Legislature(2009 - 2010)BUTROVICH 205

01/20/2010 03:30 PM Senate RESOURCES

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03:33:04 PM Start
03:35:14 PM Overview: Omnibus Energy Policy Recommendations Alaska Sustainable Energy Act
03:36:53 PM SB220
04:13:24 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Overview: Senate Omnibus Energy Bill &
Proposed Alaska Energy Policy
Heard & Held
Bills Previously Heard/Scheduled
          SB 220-ENERGY EFFICIENCY/ ALTERNATIVE ENERGY                                                                      
3:36:53 PM                                                                                                                    
CO-CHAIR MCGUIRE announced the consideration  of SB 220 and asked                                                               
Ms. Sydeman to lead the committee through the draft of SB 220.                                                                  
MICHELLE SYDEMAN, Staff to Senator  Wielechowski, said she helped                                                               
support the work of the  combined Resources and Energy committees                                                               
as they  sought to find  ways to  lower energy costs  and provide                                                               
more reliable and sustainable sources of energy to Alaskans.                                                                    
MS. SYDEMAN  paid tribute  to all the  members of  this committee                                                               
who  played  a  key  role   in  developing  the  proposed  Alaska                                                               
Sustainable Energy  Act. She said that  Senator Stedman expressed                                                               
his desire  to see the full  range of energy bills  before moving                                                               
any one  bill. Senator  McGuire heard his  call and  committed to                                                               
holding field hearings around the  state to collect Alaskans best                                                               
ideas about how it can  move towards greater energy independence.                                                               
She said her energy in coming  up with and fleshing out new ideas                                                               
was unparalleled;  many of the ideas  in this bill came  from her                                                               
and her staff.                                                                                                                  
MS. SYDEMAN said that Senator  Stevens hosted the joint committee                                                               
in Kodiak and Ousinkie where  they saw new wind turbines reducing                                                               
reliance  on high-cost  diesel,  heard from  fish processors  who                                                               
were  turning fish  waste into  biodiesel, and  learned just  how                                                               
much rural energy costs can  be reduced when community generators                                                               
are made  to be more  efficient. He  made sure the  committee had                                                               
the funds to do a credible job in the Interim.                                                                                  
She said  that Senators French  and Wagoner each  participated in                                                               
the  field  hearings.  Senator   Wagoner  brought  his  extensive                                                               
knowledge  of energy  issues and  interest  in finding  practical                                                               
solutions to  Alaska's energy challenges. Senator  French brought                                                               
an eagerness to  learn more, critical analysis of  the ideas they                                                               
heard, and  openness to the  broad range of  recommendations they                                                               
received. Senator Huggins' schedule  precluded him from attending                                                               
many  of the  field hearings,  but his  focus on  developing long                                                               
term  reliable  sources  of  energy  for  Alaskans  is  clear  to                                                               
everyone.  "He  is a  rock  on  which  resource policies  can  be                                                               
debated in a cool, thoughtful and informed manner."                                                                             
Lastly, she  said, Senator Wielechowski's interest  in developing                                                               
an energy plan forced them  to look critically at Alaska's energy                                                               
challenges and identifying changes  in statute or program funding                                                               
levels  that would  make  life better  for  Alaskan families  and                                                               
businesses. "He was  resolute in his desire that  we look broadly                                                               
and methodically  at what  the legislature could  do to  help the                                                               
average Alaskan."                                                                                                               
3:40:29 PM                                                                                                                    
MS. SYDEMAN said  this plan is the product of  his insistence and                                                               
Senator McGuire's  passion and  persistence. She  recognized that                                                               
the House Energy Committee,  co-chaired by Representatives Edgmon                                                               
and  Millet,  has been  engaged  in  a  similar effort  over  the                                                               
Interim, and  their excellent work  is seen in their  draft state                                                               
energy  policy, which  they  are all  proposing  be adopted  into                                                               
statute.  She thanked  Adam Berg  and Jeff  Turner, staff  to the                                                               
House Energy Committee,  for sharing that with  Senate staff. She                                                               
hoped  to continue  sharing ideas  and collaborate  as House  and                                                               
Senate bills move through the legislative process.                                                                              
She  said the  bill before  them today  is a  starting point  for                                                               
discussion.  SB 220  is a  compilation of  bills that  were heard                                                               
last year  as well as new  ideas from the Interim;  she knew that                                                               
additional  concepts   would  be  added  before   it  leaves  the                                                               
Resources  Committee.  She  then  presented an  overview  of  its                                                               
CO-CHAIR MCGUIRE thanked  Ms. Sydeman for devoting a  year of her                                                               
