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HomeMy WebLinkAboutHFIN18 SB 106 PCE Legislation 1993DIVISION OF LEGAL SERVICES L E G I S L A T I V E A F F A I R S A G E N C Y S T A T E O F A L A S K A (907) 465-3867 or 465-2450FAX (907) 465-2029 130 Seward Street, Suite 409 Mail Stop 3101 Juneau, Alaska 99801-2105 M EM ORANDUM May 8, 1993 SUBJECT:Sectional Summary of HCS CSSB 106 (FIN) (Power projects and interties, relating to the Alaska Energy Authority, AIDEA bonds for energy resource projects) TO: FROM: Representative Ramona Barnes Speaker of the House of Representatives Teresa B. Cram ero^^^" Legislative Counsel You have requested a sectional summary of the above-described bill. As a preliminary matter, note that a sectional summary of a bill is not considered an authoritative interpretation of the bill. The bill itself is the best statement of its contents. Section 1 makes legislative findings and expresses the legislative intent. Sec. 2 identifies additional uses for which money in the Railbelt energy fund may be ap, ropriated. Sec. 3 changes, in a statute concerning the Alaska Public Utilities Commission (APUC), an internal reference to the power cost equalization program to reflect changes made by this bill. Sec. 4 requires the APUC, when setting or reviewing rates for a public utility that sends or receives power over the Fairbarks-Healy or the Anchorage-Kenai intertie, to consider certain costs as costs incurred for the existing system. Sec. 5 enacts a new chapter, giving the Department of Community and Regional Affairs responsibility for programs and projects now within the jurisdiction of the Alaska Energy Authority. Sec. 42.45.010 establishes the power project fund in the department. This section is similar to existing AS 44.83.170. The department may make loans from the fund to the entities listed in (b)(1) for the purposes listed in (b)(1)(A) and (b)(1)(B). Under subsection (f)(2)(B), the department may make zero interest loans. Representative Ramona Barnes Mav 8, 1993 Page 2 Sec. 42.45.020 estah'ishes the rural electrification revolving loan fund in the department. The fund may be used for extending new electric service. This section is taken from AS 44.83.361. Sec. 42.45.030 establishes a load advisory committee for loans from the rural electrification revolving loan fund. This section is taken from AS 44.83.363. Sec. 42.45.040 establishes the Southeast energy fund (SEF) consisting of money transferred to it from the four dam pool transfer fund, created in the next section. The department may use the SEF for grants to utilities participating in the Swan Lake-Tyee Lake intertie. This is a new section. Sec. 42.45.050 establishes the four dam pool transfer fund, which consists of repayments of principal and income from the power development revolving loan fund. Subsection (b) sets out how money in the fund is to be transferred to other departmental funds. This is a new section. Sec. 42.45.060 establishes a loan committee composed of commissioners, the director of management and budget, and four public members to review loans, other than loans from the bulk fuel revolving loan fund. Subsections (f) and (g) set out the committee powers and responsibilities with respect to loans. This is a new section. Sec. 42.45.100 - 42.45.150 establish the power cost equalization program in the department. These sections are similar to existing AS 44.83.162 - 44.83.164, with some restructuring of the statutes and some changes. Sec. 42.45.100 establishes the power cost equalization and rural electric capitalization fund to provide power cost equalization and to make grants to eligible utilities. It is taken partly from AS 44.83.162(a). Sec. 42.45.110 addresses entitlement to power cost equalization and is taken from AS 44.83.162(b) - (j). Note that in subsection (c), minimum power costs of more than 9.5 cents per kilowatt-hour qualify. In subsection (d), state and federal offices and facilities other than schools are not entitled