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HomeMy WebLinkAboutREFAC Meeting draft minutes 4-4-2012Renewable Energy Fund Advisory Committee Meeting April 4, 2012 Centennial Hall Juneau, Alaska DRAFT MINUTES 1. Call to Order The Renewable Energy Fund Advisory Committee (REFAC) convened.at 11:32 a.m., with Chairman Vince Beltrami presiding. 2. Roll Call Committee Members: Chair Vince Beltrami; Chris Rose; Jodi Mitchell; Brad:Reeve; Jim Posey; Representative Bryce Edgmon; Representative Charisse Millett; Senator Anna Fairclough (arrived 12:15:pm); and Senator Lyman Hoffman (arrived 12:10 pm). : AEA Staff: ‘ Sean Skaling; Sara Fisher-Goad; Shawn'Galfa; Nick Szymoniak; Gene Therriault; Josh Craft; Chris Gobah; Doug Ott; Alan Baldivieso; Rich:Stromberg; Jed Drolet; Cady Lister; Devany Plentovich; Helen Traylor; and Teri Webster. Public: Fs es Gwen Holdmann, UAF; Wyn Menefree, Dept. Natural Resources; Clinton White, STG. Inc; Adam Berg, Rep. Edgmon office; Sandy Burd, Sen. Hoffman office; Robert Venables, SE Conference; Brian Bjorkquist, Dept. of Law; and Brian Hirsch, National Renewable Energy Laboratory. 3. Welcome New Committee Members Chairman. Beltrami welcomed Representative Millett and Representative Edgmon. 4. Agenda.Comments The agenda is approved as presented. Chairman Beltrami requested Vice Chair Rose become Chairman of the REFAC Committee beginning the next meeting. There was no objection. Mr. Posey suggested Chairman Beltrami be appointed Chairman Emeritus. Chairman Beltrami stated he intends to step down as Chairman. There were no objections and Mr. Rose accepted the position. 5: Public Comments Mr. White stated he works for STG Incorporated which primarily constructs energy infrastructure and have built 40% of the projects that have been constructed through the RE Fund Renewable Energy Fund Advisory Committee Meeting Minutes Page 2 of 7 April 4, 2012 program. Mr. White fully supports the work and the projects that have been made possible through the program providing real and tangible benefits to many communities. Mr. White stated the reimbursement process does not work well with the way projects are implemented in rural Alaska and causes impacts on grant recipients and would provide specific examples at the request of the Committee. Mr. White stated the procurement policies at AEA are seeping into this program threatening private industry. He believes improvements need to be considered for the state to get all of the benefits they can from this program. Mr. White suggested the potential solution of expanding the applicant classes within the program to private investors. Mr. Posey asked Mr. White what the difference is between_.private: investors and independent power producers (IPPs). Mr. White stated he doesn't see a difference. Mr:.White commented his proposed solution would circumvent the reimbursement. process and take advantage of depreciation benefits and production tax credits on the federal level that most.grant applicants cannot take advantage of as a public entity. Mr. Posey asked Mr. White to clarify how his proposed:.solution*would be different than the current allowance of applications by IPPs. Mr. White stated the solution was developed in consideration of rural Alaska and provides.a way to leverage the grant funding to buy a facility. Mr. Posey asked if Mr. White is suggesting to’ build a facility first'and then apply for a grant. Mr. White stated the application would be on the front:side and the investor would know the grant money will be available at the end of the ‘period as long as they build and produce per the application. Mr. Posey asked Mr.: White for further clarification of his proposed solution and how it is different than the current process. Mr. White gave:an.example of a private investor and a local utility partnered together to: submit an.application to the program and the project was awarded. Instead of the.money being made available:to:reimburse project expenses directly, as is done currently, that*money :would be awarded, but not distributed. It would be held in trust. The private investor would use‘their own:money to pay for the facility to be constructed. The facility comes online and begins: supplying’ electricity to the local utility. The local utility pays the private investor for the energy supplied by that project and the private investor owns it for a period of five to seven years. During that time, the private investor has cash flow benefits of depreciation and‘production tax credits which helps them earn their return on the project. Once those benefits are exhausted; the state would evaluate the project to see if it met the application's requirements. If all the targets were met, the money in the trust would be released to the investor to fully earn the return. The ownership of the facility would then go to the local utility. Mr. White stated the money the state would have to