life to this project.                                                                                                           
3:43:26 PM                                                                                                                    
MS. SYDEMAN said this bill drew  from at least eight other bills.                                                               
Intent language is included stipulating  that Alaska will achieve                                                               
a 15-percent  increase in  energy efficiency  per capita  by 2020                                                               
and meet  50 percent  of its  electrical needs  through renewable                                                               
energy by 2025.                                                                                                                 
SB 121  was included; it  was introduced by  Senator Wielechowski                                                               
and calls for the state to  focus more attention on insuring that                                                               
its own facilities  are energy efficient and that  it is spending                                                               
as little money  as it can on energy. The  state owns about 1,800                                                               
public facilities  and eight buildings  have been  retrofitted by                                                               
the  Department of  Transportation  (DOTPF).  In these  buildings                                                               
electrical  use was  cut by  22 percent,  natural gas  use by  15                                                               
percent and  fuel oil by  36 percent. So,  retrofitting buildings                                                               
makes sense and that is called for in SB 220.                                                                                   
3:44:43 PM                                                                                                                    
The  second  part  of  SB  220  is  SB  31,  a  renewable  energy                                                               
production  tax credit  that was  introduced  by Senator  McGuire                                                               
last year.  Across the nation,  production incentives  were being                                                               
introduced last  year to encourage more  development of renewable                                                               
energy  resources  and 25  states  have  some sort  of  renewable                                                               
energy  corporate tax  credit. So  Alaska would  be joining  that                                                               
Another bill,  SB 150, is  included and that was  also introduced                                                               
by Senator McGuire. It would  create an Emerging Technology Fund.                                                               
Ms.  Sydeman  mentioned  that Gwen  Holdman,  Alaska  Center  for                                                               
Energy and  Power, is a  "spark plug" for new  energy innovations                                                               
in the state.  Currently, little or no state  funds are available                                                               
for  research and  development of  new  energy technologies,  and                                                               
this fund  would provide  a place  to put them  in the  future so                                                               
that they could go to the  University and others that are pushing                                                               
the envelopes  and not  just getting  off-the-shelf technologies,                                                               
which is what the Renewable Energy Fund is directed to do.                                                                      
3:46:18 PM                                                                                                                    
She said that  SB 186 is about the Renewable  Energy Fund, and it                                                               
requires  that  projects  funded  through it  have  a  verifiable                                                               
financial  benefit  that  exceeds  the  amount  of  grant  monies                                                               
received to make  sure of "getting a good bang  for out buck." HB
196 revives and amends some  terms in the Alternative Energy Loan                                                               
Fund that  was enacted  in the 1980s  to purchase,  construct and                                                               
install small-scale alternative energy systems.                                                                                 
3:47:17 PM                                                                                                                    
SB 71  was introduced  by Senator Therriault  last year;  it asks                                                               
the  state to  incorporate viable  renewable energy  systems into                                                               
any new  public works projects if  it makes economic sense  to do                                                               
so.  And SB  220 directs  the  administration to  always look  at                                                               
renewables  when building  new  public  facilities. Finally,  one                                                               
section of  the bill has to  do with the State  of Alaska leading                                                               
by  example, and  it would  require the  executive branch  to set                                                               
energy efficiency targets  for all state agencies,  to use energy                                                               
efficient equipment and  vehicles when it's cost  effective to do                                                               
so,  and for  the Alaska  Energy Authority  (AEA) to  establish a                                                               
statewide fuel-buying cooperative.                                                                                              
She  elaborated that  plenty of  evidence  indicates that  energy                                                               
star  appliances conserve  upwards  of 60  percent, and  vehicles                                                               
that are  even 10 percent  more efficient than the  current state                                                               
fleet  could  save  the  state  nearly  a  half  million  dollars                                                               
MS.  SYDEMAN explained  that a  fuel-buying  cooperative is  good                                                               
especially  for  rural  Alaska   because  it  would  allow  rural                                                               
residents  to buy  fuel in  greater quantities  and get  a better                                                               
price;  schools,  local  governments  and the  public  would  all                                                               
3:49:15 PM                                                                                                                    
MS. SYDEMAN said a proposed  amendment includes a bill introduced                                                               
by  Senator  Stedman to  expand  the  purposes of  the  Southeast                                                               