to receive power cost equalization. Sec. 42.45.120 sets out the notice that an electric utility receiving power cost equalization must give its customers. It is taken from AS 44.83.162(k). Sec. 42.45.130 requires utilities to make an effort to minimize costs. It is taken from AS 44.83.162(1). Sec. 42.45.140 permits customers to petition for inclusion in the power cost equalization program. It is taken from AS 44.83.162(m). Sec. 42.45.150 sets out definitions for Secs. 42.45.110 - 42.45.150, taken from AS 44.83.162(p). Sec. 42.45.160 permits the Alaska Public Utilities Commission to adjust the power cost equalization per kilowatt-hour payable to an electric utility. It is taken from AS 44.83.163. Sec. 42.45.170 permits electric utilities exempt from regulation by the APUC to participate in the power cost equalization program. It is taken from AS 44.83.164. Sec. 42.45.180 permits the Department of Community and Regional Affairs to make grants from the power cost equalization and rural electric capitalization fund to utilities receiving power cost equalization for small power projects that will reduce the costs of the utility. This is a new section. Sec. 42.45.190 is a definition section for AS 42.45.100 - 42.45.190. Sec. 42.45.200 establishes the electrical service extension fund in the department. It is taken from AS 44.83.370. Sec. 42.45.250 establishes the bulk fuel revolving loan fund in the department. It is taken from AS 44.83.600 - 44.83.650. The amount for which a loan may be made is increased from $50,000 to $100,000. Sec. 42.45.300 permits two or more public utilities to form a joint action agency for participating in a power project and to secure financing for the project. A joint action agency may request the Alaska Industrial Development and Export Authority (AIDEA) to issue revenue bonds. This is a new section. Sec. 42.45.400 directs the department to provide rural utilities with technical assistance as set out in the section. This is a new section. Sec. 42.45.410 directs the department to delegate as much as possible to the private sector. This is a new section. Sec. 42.45.990 sets out definitions for the chapter and is taken, in part, from AS 44.83.990. Sec. 6 amends the powers of the Department of Community and Regional Affairs to include the powers and duties assigned under AS 42.45, enacted by sec. 5 of the bill. Sec. 7 changes the membership of the Alaska Energy Authority (AEA) to be the members of the Alaska Industrial Development and Export Authority (AIDEA). Sec. 8 directs that the chair an J vice-chair of AIDEA serve as officers of AEA. Secs. 9, 10, and 14 restrict the powers of AEA, removing authority for acquiring or constructing power projects. Many of the statutes affecting the AEA are repealed in sec. of the bill. Secs. 11 - 13, and 15 - 22 make technical changes to reflect the reduced scope of operation of the AEA. Sec. 23 includes capital reserve funds that secure bonds for power transmission interties in the definition of "capital reserve fund" for that subsection. Sec. 24 permits AIDEA to issue bonds for power transmission interties in amounts greater than AIDEA otherwise could issue and for a longer period of time. Sec. 25 permits AIDEA to waive or modify requirements of the enterprise development account to finance a power transmission intertie project. Representative Ramona Barnes May 8, 1993 Page 3 Sec. 26 amends the definition of "project" in the chapter pertaining to AIDEA to include plants and facilities for the generation, transmission, development, transporta­ tion, conversion, or use of energy resources. Sec. 27 repeals statutes relating to the Alaska Energy Authority board of directors and employees. Sec. 28 repeals a number of provisions relating to AEA, to reflect the transfer of programs to the Department of Community and Regional Affairs and the elimination of the ability of AEA to acquire or construct power projects. Sec. 29 gives legislative authorization to AIDEA to issue bonds, not