provide for this model to work would be significantly less than the current reimbursement basis because the investor earns the majority of his return through the combination of the sale of the energy, depreciation and tax credits. Mr. Posey stated this proposed solution is similar to an offer made to CIRI on Fire Island a long time ago. He stated it deserves consideration and review by staff. Renewable Energy Fund Advisory Committee Meeting Minutes Page 3 of 7 April 4, 2012 Vice Chairman Rose asked Mr. White to explain what happens if the federal tax benefits change. Mr. White believes the investor would have to bear that risk. Representative Edgmon asked for clarification what would need to happen for a proposal like this to go forward. Chairman Beltrami asked Mr. White if he has shared his detailed proposal with AEA staff. Mr. White stated he has shared it with some staff members and some members of the Committee. He will be happy to provide it to all who want it. Ms. Fisher-Goad stated she will provide an analysis to the Committee.of what would need to happen to accommodate this proposal and look at the pros, cons and.tisks. Mr. Reeve stated it is a very complicated issue and he wants.to ensure. the benefits are realized by the community. 6. Approval of Meeting Minutes - January 8, 2013 MOTION: Vice Chairman Rose moved to approve:the meeting minutes from January 8, 2013, Renewable Energy Fund Advisory Committee meeting. Seconded by Mr. Posey. The minutes were approved as presented. ils RE Fund Program Update & Performance Briefing Mr. Skaling reviewed the performance of the Rural Energy.Fund Round 6. Mr. Posey asked Mr. Skaling-how.much of the'$52 million.recommendation is the continuation of prefunded projects,-Mr. Skaling stated 18 of the 23 projects in the top $25 million are in the construction category ‘or:.in the design and construction category. Mr. Skaling stated they wouldn't generally get to design. or.construction without a previous phase and presumed the entire 18 had a previous phase.:Mr. Posey suggested this data is important to get a higher score for the budget year consideration. Vice-Chairman Rose requested knowing what percentage of the projects are coming from a previous round. Mr. Skaling stated he.would provide that follow-up analysis. Vice Chairman Rose requested for future yearly Status Reports to include in Table 1 the number of projects completed to give a sense of relative progress. He requested Table 1 include total expenditures to get a sense of what the leverage of the state money has been. Mr. Skaling stated some of that information is at the bottom of Table 1, including cash distributed, match provided, and other known funding. Mr. Posey commented, for the benefit of the two new members, this has been deemed as the best program in the Unites States and the world of its type. Vice Chairman Rose stated Vermont Energy Investment Corporation did a process review and an impact review and offered to examine those with the new members. Renewable Energy Fund Advisory Committee Meeting Minutes Page 4 of 7 April 4, 2012 8. Suggested Changes for Round 7 Mr. Skaling gave a presentation on the suggested changes for Round 7 and provided a three-page list entitled Alaska Energy Authority Recommended Changes to Renewable Energy Fund Round 7 Request for Applications. Mr. Reeve commented the proposed information for recommended change #5 “Heat Cost of Energy” will be very valuable for the evaluation process. He asked Mr. Skaling to explain how the information will be collected. Mr. Skaling proposed that the..applicant provide the information through evidence of their most recent bills. Senator Fairclough requested Mr. Skaling take into consideration the state's contribution on power cost equalization (PCE) or subsidies when calculating the benefit and total cost. Mr. Skaling stated the list provided in the past is the residential rate before PCE is applied. Vice Chairman Rose commented there is no baseline information regarding the number of gallons of heating oil used per month because there ‘is:no requirement from vendors to provide this information. He commented any information gathered from the recommended change #5 would be helpful for baseline energy efficiency efforts. Senator Fairclough stated there is a consumer‘protection issue that-has been raised regarding the vendors supplying their price information and would.Jet their competition know their price. She has been told it creates an unfair business practice to mandate those numbers. Senator Hoffman stated the number of gallons used in a community should be available information. Mr. Posey supports getting the cost information directly from the applicant. Representative Edgmon requested factoring in the fuel cost savings of weatherization and home energy rebate programs. Mr. Posey asked to consider what the penetration has been on the weatherization and home energy