Legislature(2009 - 2010)BUTROVICH 205

03/08/2010 03:30 PM Senate RESOURCES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSB 220(RES) Out of Committee
Moved CSSJR 27(RES) Out of Committee
Moved CSSB 274(RES) Out of Committee
Moved CSSB 208(RES) Out of Committee
Moved SB 144 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
          SB 220-ENERGY EFFICIENCY/ ALTERNATIVE ENERGY                                                                      
3:40:22 PM                                                                                                                    
CO-CHAIR  MCGUIRE announced  SB 220  to be  up for  consideration                                                               
[CSSB  220(RES),   labeled  26-LS1197\D,  Kane  was   before  the                                                               
MICHELLE SYDEMAN,  staff to  Senator Wielechowski,  reviewed that                                                               
the committee  first took  up SB  220 almost  six weeks  ago. She                                                               
said they  had taken invited  testimony from energy  experts, and                                                               
staff has worked closely with all  the agencies; the bill has had                                                               
many hearings.  As result  there were  numerous changes.  Five of                                                               
those main changes are that  they adopted an amendment by Senator                                                               
Huggins  that allows  nuclear power  in Alaska  and they  added a                                                               
section  suggested by  Senator Hoffman  that expands  the state's                                                               
heating  assistance  program for  low  income  families when  oil                                                               
prices  are  high  and  the   state  has  a  surplus.  They  also                                                               
incorporated  language  from  Senator   Stedman's  SB  132  which                                                               
expands  the purposes  of Southeast  Energy Fund  and adopted  an                                                               
amendment offered  by Senator Dyson  requiring the  Department of                                                               
Transportation  and  Public  Facilities (DOTPF)  to  examine  the                                                               
feasibility  of  powering  vehicles in  Alaska  using  compressed                                                               
natural  gas. Finally,  they added  new language  creating a  new                                                               
loan fund  for businesses seeking  to make their  facilities more                                                               
energy efficient  or to incorporate  renewable energy  into their                                                               
operations. This idea  was advanced by Senator  Egan's office and                                                               
further  developed by  Senator McGuire's  office. One  additional                                                               
change  was that  they incorporated  the Governor's  SB 223  into                                                               
this bill  and that authorizes AHFC  to issue up to  $250 million                                                               
in bonds to  help the state, municipalities  and school districts                                                               
to  make their  buildings more  energy efficient.  This revolving                                                               
loan fund should create an  on-going revenue stream for the state                                                               
to help  cities and schools  cut their energy-related  costs. She                                                               
said that they had a few  more amendments and then the bill would                                                               
be ready for the committee's consideration.                                                                                     
3:43:23 PM                                                                                                                    
MIKE  PAWLOWSKI,  staff to  Senator  McGuire,  said that  several                                                               
small changes  were made to  version D after the  amendments were                                                               
made to  the previous version;  some were clerical and  some were                                                               
based on  statements heard at the  table. One example is  on page                                                               
14, line 11, the Emerging  Energy Technology Fund (EETF) section.                                                               
He explained that  one of the discussions by  Senator Wagoner was                                                               
that  while  having  a  degree   in  science  or  engineering  is                                                               
appropriate, professional  experience should be  considered also.                                                               
Others   were  clerical   cleanups,  for   example,  saying   the                                                               
department  shall   work  with   other  state  agencies   in  the                                                               
alternative energy section.  Another change was on  page 14, line                                                               
23. In the previous version  they had the Alaska Energy Authority                                                               
on the board of the EETF,  but since it is administering the fund                                                               
it  didn't make  sense for  someone  from it  to also  be on  the                                                               
advisory committee. So they were  replaced that position with the                                                               
Alaska  Industrial  Development  and  Export  Authority  (AIDEA).                                                               
Other changes were small and clerical.                                                                                          
3:45:07 PM                                                                                                                    
CO-CHAIR MCGUIRE moved Amendment 1, labeled 26-LS1197\D.1.                                                                      
                          AMENDMENT 1                                                                                       
     OFFERED IN THE SENATE               BY SENATOR MCGUIRE                                                                     
     TO:  CSSB 220(RES), Draft Version "D"                                                                                      
     Page 20, line 27:                                                                                                          
          Delete "Alaska"                                                                                                       
