Legislature(2009 - 2010)BUTROVICH 205

02/11/2010 03:30 PM Senate RESOURCES

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
<Bill Hearing Postponed to 2/15/10>
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 20(FIN) Out of Committee
Heard & Held
        HB  20-FISHERIES LOANS:ENERGY EFFICIENCY/AMOUNT                                                                     
4:08:29 PM                                                                                                                    
CHAIR  WIELECHOWSKI announced  HB  20  to be  the  next order  of                                                               
business to  come before the  committee [CSHB 20(FIN)  was before                                                               
the committee].                                                                                                                 
SENATOR STEVENS  asked Tim  Clark to  comment on  eliminating the                                                               
prohibition on people who have had loans in the past.                                                                           
TIM CLARK,  staff to  Representative Edgmon, said  in the  past a                                                               
prohibition  prevented  anyone who  has  ever  had a  loan  under                                                               
subsection A from  becoming a borrower under subsection  B. HB 20                                                               
eliminates that prohibition  if the loan is  for improving energy                                                               
efficiency of the vessel or operation.                                                                                          
SENATOR STEVENS  asked if  the balance that  a fisherman  can owe                                                               
according to the loan has changed.                                                                                              
MR. CLARK replied  that the limits set in each  program, A and B,                                                               
would remain  the same. However,  the total amount that  a single                                                               
borrower can have  outstanding from the combination  of Program A                                                               
and Program B would increase from $300,000 to $400,000.                                                                         
SENATOR STEVENS thinks that is a major improvement.                                                                             
4:11:53 PM                                                                                                                    
SENATOR  STEDMAN said  he  is concerned  the  parameters are  too                                                               
broad and  suggested targeting engines  should be  more specific.                                                               
He thought  some discussion should  take place on what  should be                                                               
GREG  WINEGAR,  Director,  Division   of  Investments,  said  the                                                               
division had the  authority, under Section B, to make  a loan for                                                               
improving  a vessel  and  went through  a  regulatory process  to                                                               
provide a lower interest rate for  an engine. In the last year or                                                               
so, the industry has suggested  other types of improvements could                                                               
qualify such  as certain  types of hulls  or generators  that are                                                               
far  more   efficient.  Some   early  testimony   suggested  that                                                               
expanding the language could be beneficial.                                                                                     
SENATOR  STEDMAN  asked  if engines,  but  not  generators,  were                                                               
classified as qualifying in regulations.                                                                                        
MR. WINEGAR  replied that is  correct under Section  B currently;                                                               
when  the regulation  was  put in  place  engines were  targeted.                                                               
Money can be  borrowed for the other things,  such as generators,                                                               
but the  loan for a  more efficient  engine has a  lower interest                                                               
4:14:37 PM                                                                                                                    
SENATOR STEDMAN asked if any  engine qualifies in terms of energy                                                               
MR. WINEGAR  said the engine  must be more energy  efficient. The                                                               
Division  compares  the efficiency  rating  of  the engine  being                                                               
purchased versus the engine being  replaced. In almost every case                                                               
it  is a  "pretty substantial  difference" because  newer engines                                                               
are much more efficient.                                                                                                        
SENATOR STEDMAN asked what the increase in efficiency is.                                                                       
MR. WINEGAR  answered that the  efficiency increase  is generally                                                               
in the 20  to 30 percent range  with some as high  as 40 percent.                                                               
He said the  current regulation is under 3  AAC 80.055.02 [Alaska                                                               
Administrative Code, Title  3, Chapter 80, Section  55] and reads                                                               
"for an  engine efficiency upgrade,  an applicant  must establish                                                               
to  the satisfaction  of the  Department that  the upgrade  to be                                                               
financed  with the  loan will  reduce emissions  or improve  fuel                                                               
productivity." He explained a set  percentage does not have to be                                                               
SENATOR STEDMAN asked  about comparing engines.   For example: If                                                               
an 8  year old Caterpillar  was going to  be replaced with  a new                                                               
Caterpillar, does  the Division look at  the original consumption                                                               
specs from  8 years  ago for  the old  Caterpillar engine  or the                                                               
current consumption with wear and tear.                                                                                         
MR. WINEGAR replied  that the Division does compare  the specs of                                                               
the engine  being replaced with  the newer engine and  gets input                                                               
from the borrower.                                                                                                              
SENATOR STEDMAN asked if the  specs used for comparisons are from                                                               
the 8 year old engine when it was new.                                                                                          
MR. WINEGAR replied that is correct.                                                                                            
4:17:03 PM                                                                                                                    
SENATOR STEDMAN  said he  is still  concerned that  HB 20  is too                                                               
broad. He asked what the lending capacity is.                                                                                   
MR.  WINEGAR answered  the fund  itself  will have  a balance  of                                                               
about $30  million at  the end  of the fiscal  year. He  said the                                                               
annual volume runs between $10 and $14 million.                                                                                 
SENATOR  STEDMAN   said  some  language  exists   adding  another                                                               
subsection  on upgrading  vessels and  gear for  the purposes  of                                                               
improving energy  efficiency with a minimum  5 percent reduction.                                                               
He felt that was extremely low.  He said he understood going from                                                               
a two stroke  to a four stroke with a  fuel consumption spread of                                                               
20 to  40 percent improvement,  for example, but suggested  HB 20                                                               
could allow any hull improvement or engine change to qualify.                                                                   
MR. WINEGAR  said he did not  have an amendment in  front of him.                                                               
He said he has  no objection to some sort of limit  and he is not                                                               
fixed on  a certain  percentage. He  said the  engine comparisons                                                               
the Division has looked at have  been much higher than 5 percent.                                                               
He  said  he  would defer  to  HB  20's  sponsor  but he  has  no                                                               
objection to  inserting some  criteria. He said  that would  be a                                                               
policy call by the Legislature.                                                                                                 
4:19:09 PM                                                                                                                    
SENATOR STEVENS  asked what the  savings might be with  the lower                                                               
interest rate.                                                                                                                  
MR. WINEGAR said  the rate is prime minus 2  percent with a floor                                                               
of 3 percent.  Right now, it would mean the  difference between a                                                               
3 percent  loan and a 5.5  percent loan because of  the 3 percent                                                               
floor at this time.                                                                                                             
CHAIR WIELECHOWSKI said this was the  second day HB 20 was before                                                               
the committee and  it has another referral to  finance. He stated                                                               
he  would  like  to  get  an  amendment or  move  HB  20  out  of                                                               
SENATOR  STEVENS  moved  to  report HB  20  from  committee  with                                                               
individual recommendations  and accompanying fiscal  notes. There                                                               
were  no  objections  and  CSHB 20(FIN)  moved  from  the  Senate                                                               
Resources Standing Committee.                                                                                                   

Document Name Date/Time Subjects