Energy Fund.                                                                                                                    
Finding no  questions or comments,  Ms. Sydeman continued  with a                                                               
sectional analysis as follows:                                                                                                  
3:50:09 PM                                                                                                                    
Page  1 sets  the short  title which  is the  "Alaska Sustainable                                                               
Energy Act".  It also  sets out the  legislative intent  that she                                                               
referred to earlier.  It also states that the  state will attempt                                                               
to generate 50  percent of its electricity  from renewable energy                                                               
3:51:06 PM                                                                                                                    
MIKE PALOWSKI,  staff to  Senator McGuire,  added that  the third                                                               
bullet  point also  says  "work to  ensure  reliable instate  gas                                                               
supply to residents of the state."                                                                                              
3:51:27 PM                                                                                                                    
MS. SYDEMAN  said section 4  provides the Alaska  Housing Finance                                                               
Corporation   (AHFC)  with   the  power   to  provide   technical                                                               
assistance to  municipalities regarding their adoption  - if they                                                               
are interested  - in energy  codes and efficiency  standards. She                                                               
explained that  last year the state  had a board that  would have                                                               
adopted a  state energy  standard, but  their position  has moved                                                               
back  to  simply  providing  the  AHFC with  the  power  to  help                                                               
interested communities to adopt standards.                                                                                      
Section 5 on page 2 creates  and Energy Efficiency Grant Fund for                                                               
providing grants  to municipalities,  unincorporated communities,                                                               
school districts, and the University of Alaska.                                                                                 
3:52:35 PM                                                                                                                    
She said that section 6 on  page 3 tasks the DOTPF with reviewing                                                               
the option  of using alternative  energy when adopting  plans and                                                               
specifications for public works (from SB 21).                                                                                   
Section  7  on  page  4   provides  that  the  state  shall  give                                                               
preference in procurement for equipment  and appliances that have                                                               
received  an energy  star under  the Energy  Star Program  of the                                                               
U.S. Environmental Agency (EPA) in  the U.S. Department of Energy                                                               
(DOE).  This  effort is  leading  by  example and  cutting  state                                                               
operating costs.                                                                                                                
3:53:20 PM                                                                                                                    
Section 8  on page 4 amends  a provision of the  Renewable Energy                                                               
Grant Fund  regarding the methodology  for determining  the order                                                               
of projects to receive funding  and requiring activity reports to                                                               
be filed  by grant  recipients. The AEA  may already  be evolving                                                               
Section 9 on  page 5 amends the Renewable Energy  Fund statute by                                                               
requiring  the AEA  to hire  an  economist to  prepare a  written                                                               
evaluation of each grant proposal.                                                                                              
She  said  that  section  10  on   page  5  tasks  the  AEA  with                                                               
organizing,  or providing  for, the  organization of  a statewide                                                               
fuel buying cooperative.                                                                                                        
3:54:18 PM                                                                                                                    
MR.   PAWLOWSKI  continued   that   Section  11   on  pages   5-7                                                               
incorporates  bills that  have already  moved past  the Resources                                                               
Committee,  but do  well in  the  omnibus policy.  He began  with                                                               
changes that  were made to  the Emerging Energy  Technology Fund.                                                               
He  explained  that  over the  Interim,  the  Denali  Commission,                                                               
working  with the  stakeholder groups  identified the  fund using                                                               
purely federal  dollars. Last  year they found  a lot  of federal                                                               
money for innovation  in the stimulus bill and so  some of it was                                                               
directed towards  identifying problems  in the  process contained                                                               
in section 11.  One of  the fundamental changes was to repeal the                                                               
phrase "or  loans". The  original bill was  passed as  "grants or                                                               
loans",  but they  found the  University's  capacity to  actually                                                               
make a loan did not exist.                                                                                                      
In the next  few weeks, Mr. Pawlowski said, they  will hear about                                                               
some best practices  oversight issues related to  the grant fund,                                                               
but the root goal is still the  same - to find mechanisms to fund                                                               
the next generation of energy technologies in Alaska.                                                                           
Sections 12 and 13  pick up on page 7 and go  through page 10 and                                                               