          Insert "alternative"                                                                                                  
     Page 28, line 1:                                                                                                           
          Delete "AS 44.42.067(c)"                                                                                              
          Insert "AS 44.42.067(d)"                                                                                              
CO-CHAIR WIELECHOWSKI objected for discussion purposes.                                                                         
CO-CHAIR  MCGUIRE  said  this  amendment  references  alternative                                                               
MR. PAWLOWSKI  added that Amendment  1 took on the  Department of                                                               
Commerce,  Community and  Economic  Development (DCCED)  business                                                               
loan program  for energy  efficiency and  retitled it  the Alaska                                                               
Energy  Conservation  Loan Fund.  Since  it  was the  Alternative                                                               
Energy Conservation  Loan Fund, the  reference in Section  27 had                                                               
to be  changed to conform  to the  change language in  an earlier                                                               
reference. So Amendment 1 is pure cleanup language.                                                                             
The second change  in Amendment 1 corrects the repeal  of a wrong                                                               
subsection.  It  relates  to   new  construction  meeting  energy                                                               
efficiency  standards, but  they wanted  to repeal  the reporting                                                               
requirements in  AS 44.42.067(c)  and (d). This  can be  found on                                                               
page 19, line 21.                                                                                                               
CO-CHAIR WIELECHOWSKI removed his objection to Amendment 1.                                                                     
CO-CHAIR MCGUIRE found no further objections and Amendment 1 was                                                                
CO-CHAIR MCGUIRE moved Amendment 2.                                                                                             
                          AMENDMENT 2                                                                                       
     OFFERED IN THE SENATE              BY SENATOR MCGUIRE                                                                      
     TO:  CSSB 220(RES), Draft Version "D"                                                                                      
     Page 13, line 16, following "projects;":                                                                                   
          Insert "(2) amounts deposited under (f) of this                                                                       
     Renumber the following paragraph accordingly.                                                                              
     Page 13, line 22:                                                                                                          
          Delete "(f)"                                                                                                          
          Insert "(g)"                                                                                                          
     Page 14, line 1:                                                                                                           
          Delete "(f)"                                                                                                          
          Insert "(g)"                                                                                                          
     Page 14, line 8:                                                                                                           
          Delete "(f)"                                                                                                          
          Insert "(g)"                                                                                                          
     Page 14, following line 9:                                                                                                 
          Insert a new subsection to read:                                                                                      
          "(f)  As a condition of all grants awarded under                                                                      
     this  section, the  authority  shall  require that  the                                                                    
     grantee  pay to  the  authority a  fair and  reasonable                                                                    
     return  to the  fund, as  determined by  the authority,                                                                    
     from the  revenue, economic  value, or  profits derived                                                                    
     by the  grantee from  the grant project.  The authority                                                                    
     shall   deposit  the   amounts   received  under   this                                                                    
     subsection  into the  fund. To  secure payment  of sums                                                                    
     owed  to the  authority  under a  grant agreement,  the                                                                    
     authority  may  own and  take  a  security interest  in                                                                    
     patents, copyrights, and other intellectual property."                                                                     
     Reletter the following bill subsections accordingly.                                                                       
     Page 14, line 24:                                                                                                          
          Delete "(f)"                                                                                                          
          Insert "(g)"                                                                                                          
     Page 14, lines 27 - 28:                                                                                                    
          Delete "(f)(4), (f)(5), or (f)(6)"                                                                                    
          Insert "(g)(4), (g)(5), or (g)(6)"                                                                                    
     Page 14, line 30:                                                                                                          
          Delete "(f)(4), (f)(5), or (f)(6)"                                                                                    
          Insert "(g)(4), (g)(5), or (g)(6)"                                                                                    
CO-CHAIR WIELECHOWSKI objected for discussion purposes.                                                                         