exceeding $60,000,000, for a power transmission intertie between Healy and Fairbanks to be owned, for the benefit of all of the utilities participating in the intertie, by Golden Valley Electric Association. Sec. 30 gives legislative authorization to AIDEA to issue bonds, not exceeding $60,000,000, for a power transmission intertie between Anchorage and the Kenai Peninsula to be owned, for the benefit of all of the utilities participating in the intertie, by Chugach Electric Association, Inc. Sec. 31 gives legislative authorization to AIDEA to issue bonds, not exceeding $40,000,000, for a power transmission intertie between the Swan Lake and Tyee Lake hydroelectric projects and owned, for the benefit of all of the utilities participating in the intertie, by Ketchikan Public Utilities. Sec. 32 gives legislative authorization to AIDEA to issue bonds, not exceeding $25,000,000, for a power transmission intertie between Sutton and Glennallen and owned, for the benefit of all of the utilities participating in the intertie, by Copper Valley Electric Association. Sec. 33 states that the repeal of the Alaska Energy Authority statutes does not affect existing bonds or actions that have been taken under the repealed statutes. Sec. 34 transfers the proceedings, activities, and property of the Alaska Energy Authority to the Department of Community and Regional Affairs to the extent that the project or program has been transferred to the department by the bill. Sec. 35 adijressii - transfer of employees from the AEA to DCRA Sec. 36 sets out the initial terms of the loan committee, established in Sec. 42.45.060. Sec. 37 directs the AEA to enter into contracts with private sector entities to the maximum extent possible. Representative Ramona Barnes May 8, 1993 Page 4 Sec. 38 directs that various agencies of state government work together to ensure an orderly transfer of functions as required under the bill. Sec. 39 is a severability clause for the bill. Representative Ramona Barnes May 8, 1993 Page 5 TC:pl 93-359.plm OTHER RECOMMENDATIONS CHAIRMAN'S SIGNATUR, SIGNING DO PASS DNP g P , HOUSE COMMITTEE REPORT (ID Date Referred: May 7, 1993 FURTHER REFERRALS: Date of Committee Action: \^~\ ez^ \ c\'^ ) The FINANCE Committee considered: CSSB 106(FLN) amfefd fid-) CSSB 106(FIN) AM(EFD FLD) AUTHORIZING POWER TRANSMISSION INTERTIES "An Act transferring certain projects of and amending and transferring programs of the Alaska Energy Authority to the Department of Community and Regional Affairs; relating to the Alaska Energy Authority; permitting the TITLE CONTINUED ON PAGE 2 RECOMMENDATIONS: . . s . I 1 the same title be replaced with t~\ CLtZ) lOCo \ O j __1^ a new title [ ] have attached amendments(s) [ ] do pass [ ] do not pass §<*"no recommendations [ ] individual recommendations [ ] additional referral to the ___________________________________Committee ADOPTS:__________________________letter of Intent ATTACHES NEW FISCAL NOTE(s): (Dcpl) r „ fiscal impact _______________________ ^ 3 zero fiscal note ; C. feD { APPROVES PREVIOUS: [ ] fiscal note(s)____________________ I ] zero fiscal note(s) STATE OF ALASKA F I ^ P A I N H T F BILL NO CSSB 1993 LEGISLATIVE SESSION H O V /H L IMUIt 106(FIN)ant Revision Date: _________________________________________Dept. Affected: Community & Regional Affairs f Pf r| fid Title: An Act tra n s fe rrin g c e rta in p ro je c ts BRU: _____________________________________ From the A laska Energy A u th ority to DCRA _________Component: _____________________________________ s P°nsor: S enator Sharp ___________________________________________________________________________ Requestor: House Finance _____________________COMPONENT SERIAL NO. __________ Expenditures/Revenues:______________________ (Thousands of Dollars) OPERATING FY 94 FY 95 FY 96 FY 97 FY 90 FY 99 PERSONAL SERVICES TRAVEL CONTRACTUAL SUPPLIES EQUIPMENT LAND & STRUCTURES GRANTS, CLAIMS MISCELLANEOUS TOTAL OPERATING 0.0 0.0 0.0 0.0 0.0 0.0 CAPITAL REVENUE FUND