                               
MS.  MORGAN  said,  "If  you  build  a  new  building  under  the                                                               
guidelines of SB  121, that new building would be  required to be                                                               
built   to   the  most   recently   published   version  of   the                                                               
international  energy conservation  code  standards, which  would                                                               
bring it to  what we're trying to bring these  other buildings to                                                               
through retrofitting."  This bill also  allows for updates  to be                                                               
made through  utility bills. Currently  it says every  ten years,                                                               
but DOTPF is more interested in  doing it every year. Updates can                                                               
be made every  ten years or every year using  utility bills. That                                                               
allows for  observation of  any substantial  inefficiencies. When                                                               
the conservation code is updated,  new buildings may not need any                                                               
retrofitting for a longer time.                                                                                                 
4:31:01 PM                                                                                                                    
JOHN  DAVIES, Research  Director, Cold  Climate Housing  Research                                                               
Center,  Fairbanks,  supports  SB   121.  It  addresses  two  key                                                               
recommendations that were in his  group's report entitled: Alaska                                                               
Energy Efficiency Program and  Policy Recommendations. The report                                                               
recommended   establishing  an   energy-use   index,  which   the                                                               
committee has just been discussing.  It also recommended that the                                                               
governor   require  state   agencies  to   reduce  their   energy                                                               
consumption. SB 121 addresses both recommendations.                                                                             
MR. DAVIES noted  that the CS has "cross talk"  between the index                                                               
and the database in Section 4,  subsections 1 and 2. It should be                                                               
clear  that  the   index  is  the  method   for  calculating  the                                                               
efficiency  of a  building, and  the database  just collects  the                                                               
information to  make that calculation  and report the  index. The                                                               
report helps  prioritize what is  needed; state agencies  have an                                                               
enormous number of buildings.                                                                                                   
MR. DAVIES said  that new construction goes  to the international                                                               
energy conservation code, but he  suggested that the standards be                                                               
made stronger. People trying to  save energy would try to achieve                                                               
a higher target,  or about 50 percent of the  energy specified in                                                               
that  standard.  He  supports  the  bill but  it  could  be  more                                                               
aggressive and save more energy.                                                                                                
4:34:51 PM                                                                                                                    
SENATOR  HUGGINS  said  Mr.  Davies  made  a  comment  about  the                                                               
governor directing  the AEA. He  asked Mr.  Davies if he  has had                                                               
"any conversations with Mr. Haagenson  or any of his subordinates                                                               
about the governor directing."                                                                                                  
MR. DAVIES  said not in recent  weeks, but Mr. Haagenson  is very                                                               
supportive "of  this general  idea." The  specific recommendation                                                               
in the report  was to have the governor do  the directing, but as                                                               
long as it gets done it doesn't matter who does it.                                                                             
SENATOR HUGGINS  asked if the  energy index  is a major  new task                                                               
for the AEA.                                                                                                                    
MR. DAVIES  said it is neither  major nor trivial. It  would cost                                                               
about $50,000  to hire a  consultant to  get the database  up and                                                               
running with  an easy  way to enter  data. The  basic information                                                               
that will  be entered  into the  index is  fuel bills  and square                                                               
footage of  the building.  The database  needs to  be maintained,                                                               
and that may require a quarter of a person's time.                                                                              
4:37:41 PM                                                                                                                    
STEVE  HAAGENSON,  Executive  Director, Alaska  Energy  Authority                                                               
(AEA),  Anchorage, said  the AEA  will measure  the total  energy                                                               
going into buildings  on a BTU basis, and then  it will divide by                                                               
occupancy or  square footage  to get  an index.  There will  be a                                                               
database that  will do  a lot  of the math  and be  a repository.                                                               
Once the data  is there, there won't  be a need to  redo the math                                                               
until the buildings  have been modified. AEA will  then work with                                                               