MR. PAWLOWSKI  explained that Amendment  2 applies to  Section 18                                                               
on page 13-15  of the bill, the Emerging  Energy Technology Fund.                                                               
Lines  1-18  of  the  amendment  are  conforming  languages.  The                                                               
substance of the amendment was from  line 18 through page 2, line                                                               
3. A  question was  raised in working  with the  department about                                                               
giving these  grants to technology  development and  what happens                                                               
if  this  technology  becomes wildly  successful  and  a  private                                                               
sector entrepreneur makes  a lot of money out of  it. This is old                                                               
language that existed  in the Alaska Science  and Technology Fund                                                               
where grants had  conditions to provide a return to  the state in                                                               
the event  that a grant  was successful. This language  gives the                                                               
department some flexibility  to put conditions on  grants so that                                                               
they can  function in a  way that returns  money to the  fund for                                                               
future  use  and  to  endow future  activities.  They  are  still                                                               
working with the  department to a degree on the  language, but it                                                               
is very open and permissive.                                                                                                    
CO-CHAIR MCGUIRE  remarked that in  Washington D.C. she  was part                                                               
of a discussion that revealed  the Department of Energy (DOE) has                                                               
an Emerging Technology  Fund similar to this. They took  a bet on                                                               
the  technology that  involves  refracking that  has  led to  the                                                               
shale extractions and  as a result returns from that  have set up                                                               
a pretty healthy loan fund for future technologies.                                                                             
CO-CHAIR WIELECHOWSKI removed his objection to Amendment 2.                                                                     
CO-CHAIR MCGUIRE found no further objections and therefore                                                                      
Amendment 2 was adopted.                                                                                                        
3:49:57 PM                                                                                                                    
CO-CHAIR MCGUIRE moved to adopt Amendment 3.                                                                                    
                          AMENDMENT 3                                                                                       
     OFFERED IN THE SENATE              BY SENATOR MCGUIRE                                                                      
     TO:  CSSB 220(RES), Draft Version "D"                                                                                      
     Page 16, line 31, following "$30,000,000":                                                                                 
          Insert "for each project"                                                                                             
     Page 17, line 16:                                                                                                          
     Insert a new paragraph to read:                                                                                            
               "(3)  "project" means a plant, works,                                                                            
     system,   or  facility,   together   with  related   or                                                                    
     necessary  facilities  and appurtenances,  including  a                                                                    
     divided  or undivided  interest in  or a  right to  the                                                                    
     capacity of  a power project  or project, that  is used                                                                    
     or  is  useful  for  the purpose  of  renewable  energy                                                                    
     Renumber the following paragraph accordingly.                                                                              
     Page 30, following line 12:                                                                                                
          Insert a new bill section to read:                                                                                    
        "*  Sec. 51.  The  uncodified law  of  the State  of                                                                
     Alaska is amended by adding a new section to read:                                                                         
          EXHAUSTION OF UNUSED RENEWABLE ENERGY REFUNDABLE                                                                      
     TAX    CREDITS.   Notwithstanding    the   repeal    of                                                                    
     AS 43.98.040 by sec. 43 of  this Act, an unused portion                                                                    
     of a  tax credit  acquired under  AS 43.98.040, enacted                                                                    
     by sec.  21 of this  Act, may be carried  forward until                                                                    
     exhausted, except  that the unused  portion of  the tax                                                                    
     credit  may  not  be  carried   forward  to  tax  years                                                                    
     beginning after December 31, 2023."                                                                                        
     Renumber the following bill section accordingly.                                                                           
CO-CHAIR WIELECHOWSKI objected for discussion purposes.                                                                         
MR. PAWLOWSKI  explained that Amendment  3 came out of  work with                                                               
the Department  of Revenue  (DOR). In the  previous work  on this                                                               
production tax  credit there had  been a degree of  concern about                                                               
how  big the  liability  to the  state could  be.  That has  been                                                               
approached in several  different directions. It was  based on the                                                               