SOURCE: FUNDING:(Thousands of Dollars) 1002 Federal Receipts 1003 GF Match 1004 GF 1005 GF/Program Receipts 1006 GF/MHTIA Other TOTAL 0.0 0.0 0.0 0.0 0.0 0.0 POSITIONS: FULL-TIME 0 0 0 0 0 0 PART-TIME TEMPORARY Estimate of currant (FY93) impact $ none ANALYSIS: (Attach a r.aparata page If nacassan ^ A zero fis c a l note is presented assum ing the balances o f a p p ro p ria tio n s and o b lig a ­ tio n s rem aining in AEA's ru ra l program fu n ction s and AEA's bwned assets a t the tim e o f tra n s fe r are tra n s fe rre d to the Departm ent o f Community $ R egional A ffa irs . The a c tu a l co st to DCRA o f running AEA program s as re stru c tu re d by th is b i ll w ill be determ ined in the in te rim . *n ote: assumes the tra n s fe r o f AEA's " ru ra l owned a sse ts" on ly not o ti.e r AEA owned ass ?ts, Prepared by: (rf*7Yl& 7uP Phone: 465-4708 Division: Administrative Services Date: S'/s/<7 ? Approved by Commissioner: C2__^^^Date: - *7 < , Agency: Community & Regional Affairs PREPARER TO PROVIDE ALL DISTRIBUTION COPIES TO GOVERNOR S LEGISLATIVE OFFICE For further distribution information call the Governor's Legislative Office Page 1 of 1 FISCAL NOTE STATE OF ALASKA 1993 LEGISLATIVE SESSION BILL NO. HCSCSSB106 (FIN) 5 /8 /9 3 An A c t T r a n s fe r r in g C e rta in "Revision Oate: Title: ____________________________________________________ programs rtf fliP.-A-l a lira F.nprg.y Alifhnri fy Sponsor: S h a rp ______________________________________ R«qu*stor: H ouse F in a n c e Co m m itte e ______ Expandituras/Ravanuaa: Dept.Affected: C om m erce& E conom ic D e v e lo p 'r r U: A la s k a E n e rg y A u c h o r i c y Component: U p e ra tio n c - COMPONENT SERIAL NO. (rhousands of Oolfors) 1 2 3 2 OPERATING FY94 FY35 FY96 FY97 FY98 FY99 PERSONAL SERVICES TRAVEL CONTRACTUAL SUPPLIES EQUIPMENT LAND & STRUCTURES GRANTS, CLAIMS MISCELLANEOUS TOTAL OPERATING 0 0 0 0 0 0 CAPITAL REVENUE FUND SOURCE: FUNDING:(Thousands of Oottorsl 1002 Federal Receipts 1003 GF Mitch 1004 GF 1005 GF/Progrsm Receipts 1006 GF/MHTIA Other TOTAL 0 TJ " 0 u (J b POSITIONS: FULLTIME PART-TIME TEMPORARY Estimate of cerraot year (FYI3I Oi vision:A d m in is ^ .ra tiv a ,(Approvodby Commissionor: Paul Fuhs Agency: _—Conmax .e & Ec.gnomi c \DpvelnpmeaJ:. - y -»r\n om i r \ Dote 5 /8 /9 3 OotK S ( R e v 1 1 1 8 2 ) 9 3 4 m u W D M P R E P A R E R T O P R O V I D E A L L D I S T R I B U T I O N C O P I E S T O G O V E R N O R ? L E G I S L A T I V E O F H C i F o r f u r t h e r d i s t r i b u t i o n i n f o r m a t i o n c a d t h o G o v e r n o r ' s L o g i a l a t i v e O f f i c e Page 1 o f 2 This bill would transfer certain functions of the Alaska Energy Authority (AEA) to the Alaska Industrial Development and Export Authority (AIDEA). The anticipated total operating costs of the projects and functions of the AEA are included in the FY 94 operating budget. All monetary costs to AIDEA that are associated with this transfer will follow the transfer of the functions from the AEA. When the AEA's functions are split up and transferred, so wi.ll the corresponding appropriations. Section 6 of SB 126 makes an appropriation in the amount of $3,900.0 to the Department of Community and Regional Affairs for operating costs for carrying out its powers and duties under AS 42.45 and AS 44.47.050(19) and (20). A portion of this appropriation will likely be required for transition expenses. HCS CS SB106 (FIN) F iscal Note A nalysis Page 2 of 2 FISCAL NOTE STATE OF ALASKA 1993 LEGISLATIVE SESSION BILL NO. HCSCSSB106(FIN) 5 /7 /9 3 _______________ An A c t T r a n s fe r r in g c e r t a inRevision Date:Title: prngrams nf t~hp Alaska F.rtPrgy Anfhnr-i fy Sponsor S e n a to r S h a rp ___________________________ Requestor: H ouse F in a n c e C o m m itte e __________ □•pt.Affected: C om m erce& E conom ic D e v . BRU: A IDEA Component Opp-raM nnfi ExpenditurM/RevenuM COMPONENT SERIAL NO. (Thousands of Dollars) 1 23 4 OPERATING FY94 FY95 FY96 FY97 FY98 FY99 