DOTPF to put regulations in place.                                                                                              
4:39:21 PM                                                                                                                    
SENATOR HUGGINS asked if AEA had the time to do this.                                                                           
MR. HAAGENSON  said he hired someone  three weeks ago who  is all                                                               
charged up, and that person will do the work.                                                                                   
SENATOR HUGGINS said, "We continue  to get way ahead of ourselves                                                               
as  far as  having  a  state energy  policy,  and we're  cramming                                                               
square pegs  in square holes  and sometimes round pegs  in square                                                               
holes. Does that make you uncomfortable?"                                                                                       
MR.  HAAGENSON said  not at  all. There  are energy  policies and                                                               
plans,  but a  large  component is  conservation and  efficiency.                                                               
Retention of heat in a building  is one of the smartest things to                                                               
do, and this is a great step in that direction.                                                                                 
4:41:33 PM                                                                                                                    
RANDY VIRGIN,  Director, Sustainability and  Efficiency Projects,                                                               
Municipality of Anchorage, said SB  121 is a win-win bill. Alaska                                                               
is  one  of two  states  in  the  country without  an  efficiency                                                               
policy.  It is  high time.  Buildings account  for 39  percent of                                                               
total energy use and 72 percent  of electricity use in the United                                                               
States.  Efficiency  programs  can  achieve  measurable  results.                                                               
California  has the  nation's leading  efficiency effort  and has                                                               
kept its per  capita energy use flat since 1974,  and the rest of                                                               
the  nation has  gone up  around  50 percent.  Anchorage has  had                                                               
success  in  outdoor  lighting by  installing  over  4,000  high-                                                               
efficiency LED  fixtures that  led to a  56 percent  reduction in                                                               
energy use. The  payback on the capital investment  is six years,                                                               
and that  assumes today's  prices. The bulbs  last five  times as                                                               
long, so they  reduce the labor to change  bulbs. This investment                                                               
in efficiency is  beating the market. It is  a guaranteed return.                                                               
If that money had  been put into the market, it  would be doing a                                                               
lot worse.  The bill sets  out a goal  of reducing energy  use in                                                               
buildings by 20  percent, but that could be easily  doubled to 40                                                               
percent  without trying.  Mr. Virgin  said the  facility managers                                                               
could reach a little, and the bar could be set at 60 percent.                                                                   
4:44:39 PM                                                                                                                    
MR. VIRGIN said the bill  allows the department to determine that                                                               
a retrofit is  not cost effective. He urged the  committee to set                                                               
an objective  standard to  determine if  a retrofit  is feasible,                                                               
and that could  be done by setting a timeframe  for the return on                                                               
investment. If the return is 15  years or less, then the facility                                                               
must  do  it.   That  will  set  the  proper   balance  with  the                                                               
expenditures  on the  front  end. Thirdly,  the  bill allows  the                                                               
department   to   not   comply  fully   with   ASHRAE   [Heating,                                                               
Refrigeration, Air  Conditioning Engineering] standards  if there                                                               
are specific climate [issues], and  he thinks that language could                                                               
be made into a more objective standard.                                                                                         
4:46:10 PM                                                                                                                    
CHRIS HODGIN,  Project Manager, Department of  Transportation and                                                               
Public  Facilities (DOTPF),  Anchorage, said  DOTPF supports  the                                                               
bill but  has concerns with  the 20 percent  goal. It is  a goal,                                                               
not a mandate, but  he wants it to be clear  that it doesn't mean                                                               
that 20  percent can  be attained. Some  buildings can  save more                                                               
and some less. Rather than updating  the energy use index in only                                                               
specific circumstances, he  suggested continuous updates annually                                                               
to allow  managers to  evaluate their  buildings "using  the same                                                               
average  of  annual  periods".  That  gives  an  apples-to-apples                                                               
comparison  that  won't  miss  inefficiencies.  Even  though  the                                                               
capital costs are  paid for through the  realized energy savings,                                                               
there will be increased work for managers and administrators.                                                                   
4:48:47 PM                                                                                                                    
