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House Energy, RCA wrestle similar issues Ability of independent power providers to sell to Alaska’s utilities, access transmission lines, at issue in commission dockets, HB 78 Kristen Nelson Petroleum News
The Regulatory Commission of Alaska and the House Energy Committee are struggling with overlapping issues related to the ability of independent power producers to sell electric power to existing utilities and to access transmission lines.
The committee has held a number of hearings on House Bill 78, the “Alaska Competitive Energy Act of 2015,” sponsored by Rep. Tammie Wilson, R-North Pole. A bill summary says RCA’s authorizing statute, AS 42.05, “is out of compliance with federal law, inconsistent with State energy policy, and hostile to private-sector wholesale competitive participation in Alaska’s electric generation and utility industry.”
Concern about the bill comes from the state’s utilities; proponents are independent power producers.
RCA, meanwhile, has been working on new regulations for electric utilities under docket R-13-002 and opened a docket, I-15-001, in late February to address the issue of an independent system operator for the Railbelt electrical transmission system.
RCA hearing At Wilson’s request, RCA held a public hearing on HB 78; a transcript of the commission’s discussion at that Feb. 25 hearing was provided to House Energy. Comments from the commissioners in that transcript provide the perspective of regulators on the proposed legislation.
Pickett said one challenge he sees with the bill is how it relates to the state’s Energy Policy Act of 2010, which calls for 50 percent renewable energy by 2025, but doesn’t specifically refer to RCA’s statute. In 2010, he said, the presumption was that the Watana dam would be the bulk of that 50 percent “aspirational goal,” but today, he said, “that’s a highly, highly optimistic, if not unrealistic assumption.”
Version “E” of the bill requires that the RCA’s annual report “list the avoided cost of each public utility issued a certificate under AS 42.05.221, including reporting the costs of production, capital, debt, fuel, operation, and maintenance for each source of electrical generation.”
Pickett said there are some 123 electric utilities in the state, only 32 of which the commission economically regulates, and asked if those small utilities would be required to provide incremental avoided cost data, something the bill requires so independent power producers will know how to price their projects.
Overall, Pickett noted that the commission “has a rulemaking process going on that’s going to deal with avoided costs,” has a transmission report due to the Legislature, but also noted an unaddressed question of whether the state of Alaska needs a binding renewable portfolio standard.
Regulations docket timeframe Commissioner T.W. Patch was concerned that the bill would cut in half the commission’s timeframe for all regulations dockets, saying it would “impose upon us a horrendous burden.” He also noted the lack of discussion of a fiscal impact. Pickett said the current fiscal note was “indeterminate” and said the process was under way to determine the staffing impact, but also said he didn’t think it was fair to put a number on the bill until it has been “fully vetted.”
Patch said he believes the bill requires “a much more fulsome discussion” than it has had so far, and hopes the Legislature will engage in further discussion “and that the affected industries participate fully and meaningfully.”
Late ’90s discussion Commissioner Norm Rokeberg, a former legislator, said that in the late 1990s there was a joint House-Senate committee which spent two years studying the potential for electrical restructuring in Alaska, with particular focus on the Railbelt. Concurrent with that, he said, the Alaska Public Utility Commission, since renamed the RCA, commissioned a major study of the issues.
He said a goal of HB 78 seems to be “to open up Alaska for more private competition in supplying of electrical energy,” and said the legislative committee in the late 1990s concluded “Alaska was too small to be able to accept any type of wholesale or retail restructuring as it was then contemplated.” The APUC study, by Black & Veatch, “concluded much the same as the legislative committee,” he said.
Restructuring Commissioner Janis Wilson noted that while HB 78 isn’t called a restructuring bill, “I think it is a restructuring,” and said she thinks such changes require “careful consideration.”
Wilson also said that since the Regulatory Affairs and Public Advocacy section of the attorney general’s office doesn’t comment on bills, “ratepayer and other public interest considerations are not represented from that forum. So we do have some duty to represent ratepayers and other public interest considerations.”
Wilson said she is a strong supporter of renewable energy, but the bill “also brings into the picture nonrenewable energy considerations,” which is why she thinks it is a fundamental restructuring.
Wilson said she thought “the intent of the bill - promoting competition, getting the rules of the road and pricing for transmission - are entirely legitimate and we are trying to do that in other venues.”
IPP concerns Rep. Wilson told House Energy Feb. 24 that she was presenting the bill on behalf of Alaska Independent Power Producers. She said the state’s electrical laws discourage competition and discourage investment.
A sectional for the bill was presented by Duff Mitchell, executive director of the Alaska Independent Power Producers, who told the committee AIPP has worked on the bill for some three years.
Examples of IPP concerns include those of Alaska Environmental Power which has been in a dispute with Golden Valley Electric Association over GVEA’s refusal to purchase wind power from AEP. AEP’s attorneys, Peter Van Tuyn and Teresa Clemmer of Bessenyey & Van Tuyn, told RCA in a filing that “GVEA and many of the other Railbelt utilities have been reluctant to allow IPPs access to the transmission grid and have resisted their efforts to play a bigger role in energy generation,” and called on the RCA to “help IPPs overcome the obstacles imposed by the utilities” saying it would “benefit Alaska ratepayers and communities.”
Cook Inlet Region Inc.’s Ethan Schutt, senior vice president, land and energy development, said in a letter to Rep. Wilson that through CIRI’s development of the Fire Island Wind Project it has become knowledgeable of “the significant flaws and barriers inherent in the existing system,” and said “the ratepayers of Alaska’s existing electric utilities bear the financial burden of this flawed system.”
Schutt said HB 78 would help rectify this situation “by introducing competition to this currently isolated market.”
Utility concerns Chugach Electric Association CEO Bradley Evans told the committee in a letter that while the utility “supports efforts to provide mechanisms for lowering costs to electric ratepayers, several ongoing regulatory efforts appear to provide avenues for considering all of the issues raised in HB 78, at least with respect to the Railbelt transmission system,” and said Chugach Electric opposes HB 78 “in order to prevent the duplication of effort and potential for inconsistent policy decisions on these important electric policy issues.” Evans cited docket I-15-001 which RCA opened Feb. 27 to address an independent system operator for the Railbelt transmission system and proposed regulations presented by commission staff in docket R-13-002 designed to bring Alaska’s regulations implementing the Federal Public Utility Regulatory Policy Act of 1978 up to date to reflect changes made by the Federal Energy Regulatory Commission to its regulations over the last several years.
David Gillespie, CEO of the Alaska Railbelt Cooperative Transmission & Electric Co. (GVEA, Matanuska Electric Association, Chugach Electric Association and the City of Seward), told the committee in prepared remarks that ARCTEC opposes HB 78 because it believes detailed implementation outlined in HB 78 is best left to the RCA; the “bill contains a number of ambiguous and potential unintended consequences”; most of the provisions of HB 78 are already covered by federal law or RCA’s proposed rules in R-13-002; and that the bill “doesn’t get to the real, fundamental problem in the Railbelt: a lack of robust infrastructure and a regulatory framework that will allow energy to economically flow to where it is most needed, when it is most needed.”
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