PERSONAL SERVICES TRAVEL CONTRACTUAL SUPPLIES EQUIPMENT LAND & STRUCTURES GRANTS. CLAIMS MISCELLANEOUS TOTAL OPERATING 0 0 0 0 U T3 ' CAPITAL REVENUE FUND SOURCE: FUNDING:(Thousands of Dollars) 1002 Federal Receipts 1003 GF Match 1004 GF 1005 GF/Program Receipts 1006 GF/MHTIA Other TOTAL U U u u u 0 POSITIONS: FULLTIME PART-TIMETEMPORARY Estimate of carnal year (FYS3) ANALYSIS:(Attach ■ asperate page if necessary) S ee A tta c h e d A n a ly s is . Prepared by: Division: | R w l 1 1 9 2 ) O t f i e e i j W D I R G uy B e ll 4 6 5 -2 5 0 6 Approved by Commissioner Agency: ___ A d m in is tr a t iv e . S e rv ic e s . P a u l F u h s / O \ < r.QTnmp-rop R F.rnnAmin T)Pi7f> 1 npmpn t- Datac Date: 5/8/93 P R E P A R E R T O P R O V I D E A L L O I S T R I N U T I O N C O P I E S T O G O V E R N O R ' S L E G I S L A T I V E O F F I C E F o r f u r t h e r d i s t r i b u t i o n i n f o r m a t i o n c a d t h e G o v e r n o r ' s L e g i a i a t i v e O f f i c e P a g e 1 o f 2 HCS CS SB106 (FIN) Fiscal Note Analysis This bil.c changes the membership of the Board of the Alaska Energy Authority. The same members of the Board of Directors of the Alska Industrial Development and Export Authority (AIDEA) become the board members of the AEA. The anticipated total operating costs of the projects and functions of the AEA are included in the FY 94 operating budget. All funding associated with the scaled down AEA will remain with the AEA. Page 2 of 2 " * feNT 3Y- * \ State of Alaska Waller J. nickel. Governor > * » A l a s k a E n e r g y A u t h o r i t y A Public CorporationMay 7,1993 The Honorable Eileen MacLean, Co-Chair House Finance Committee Capitol, Room 507 Juneau, Alaska 99801-1182 Subject: CSSB 106 and 126 Dear Representative MacLean: In reply to your inquiry, following is our understanding of the impact of CSSB 106 and 126 (as passed again by the Senate this date) on the expected availability of Power Development Revolving Loan Fund revenues for Power Cost Equalization, rural capital projects, and the newly created Southeast Energy Fund: 1. CSSB 106 allocates 30% of "PDRLF1 revenues to a "Power Cost Equalization and Rural Electric Capitalization Fund," another 30% to the Power Project Fund to be used as loans for statewide utility projects, and 40% to the "Southeast Energy Fund." 2. Our projections assume that PDRLF revenues in FY 1994 will be about $10.4 million, increasing gradually to about S12.0 million in FY 2002. The bill would therefore allocate the following amounts in FY 1994: a. $3.1 million for "PCE/Rural Cap" Fund. b. $3.1 million for Power Project Fund loans. c. $4.2 million for "Southeast Energy Fund." 3. Section 8 of CSSB 126 appropriates a $66.9 million beginning balance in "PCE/Rural Cap" Fund. CSSB 106 provides that up to 3% of the balance in the fund can be allocated for rural project grants in any one year. As shown in the attached spreadsheet (Case P3), this suggests that funds would be available to fully fund PCE for perhapc 4 to 5 years, after which the only funds available would be the continuing 30% allocation from TDRLF” (i.e. Four Dam Pool) revenues. Similarly, 3% of the ' PCE/Rural Cap" Fund balance for rural project grants begins at about $1.8 million, but declines to less than $100,000 after 5 years. 4. The 30% allocation for Power Project Fund loans may provide some additional support for rural utility projects, though we cannot project the rural/urban allocation that would ultimately occur. RG. 9cx 190869 701 East Tudor Read Ancbcraga Alcskc 99519-0869 (907)561-7877 Fax: (907) 561-858A The Honorable Eileen'MacLean May 7,1993 Page 2 5. The 40% allocation for the "Southeast Energy Fund" supplements the $20 million, 15-year, 3 percent loan provided for the Tyee-Swan intertie in CSSB 126. This annual allocation appears to be enough to pay the debt service on revenue bonds that would be issued for the remainder of Tyee-Swan project costs. For example, the annual debt service on $40 million issued for 30 years at 7% would be about $3.2 million, which is less then the $4.2 million allocated in the initial year to the Southeast Energy Fund. Three major differences between the earlier versions of CSSB 106 and 126 passed bythe Senate in April vs. the versions passed out today are: 1. The earlier version provided an estimated 20 years of PCE funding at the $17million level as well as 20 years of funding for rural technical assistance. In' today's version, full funding for PCE is provided for only 4 to 5 years along with very limited funding for rural capital projects. 