CAITLIN   HIGGINS,   Outreach  Organizer,   Alaska   Conservation                                                               
Alliance (ACA), Anchorage,  said ACA is a coalition  of 40 Alaska                                                               
conservation organizations  with over  38,000 Alaskans.  The bill                                                               
is critical  because it addresses  the demand side of  energy; it                                                               
will  result in  instant savings  for public  facilities; and  it                                                               
will  better position  Alaska to  receive federal  stimulus money                                                               
for efficiency. ACA has been  very pleased with the legislature's                                                               
work  on   supply-side  renewable  energy,  but   it  is  equally                                                               
important to address  the demand for energy.  The cheapest energy                                                               
is the energy  we don't have to  use. SB 121 will  result in real                                                               
savings  for  the  state  and  a  reduction  in  the  impacts  of                                                               
greenhouse  gases. Public  dollars will  no longer  be wasted  by                                                               
inefficient  lighting and  drafty windows.  The federal  stimulus                                                               
package  has $3.2  billion to  help  local governments  implement                                                               
energy efficiency  programs in a  block grant program  that seeks                                                               
to decrease energy consumption and  fossil fuel emissions. It can                                                               
be used for energy audits;  loan, rebate, and incentive programs;                                                               
grants for  retrofits by nonprofits;  and developing  programs to                                                               
conserve energy  and transportation. There is  another $4 billion                                                               
for bonds  that states  and municipalities  can issue  to finance                                                               
renewable energy and  efficiency projects. The bonds  carry a low                                                               
interest rate  and the  bond holder  receives federal  credits in                                                               
lieu  of interest.  The bill  appropriates $3.1  billion for  the                                                               
state energy program, which provides  grants and other funding to                                                               
state energy offices for energy  efficiency and renewable energy.                                                               
"The normal matching requirements under  the program do not apply                                                               
to the funding provided by  the bill." Alaska should receive some                                                               
of these  funds. States with  an energy efficiency plan  in place                                                               
will  be higher  on the  list for  receiving federal  funds. This                                                               
bill  will send  a  clear  signal that  Alaska  is  ready to  use                                                               
federal dollars for efficiency upgrades.                                                                                        
4:52:26 PM                                                                                                                    
STEVE  ASH, Sitka  Climate Action  Plan Task  Force, Sitka,  said                                                               
Sitka has  already begun  a process  very similar  to SB  121. It                                                               
joined the  International Council for Local  Environmental Issues                                                               
about  one year  ago.  The first  thing the  task  force did  was                                                               
established  an energy  use  index,  and it  is  called a  carbon                                                               
emissions  inventory.  It  includes  transportation,  public  and                                                               
private buildings,  boats, and  everything that  consumes energy.                                                               
The   task  force   focused  on   transportation  and   municipal                                                               
buildings. The  group set  a goal  of a  25 percent  reduction in                                                               
carbon  emissions by  2020. There  was a  2003 inventory,  and in                                                               
2008 there was already a  10 percent reduction in emissions. This                                                               
was  achieved  by updating  an  oil  burning furnace  in  Sitka's                                                               
middle  school.  This  job  will be  easier  than  they  thought.                                                               
Another school furnace  can be upgraded. At $3.00  per gallon for                                                               
heating fuel, it  will save over $250,000 per year  for Sitka. By                                                               
2020, fuel will likely be more than $3.00 a gallon.                                                                             
4:55:38 PM                                                                                                                    
MARCUS WALKER, Student, University  of Alaska, Anchorage, said he                                                               
is  a  member of  the  Alaska  Conservation Alliance  and  Alaska                                                               
Conservation Voters.  He supports  SB 121.  He has  been studying                                                               
how  much energy  Anchorage is  using.  He is  working for  Randy                                                               
Virgin on an energy index.  Anchorage buildings are using immense                                                               
amounts of  energy, and simple measures  can significantly reduce                                                               
this. SB  121 can save  an enormous  amount of money  for Alaska.                                                               
Some cities have  been doing this work from the  ground up, so it                                                               
is time to  help push everyone in the right  direction. There are                                                               
retrofitting  programs in  the villages,  and  just by  replacing                                                               
light  bulbs brought  a 60-percent  savings,  which is  important                                                               