rebate programs ‘in particular:communities. He stated we need to concentrate on heat conseryation. Vice-Chairman Rose believes it is important to have some information about a community's energy efficiency efforts on. the heating projects to help determine scoring on projects. Representative®.Millett stated not every community has a weatherization program and is concerned it would not be a: level playing field. She recommended amending the proposed change to ensure those communities are not negatively affected. Vice Chairman Rose stated if two exact projects are:.being compared on the scoring, it would be nice to know which communities have really made an effort toward energy efficiency. He suggested the efficiency requirement only applied if it was a public building that did have access to the public building retrofit fund. Mr. Reeve agreed with Representative Millett's comments because Kotzebue is on a two-year waiting list for an energy rater and it is difficult to get the service. Mr. Posey stated he had a rater in two weeks and suggested to be cognizant of the difference between urban and rural areas. Senator Hoffman commented it is important to get the information. He stated the use of the information is a separate issue. Renewable Energy Fund Advisory Committee Meeting Minutes Page 5 of 7 April 4, 2012 Ms. Fisher-Goad believes addressing the energy efficiency component is very important. She stated the process is a grant recommendation program. She suggested there be a special note or special consideration with respect to the recommendation given to the Legislature for applicants who are not meeting an efficiency standard. This will give an opportunity to address the efficiency issue at the same time the recommendation is being reviewed. Ms. Mitchell asked how AEA can help communities make decisions on heating solutions. Ms. Fisher-Goad stated AEA needs to know when issues arise because: technical assistance and expertise has been funded and is available to help with applications: The goal is to get the best applications possible and the best projects. Ms. Mitchell encouraged Kake to call AEA and hopes there is outreach. Ms. Plentovich stated AEA has met with the.Kake schools and have done a fair amount of outreach and they are still focusing on propane, but they are continuing to work on it. Mr. Hirsch stated there are some other details regarding:-LNG which are adding to the factors in the decision making in Kake, but did not want to get off subject. Vice Chairman Rose recommends AEA has* to consider how this grant program could disincentivize the use of the revolving loan program for energy retrofits through Alaska Housing Finance Corporation (AHFC). Mr. Skaling stated the AHFC program is for energy efficiency and that is reflected in the recommended change #8, “Efficiency Requirement”. Ms. Mitchell suggested giving more credit to a resolution of support from a body, like the local Tribe, native corporation or the city than from.an individual, Mr. Posey commented on the recommended change #13 “Matching Funds”. He stated some communities don't haye a basic credit system and. their only source of matching income is from federal and state support::He wants to ensure there is:no penalty for the size or location of the community. Mr. Skaling ‘stated the total amount of match would be excluded from the scoring. He believes it is. following the essence of Mr:Posey's comments. Mr. Reeve requested Mr. Skaling consider other ways to count matching that a small community could:utilize. Senator Hoffman requested Mr. Skaling promote recommended changes that would utilize the provision in the program that requires giving additional credence to those applicants who live in the highest energy areas of the state. Chairman Beltrami asked Mr. Skaling to explain what the requirements are for reporting data and what happens if projects aren't able to report data. Mr. Skaling stated the current requirement is that gross monthly data be gathered. He stated most projects are able to comply with this requirement, but there is an opportunity for more information to be gathered for continued learning. Chairman Beltrami asked Mr. Skaling if the numbers are understated because of any projects who are not reporting. Mr. Skaling stated there are three projects that have not reported and the reasons are included on the performance table in the Notes section. Renewable Energy Fund Advisory Committee Meeting Minutes Page 6 of 7 April 4, 2012 Representative Edgmon asked Mr. Skaling to explain the standard deviation of the current numbers regarding recommended change #9 “Data Collection”. Mr. Skaling stated the variable would be in the net generation reporting and would be within a range of a couple of points. Vice Chairman Rose fully supports revised change #9 and suggests requiring data reporting for even longer than five years. Mr. Skaling stated they could