2. State financial support was allocated to the four major interties in roughlyeven proportions in the earlier version. In today's version, State support is much more favorable for the Tyee-Swan interne than for the other three, assuming the Southeast Energy Fund is used primarily for payment of Tyee- Swan intertie costs. The allocation of 40% of PDRLF reve. res to the Southeast Energy Fund accounts for the additional State support for Tyee-Swan. 3. In today's version the Alaska Energy Authority is eliminated. There may be transitional issues that are not adequately addressed. For example, we are advised by our bond counsel and financial advisor that AIDEA statutes will require amendment in order to provide comparable financing capability. Without such amendment, revenue bond financing for projects such as interties may be more costly. Please contact me if we can provide additional information. Sincerely, G ? o rii* y£K<, Ronald A. GarzmiExecutive Director Attachment A LA SK A E N E R G Y A U TH O R ITY (All Dollars in Thousands) pago I o( I 8-Msy-93 6/30/93 1094 1995 Revenue PGE/RE F u n d Investment Income Debt Service from 4-Dam Pool 30% of 4DP Debt Service Total E x p e n d i t u r e P C E Outlay Rural Electric Grants (3% of baianc-e) Total S u r p lu s (S h o r ta g e ) PCE and Rural Electric Fund teo6 1997 1998 1999 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 $ 6 6 , 9 0 0 $ 5 5 , 5 8 1 $ 4 3 , 0 6 5 $ 2 9 , 2 5 6 $ 1 4 , 0 6 0 $ 3 , 7 3 0 $ 3 , 5 5 7 $ 3 , 6 0 8 $ 3 , 6 5 9 $ 3 , 6 9 9 $ 3 , 7 1 7 4.314 '3.450 2.496 1.445 519 138 131 I33 135 r13710.396 10.667 10.909 11,156 11.406 11,584 11.768 11,932 12.064 12.1 D13.118 3.200 3,273 3.347 3,422 3.475 3330 3660 3.619 3.6367.433 6.650 5,788 4.791 3.941 3.613 3.661 3.713 3.754 3.773 $17,000 $17,765 $18,584 $18,400 $14,060 $3,730 $3,557 $3,608 * $3,659 $3,6991.752 1,401 1.013 687 2 1 1 56 S3 54 55 5518.762 19,166 19.578 19.968 14,271 3,786 3.610 3.662 3.714 3,755($11,318) ($12,516) ($13.610) ($15,196)($10,330)$ 51 $ 51 $ 41 $ IB P C E / R E F u n d B e g i n n i n g B a l a n c e A s s u m p t i o n s • R a i l b e f t E n e r g y F u n d $ 0 A n n u a l I n f l a t i o n R a t e 4 . 5 % R a i l b e l t I n t e r t i e R e s e r v e F u n d 0 R e t u r n o n F u n d 7 . 5 % o f f u n d b a l a n c e r- I n l e r e s t o n R b l t I n t e r t i e R e s e r v e 0 B r a d l a y S t a t e F u n d S u r p l u s A d d i t i o n a l S t a l e C o n t r i b u t i o n 0 6 6 , 9 0 0 T o t a l $ 6 6 , 9 0 0 •4 1993ENERGY PROGRAM FOR ALASKA AEA to become subsidiary corporation of AIDEA All AEA bonds, bond related assets, and unobligated assets will transfer with AEA, AEA will maintain a separate accounting system to protect the AEA and AIDEA bond holders. AEA to arrange for contracting operation and maintenance of Bradley Lake to utilities prior to December 31, 1993. AIDEA to have authority to issue bonds for utility projects. Joint Action Agencies authorized and given same authority as that of utilities. Rural programs and functions of tbe AEA to be transferred to the Department of Community and Regional Affairs with emphasis on contracting with the private sector. Provides grants to Chugach Electric and Golden Valley Electric for Northern and Southern interties for the benefit of all participating utilities. AIDEA given authority to bond for amounts necessary over the grant amount. Provisions in bill for assured access