is the  former SB 31 -  the alternative energy tax  credit, which                                                               
became the renewable energy production  tax credit. This provides                                                               
a  transferable tax  credit with  some  limitations to  renewable                                                               
energy projects within the State  of Alaska. This is an incentive                                                               
that several states  already offer and it has been  found to spur                                                               
development  of these  projects.  No changes  were  made to  this                                                               
3:56:52 PM                                                                                                                    
MS.  SYDEMAN said  section 14  on page  10 tasks  the DOTPF  with                                                               
updating the energy  use index database and  conducting an energy                                                               
audit  of   public  facilities  that   are  determined   to  have                                                               
substantial energy inefficiency.                                                                                                
Section  15 on  page 11  tasks  the DOTPF  with retrofitting  all                                                               
public facilities listed  in the energy use index  and allows for                                                               
the department  to enter into performance  contracting for energy                                                               
efficiency - the basic concept  being that these companies do the                                                               
construction  retrofits and  don't ask  for any  money up  front.                                                               
They  are simply  paid back  by the  state as  it saves  money on                                                               
energy consumption. Once  the contracts are paid,  the state just                                                               
keeps those savings.                                                                                                            
Section 16  on page 11  requires the DOTPF to  annually determine                                                               
an  appropriate  energy  conservation   target  for  each  public                                                               
building  and  report the  energy  conservation  targets for  all                                                               
buildings to the relevant state  agency - so that agencies really                                                               
buy into  the fact that  they are to do  their best to  cut their                                                               
costs. The idea here, again, is to lead by example.                                                                             
3:58:35 PM                                                                                                                    
Section  17 on  page 12  requires the  AEA to  annually plan  and                                                               
conduct in cooperation  with AHFC a public  education campaign to                                                               
promote energy  efficiency and conservation. Based  on what other                                                               
states  have done,  the  average household  can  cuts its  energy                                                               
costs substantially and that information  needs to get out to the                                                               
public, and AEA  is committed to doing this work,  but they don't                                                               
have clear statutory authority to do so.                                                                                        
3:59:19 PM                                                                                                                    
CO-CHAIR  MCGUIRE  thanked  Senators   Hoffman  and  Stedman  for                                                               
instituting the  weatherization program.  They got the  idea from                                                               
this program  that indicated that  Alaskans would  improve energy                                                               
efficiency if they simply knew what to do.                                                                                      
MS. SYDEMAN continued saying that  section 18 on page 12 requires                                                               
the  AEA  to  establish  an  energy  use  index  for  all  public                                                               
4:00:14 PM                                                                                                                    
Section  19  on page  13  declares  a  state energy  policy.  She                                                               
explained that  the House established a  fairly large stakeholder                                                               
group   that  was   really   committed   to  sustainable   energy                                                               
development and efficiency and that group developed this policy.                                                                
4:01:02 PM                                                                                                                    
Section 20  on page  14 amends  the Alternative  Energy Revolving                                                               
Loan Fund by changing the funding sources for the loan.                                                                         
Section  21 on  page 14  states that  loans from  the Alternative                                                               
Energy  Revolving Loan  Fund  may only  be  made for  alternative                                                               
energy systems located within the state.                                                                                        
Section 22  on page 15 amends  the loan terms of  the Alternative                                                               
Energy  Revolving Loan  Fund to  add a  security requirement  and                                                               
resets the interest rate.                                                                                                       
Section  23 on  page  15 amends  the  definition of  "alternative                                                               
energy system" as it relates  to the Alternative Energy Revolving                                                               
Loan Fund.                                                                                                                      
Section  24  on page  16  repeals  outdated Revolving  Loan  Fund                                                               
Section 25  on page 16 repeals  January 1, 2025 as  the renewable                                                               
energy production  tax credit deadline established  in section 13                                                               
of SB 220.                                                                                                                      
4:02:47 PM                                                                                                                    
MR. PALOWSKI  explained that  both sections 25  and 26  deal with                                                               