since diesel costs so much.                                                                                                     
4:57:33 PM                                                                                                                    
SENATOR HUGGINS  said the  Dena'ina Center  is wonderful,  but he                                                               
has heard people say they would hate to heat that place.                                                                        
MR. WALKER  said "Unfortunately  with no standards  that building                                                               
was built  incredibly inefficient  ... and  Anchorage has  to pay                                                               
for  the electricity  for  a  long time."  This  bill could  help                                                               
retrofit it to save money.                                                                                                      
CHRIS ROSE, Executive Director,  Renewable Energy Alaska Project,                                                               
Anchorage, thanked  the committee for  the bill and said  it will                                                               
stimulate the  economy by creating jobs.  Performance contracting                                                               
is proven,  and more contractors  might come into the  state. The                                                               
nine  recommendations  from  the  Cold  Climate  Research  Center                                                               
report  included state  leadership, and  this is  important state                                                               
leadership by  focusing on state buildings.  "Hopefully that will                                                               
lead to more public awareness of this issue."                                                                                   
SENATOR HUGGINS  asked about expanding  this bill to  qualify for                                                               
more federal grants.                                                                                                            
MR. ROSE said  that if Alaska has this program,  "we are least in                                                               
line." Without any program it is difficult for Alaska to apply.                                                                 
5:00:55 PM                                                                                                                    
KEN  BAUER,  Performance   Contract  Salesman,  Siemens  Building                                                               
Technologies, Inc.,  Issaquah WA, said  he doesn't have a  lot to                                                               
add  because other  testifiers pointed  out the  benefits of  the                                                               
bill. The  best use of  state funds is  for projects that  can be                                                               
done without  using millions of  dollars. There are  some upfront                                                               
costs,  but it  is a  very good  investment and  a way  to reduce                                                               
energy  without  incurring  huge expenses.  The  upgrades  create                                                               
efficient buildings that are likely  healthier buildings, and the                                                               
workforce will be more productive.  It will also increase jobs in                                                               
designing, engineering, and building.                                                                                           
TOM LAKOSH, Anchorage,  said he supports the bill,  and it should                                                               
be   combined  with   SB  119:   efficiency  standards   for  new                                                               
construction.  There  is  overlap   and  conflict  with  SB  119.                                                               
Moreover, in  order to get in  line for the state's  energy block                                                               
grants, Alaska needs to comply  with section 4.10 of the stimulus                                                               
bill. It requires commercial and  residential building codes that                                                               
Alaska doesn't  have. "We need a  real comprehensive conservation                                                               
bill for  retrofit, new construction, commercial  and residential                                                               
building codes."  The residential building  code has to  meet the                                                               
international  energy  conservation  code, and  commercial  codes                                                               
need to  meet the ASHRAE standard.  He would support the  bill on                                                               
its own,  but in order  to get the  stimulus money, "you  need to                                                               
sit  down, combine  this with  119  and add  the residential  and                                                               
commercial building  codes." Everyone in  the state is  so touchy                                                               
about building codes...                                                                                                         
CHAIR WIELECHOWSKI said [the legislature]  is working on building                                                               
codes so Alaska will be eligible for the stimulus funds.                                                                        
MR. LAKOSH suggested  putting that with SB 121 and  SB 119. There                                                               
are conflicts  between SB 121 and  SB 119 that need  to be worked                                                               
out. He supports having a  15-year payback period as the standard                                                               
for  what will  be done.  That is  critical because  it goes  far                                                               
beyond any of the standards  and makes the most economical sense.                                                               
It  is somewhat  addressed  in  SB 119,  but  it  is not  clearly                                                               
spelled out. "Randy's language is the best on that." Get the                                                                    
governor to sign one combined bill so Alaska can get the funds                                                                  
and pay for all these energy savings that it really needs.                                                                      
SB 121 was held over.                                                                                                           

Document Name Date/Time Subjects
SB 31 Bill Packet.pdf SRES 3/9/2009 3:30:00 PM
SRES 3/13/2009 3:30:00 PM
SB 31
SB 121 Bill Packet.pdf SRES 3/9/2009 3:30:00 PM
SRES 3/13/2009 3:30:00 PM
SB 121