to interties. Cost to be distributed proportionate to peak demand. Provides loans to Ketchikan Public Utility and Copper Valley Utility for Swan-Tyee Intertie and Sutton-Glenallen intertie. Swan-Tyee loan to be 15 years at 3% interest. Sutton-Glenallen to be 50 years at 0% interest. Repayment of these loans goes into the Railbelt Energy Fund and becomes available for appropriation future Railbelt energy projects. Provide authorization for AIDEA to issue bonds for amounts needed over the loan amounts. Appropriates $5,000,000 grant for Taszimina Hydro project. Appropriates $3,000,000 loan for City of Seward for completion of Seward-Lawing Substation intertie. Establishes the Power Cost Equalization and Rural Capitalization Fund to fund PCE and to fund rural energy upgrades to reduce power cost in the rural areas of the state to equal those of urban Alaska. Fund to be capitalized with a portion of the accrued but unappropriated interest on the Railbelt Energy Fund. Annual PCE to be appropriated from this fund beginning FY 95. Funding source for grants to rural communities for small energy projects to reduce the cost of power in these rural areas so as to more closely equal the cost of energy in urban Alaska and eliminate the need for PCE. Distributes the revenue stream from the 4-Dam Pool to all areas of the state for energy projects. 30% of 4-Dam pool revenues to the Power Project Fund for loans statewide for energy projects. 30% of 4-Dam pool revenues to the PCE/REC Fund. 40% of 4-Dam pool revenues to SE for 4-Dam pool reserves and SE energy projects. Alaska Environmental Lobby, Inc. I’.O. Box 22151 Juneau, Alask.i 00802 Phone: 907-403-3:506 Fax: «)07-4f>:i-:m2 POSITION PAPER POWER TRANSMISSION INTERTIES T h e A lask a E nvironm ental L obby opposes H B 50/51 and SB 106/126 w hich authorize an d appropriate funds to build p o w er transm ission interties. T h e interties w ou ld connect Fairbanks-H ealy, A nchorage- K enai, S w an Lake- T y ee L ake an d Sutton-G lennallen. T he p ro po sed interties are a costly and inefficient m eans o f supplying pow er. M ore eco n om ical and en viro n m en tally sensible alternatives exist. P rogressiv energy policies recognize that en erg y conservation is the ch eap est an d m o st cost effective w ay to increase the am ount o f p o w er av ailab le for other uses. B y low ering the "dem and," that is, b y reducing the am o u n t o f en erg y consum ed, the need for generating additional p o w er is elim inated. F or exam ple, an A laska E nergy A uthority study fo u n d eight specific conservation m easures to be m ore cost effective in prod u cin g additional available energy than the construction o f interties. T h es m easu res included converting from incandescent to fluorescent light bulbs an d co n v ertin g to m ore efficient h ot w ater heaters, dryers, refrigerato rs and dryers. G o lden V alley Electri A ssociation also evaluated "d em an d side" investm ents and concluded: "C onservation appears to be the least-cost reso u rce availab le to G V E A ." A E L b eliev es that the m ost effective w ay to provide for A laska's future en erg y need s w ould be to require utilities to im plem ent an integrated reso urce (or "least-cost") planning process. T his process requires utilities to ex am in e both d em and side as w ell as supply side options to d eterm in e the m ost cost effective m eans o f providing pow er. A ll but a handful o f states n o w use this process. It is a progressive step tow ards an eco n o m ically and en v iro n m en tally sustainable en ergy policy. T h e A lask a E nvironm ental L obby urges legislators to require utilities to im p lem en t least-cost planning, to appropriate funds for conservation projects, and to reconsider the proposed interties. T he increased d em an d for p o w er in those com m unities m ay w ell be solved m ore ch eap ly and b eneficially w ith effective conservation m easures. 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