15 percent of  the electricity sold, but then also  10 percent of                                                               
the  capital expenditures.  A way  was  found to  get at  Senator                                                               
Stedman's concern  about limiting  a Susitna-style  hydro project                                                               
that would  cost in  the range  of $4.5  billion so  the investor                                                               
wouldn't get  a $450 million credit.  They tried to design  a cap                                                               
that mirrors  what the  equity would  look like  in a  project of                                                               
that size and  they came up with $30 million.  So, the cap exists                                                               
in the  current version at  $30 million,  but it was  per person.                                                               
Working with staff and the DOR  they really felt it should be per                                                               
project. So  on page  1, lines  1-2, of  the amendment  "for each                                                               
project" was  inserted. The amendment  then inserts  a definition                                                               
of project.                                                                                                                     
Another way  they approached  the issue of  the liability  to the                                                               
state  is to  provide a  sunset in  2018 for  the production  tax                                                               
credits.  But sunsetting  it early  required transition  language                                                               
since  tax  credits are  accrued  over  the  first five  years  a                                                               
project produces  energy. Section 51  on page 1, lines  15-23, of                                                               
the  amendment  are  really  about how  to  transition  once  the                                                               
renewable project comes on line just before the sunset period.                                                                  
CO-CHAIR WIELECHOWSKI removed his objection.                                                                                    
CO-CHAIR  MCGUIRE found  no  further  objection, and,  therefore,                                                               
Amendment 3 was adopted. She asked for further comments.                                                                        
MR. PAWLOWSKI  directed members to  a summary sheet  about fiscal                                                               
notes for the bill that they received yesterday afternoon.                                                                      
CO-CHAIR MCGUIRE  said most of  the bill concerns  incentives and                                                               
policy shifts  that don't involve  a lot  of money. So  the total                                                               
fiscal note is $1.281 million.                                                                                                  
She noted that  the committee heard support all  across the board                                                               
from the communities,  although one criticism she  did hear three                                                               
times is that  it doesn't deal solely with  renewable energy, but                                                               
rather  alternative energy  and  fossil fuel  based  energy in  a                                                               
variety  of   places  (the   Bulk  Fuel   Loan  and   power  cost                                                               
equalization  (PCE). Nuclear  has  been added  as an  alternative                                                               
fuel source,  so people refer to  it as renewable, but  the "real                                                               
nuclear guys" refer to it as alternative.                                                                                       
3:54:58 PM                                                                                                                    
SENATOR HUGGINS asked what kind of  energy hydro is called in the                                                               
CO-CHAIR MCGUIRE said  renewable. She said they  had directed the                                                               
federal  government to  this definition  in their  resolutions as                                                               
recently  as this  week  when she  was in  D.C.  She thanked  the                                                               
committee "for a labor of love,"  Michelle and Fish for all their                                                               
hours of work and dedication,  and the administration for heeding                                                               
the call to  assemble a team that has been  working with them, as                                                               
well  as  the House  of  Representatives,  Chair Edgmon  and  his                                                               
staff, so that the bills mirror one another.                                                                                    
SENATOR HUGGINS gave  credit to her and  Senator Wielechowski for                                                               
the  broad travels  of a  group of  people that  really did  some                                                               
yeoman work. It's  important to realize that what  they are doing                                                               
today  had a  thumbprint from  people in  communities across  the                                                               
CO-CHAIR WIELECHOWSKI commented that  when they talked to Senator                                                               
Stevens about this bill last year  he wondered if they would ever                                                               
get a  product; and here  it is. It  is a  product of one  of the                                                               
more  open  and  transparent  processes   he  has  seen  in  this                                                               
legislature. He  thanked staff,  staff in  other offices  and the                                                               
administration. He  thought the  state would get  tremendous bang                                                               
for its buck out of this bill.                                                                                                  
3:59:05 PM                                                                                                                    
CO-CHAIR WIELECHOWSKI  moved to  report CSSB 220(RES)  as amended                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note(s). There were no objections and it was so ordered.                                                                 

Document Name Date/Time Subjects