include data plans which would be included in the grants to state the data points and frequency of reporting. Senator Fairclough and Mr. Posey agreed the data reporting requirement should be longer than five years. Mr. Posey recommended a ten-year term. Vice Chairman Rose suggested the wording be amended from the recommended change #9 of "possibly offer 'black box' data" to a stronger wording providing more certainty of data collection with standard equipment. He asked about the possibility of having a budget in the grant proposal for data collection because it is an important upfront cost:.Senator Fairclough and Mr. Posey agreed funding could be budgeted for the cost of reporting. Ms. Mitchell agreed and stated it would have to be obvious in the grant application. Senator Fairclough asked Mr. Skaling to explain how ongoing:maintenance costs are considered in the grant application process. She also asked if the application process ensures there is the expertise available to make any repairs should they occur. Mr. Skaling stated the application requires ownership and maintenance throughout:the lifetime. Senator Fairclough asked if an applicant is required to contribute to a fund‘during the. build-out phase’so there are reserves to pay for the operating costs. Mr. Skaling stated.a utility is required to ensure proper operation in the future. Ms. Fisher-Goad stated there is no requirement for money to be set aside for the operation and maintenancé, but itis an Regulatory Commission of Alaska question regarding management capability:and the plan:to continue to.operate and maintain the project. She stated projects can receiveadditional technical assistance through AEA's traditional rural infrastructure programs. MOTION::: Mr. Posey moved to implement the suggested changes for Round 7. Seconded by Mr. Reeves.:The suggested changes were approved. Senator Fairclough suggested: funding, through some program, a person to go to different communities: in..a region to:help support particular types of projects. Vice Chairman Rose believes Seward: has a good program that could work in conjunction with Senator Fairclough's idea. Mr. Rose gave ideas regarding changes to the program. e The idea he suggested was to have a separate Request for Applications (RFA) for technology, including wind or biomass heating, with particular specifications required in the application. He believes this would push project innovation. e Mr. Rose stated he is in favor of looking at the feasibility studies separately from the design and construction projects. e He suggested the timing of the recommendations be given before the Governor's budget is released, which would require sending out the RFAs right after the legislative session ends. Renewable Energy Fund Advisory Committee Meeting Minutes Page 7 of 7 April 4, 2012 e Mr. Rose suggested considering heat recovery projects and renewable energy projects differently. e His last suggestion was to allow resource assessment for tidal, wave and river hydrokinetics to be funded out of the Renewable Energy Fund and then if there is a resource found under that money, the project can go back to the Emerging Energy Technology Fund (EETF) and apply to actually pilot the technology. He recommended the state have separate funds going to reconnaissance on renewable energy resources. Senator Hoffman stated the Governor negotiated an upper limit on=the programs. Senator Hoffman believes there is broad support in the Legislature for the.program, but does not know how to address an adequate level of funding for the programs. Mr: Posey believes the penetration of the programs should be 20% to 30%. He suggested discussing Mr. Rose's recommendations as an agenda item for the next meeting. He recommends having a joint meeting with EETF. Mr. Rose asked the Committee if it is acceptable to fund reconnaissance for a river hydrokinetic, tidal and wave power out of the Renewable Energy Fund. Mr. Posey does not. believe it is appropriate to do that now with the current amount ‘of funding available. He believes that is a long-term discussion. Mr. Rose believes the statute is clear-and stated the projects would still fall in the 80/20 rule where the program doesn't want to spend more than 20% in any year on reconnaissance and feasibility studies. He stated if there are good reconnaissance project applicants for a tidal or river hydrokinetic, then:they get funded."Mr..Rose believes there is a gap between the REFAC and EETF programs regarding ‘reconnaissance and feasibility study funding for river hydrokinetic and tidal power. Mr.:Posey. suggested that be a topic during the joint meeting. Mr. Skaling suggested the joint meeting happen before July 1st. 9. Next Meeting Date The next meeting was suggested to be:scheduled for the latter part of May 2013. Mr. Skaling will contact members:regarding the final date. 10. Adjournment The meeting:was adjourned at 1:21 p.m.