Providing coverage of Alaska and northern Canada's oil and gas industry
December 2009

Vol. 14, No. 52 Week of December 27, 2009

Energy Committee lays out draft bills

Policy bill includes energy efficiency; omnibus bill includes Energy Department to give cabinet-level focus to Alaska energy issues

Kristen Nelson

Petroleum News

The Alaska House Special Committee on Energy is preparing two bills for introduction in next year’s session of the Legislature: a state energy policy bill and an energy omnibus bill which incorporates elements from 11 bills introduced earlier in the year.

Drafts of the bills, discussed at a Dec. 11 committee hearing in Anchorage, are the culmination of numerous hearings the committee held around the state on the subject of energy and also reflect the work of a stakeholder advisory panel.

Legislative intent language for the energy policy bill includes: a goal for per-capita improvement in energy efficiency — a 15 percent improvement between 2010 and 2020; achieving 50 percent of electric generation from renewable energy by 2025; ensuring a reliable in-state supply of gas for residents; and establishing the power project fund as the main source of state assistance for energy projects.

The energy omnibus bill adds energy efficient to standards for schools in the state; discusses regulation of nuclear facilities; adds energy requirements for state buildings; creates a state Department of Energy (both the Alaska Natural Gas Development Authority, now in the Department of Revenue, and the Alaska Energy Authority, now in the Department of Commerce, Community and Economic Development, would be moved to the new Department of Energy); creates an emerging energy technology fund; establishes a renewable energy production tax credit “in the amount of 15 percent of the retail rate for each kilowatt-hour of electricity charged by the energy producer, as determined by the Regulatory Commission of Alaska,” which would be from 2.1 cents to 5 cents for each kilowatt-hour of renewable energy produced.

Energy Committee co-Chair Charisse Millett, R-Anchorage, said the fiscal note for the bill wasn’t available yet. She also said there were a number of things not included in the omnibus energy bill: the Greater Railbelt Energy and Transmission Corp., the Regional Integrated Resource Plan for the Alaska Railbelt and in-state gas.

The new department issue

Gene Therriault, the governor’s senior energy advisor, told the committee that Gov. Sean Parnell questions whether the expense of adding a new department is worthwhile. Therriault said the governor agrees the focus on energy is worthwhile and said the administration would work with the Legislature to ensure energy needs are met.

Millett said support for the new department came out of many discussions the committee had across the state where it heard that the existing structure is not user friendly and is duplicative. She said former Gov. Sarah Palin was also hesitant about the new department but said the bill is not meant to grow government but to eliminate duplication.

Committee co-Chair Bryce Edgmon, D-Dillingham, said the committee heard from virtually all corners of the state, including mayors, on the need to have some consolidation of energy.

The committee heard a lot of compelling reasons for establishing a Department of Energy, Edgmon said. There should at least be a seat for energy at the cabinet table, he said.

Edgmon said tribal groups told the committee it was important to have a centralized entity the federal government can work with.

Stakeholder advisory panel

The committee heard from Bill Popp of the Anchorage Economic Development Corp. and Caitlin Higgins of the Alaska Conservation Alliance on behalf of the House Energy Policy Stakeholders Advisory Panel which worked on developing a statewide energy policy. The group adopted as a starting point for a state policy the Tri-Borough Commission Energy Policy adopted by the Matanuska-Susitna Borough, the Municipality of Anchorage and the Kenai Peninsula Borough in early 2008.

That policy was developed by a 13-member task force which was established in October 2007.

The stakeholders advisory panel, which included Millett, Edgmon, legislative staff, and representatives of a broad range of organizations agreed to fundamentals for a state energy policy:

• Promotes energy efficiency and conservation;

• Promotes development of renewable and nonrenewable energy resources;

• Promotes economic development through cost-effective, long-term sources of energy for communities statewide;

• Supports energy research, education and workforce development; and

• Supports coordination of governmental functions and promotes streamlining of regulatory processes, avoiding duplication of effort, and overall coordination of effort by all levels of government.

Cook Inlet recovery act

Alaska state Reps. Mike Hawker, R-Anchorage, and Mike Chenault, R-Nikiski, said Dec. 22 that they will introduce legislation promoting Cook Inlet natural gas exploration, production, storage and deliverability.

The men are in the final stages of preparing their legislation and are reviewing the initial proposal with Cook Inlet stakeholders, including regulators, community organizations, explorers, producers and utility companies.

Hawker and Chenault said in a statement that the Cook Inlet Recovery Act will provide tax and regulatory incentives to construct large gas storage facilities to help meet consumers’ peak winter gas demands; allow more rapid recovery of exploration tax credits to entice private investment; and eliminate a production tax penalty imposed on companies working both in Cook Inlet and on the North Slope.

They said the legislation will also help protect consumers from the threat of gas delivery interruptions by addressing state regulatory policy that has resulted in “the ill-conceived rejection of critical, long-term gas supply contracts negotiated by utilities.” (This is a reference to difficulties utilities have had securing approval for gas supply contracts from the Regulatory Commission of Alaska.)

“The Cook Inlet Recovery Act is consumer-security legislation to help ensure Southcentral Alaskans have enough natural gas to keep their homes and businesses warm and their lights on every day of the year,” Hawker said.

“The economy of the Kenai Peninsula has been economically devastated by declining natural gas exploration and production,” Chenault said. “The lack of sufficient natural gas now threatens the safety of everyone in Southcentral Alaska and we need to do something about it.”

This won’t be the only bill in next year’s Legislature promoting natural gas storage.

Sen. Hollis French, D-Anchorage, said in early November that he plans to introduce legislation to provide tax incentives for development of natural gas storage capacity in Cook Inlet, and also cited concern with potential winter gas supply shortages for homes and businesses in Southcentral Alaska.

Prefiled bills will be released Jan. 8 and Jan. 15; the session begins Jan. 19.

—Kristen Nelson

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