ending  the incentive  program. The  will was  to not  provide an                                                               
incentive that lasts forever; this stops it at 2025.                                                                            
4:03:11 PM                                                                                                                    
MS. SYDEMAN said section 27 on  page 16 simply directs the AEA to                                                               
establish the energy use index  database no later than six months                                                               
after the effective date of this act.                                                                                           
Section  28  on  page  16  requires DOTPF  to  submit  an  energy                                                               
performance  report  to  the  legislature  regarding  its  energy                                                               
efficiency achievements in the measures it has taken.                                                                           
Section 29 on  page 16 requires the  Department of Administration                                                               
(DOA) to submit a plan to  the legislature to reduce state energy                                                               
use by 10 percent by 2015  and provide interim progress reports -                                                               
building   in  accountability   on   carrying   through  on   the                                                               
legislative intent.                                                                                                             
4:04:14 PM                                                                                                                    
CO-CHAIR WIELECHOWSKI  commented that they would  have additional                                                               
financial  recommendations  as  well,  because  a  lot  of  their                                                               
recommendations are financial.                                                                                                  
4:05:17 PM                                                                                                                    
CO-CHAIR MCGUIRE  announced that they  would release the  list of                                                               
capital  infrastructure  investment   at  their  news  conference                                                               
MR. PALOWSKI  said they  should be  getting updated  fiscal notes                                                               
for SB 220.                                                                                                                     
SENATOR HUGGINS  focused on page  2, line  6, that says  "work to                                                               
ensure reliable instate  gas supply for residents  of the state."                                                               
However, he said  some people talk about importing  LNG and other                                                               
kinds  of   items,  and  he   questioned  whether  it   would  be                                                               
appropriate to have  a provision that addresses  a preference for                                                               
using Alaska's energy sources rather than importing others.                                                                     
CO-CHAIR  MCGUIRE  agreed  that   that  language  could  be  made                                                               
stronger on page 2, line 6.                                                                                                     
4:07:36 PM                                                                                                                    
MR. PALOWSKI said their suggestions  should go into section 19 on                                                               
page  13   that  has  provisions  related   to  domestic  natural                                                               
resources, particularly in subsections (a) and (b).                                                                             
SENATOR  FRENCH  asked  her  to  "sketch  out"  how  "alternative                                                               
energy"  is  different  from  or   the  same  as  "emerging"  and                                                               
"renewable energy."                                                                                                             
MS. SYDEMAN  acknowledged the passion  behind the issue  of which                                                               
term is used  and said she wasn't  ready to go into  that at this                                                               
point.  Many of  the  statutes  in this  omnibus  have their  own                                                               
definitions. So,  renewable energy  in one statutory  section may                                                               
mean something a little different in another.                                                                                   
SENATOR FRENCH said  that he wanted that "ironed out"  so that it                                                               
is "crystal clear."                                                                                                             
4:09:45 PM                                                                                                                    
SENATOR  STEDMAN said  he  would check  on  the funding  location                                                               
because the Finance  Committee is in the process  of closing down                                                               
a lot of specialty funds and merging them into the general fund.                                                                
4:10:38 PM                                                                                                                    
SENATOR  FRENCH  went  to  page 4,  lines  25-27,  regarding  the                                                               
placement of  projects in  a priority  list -  the idea  being to                                                               
find projects  that are likely  to have a financial  benefit that                                                               
exceeds  the amount  of the  grant funds  received. He  asked for                                                               
some  background  on  that  language and  how  realistic  it  is,                                                               
because  they  all recognize  that  some  sort of  investment  is                                                               
necessary to  get these technologies launched,  and it's probably                                                               
likely  that  they will  not  exceed  the financial  benefits  at                                                               
first.  Start up  costs  might  not allow  them  to exceed  their                                                               
limited supply of money.                                                                                                        
MS. SYDEMAN agreed that that language needed more discussion.                                                                   
CO-CHAIR MCGUIRE thanked everyone for their comments and held SB
220 in committee.                                                                                                               

Document Name Date/Time Subjects
SB 220 Overview.pdf SRES 1/20/2010 3:30:00 PM
SB 220
SB 220 Bill Components and Brief Description.pdf SRES 1/20/2010 3:30:00 PM
SB 220