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HomeMy WebLinkAboutAEA-REFAC_Meeting_Minutes_15NOV2012 DRAFT tw edits 12-31-12Draft Renewable Energy Fund Advisory Committee Meeting Minutes November 15, 2012, 10:00 am Alaska Energy Authority Board Room 813 W. Northern Lights Blvd, Anchorage, Alaska 1. Call to Order The Renewable Energy Fund Advisory Committee (REFAC) convened at 10:05 a.m., with Chairman Vince Beltrami presiding. 2. Roll Call Committee Members Chairman Vince Beltrami; Chris Rose; Brad Reeve; Representative Bill Thomas (phone); Senator Bert Stedman. AEA Staff Sean Skaling; Shawn Calfa; Alan Baldivieso; Doug Ott; Josh Craft; Emily Binnian; Karin St. Clair; Chris Gobah ;Jed Drolet ;Nick Szymoniak ;Audrey Alstrom; Deborah Vo; Rich Stromberg; Helen Traylor; May Clark ;Teri Webster; Yolanda Inga Other Participants in person Julie Estey, Alaska Center for Power and Energy (ACEP); Wyn Menefee (Department of Natural Resources); Donovan Walker, Accu-Type Depositions. Other Participants via phone Chris Badger and David Hill, Vermont Energy Investment Corp (VEIC); Representative Paul Seaton; Louie Flora, Representative Seaton's Office; Pat Walker and Sandy Burd, Senator Hoffman's Office. 3. Public Comments No public comments were made. 4. Agenda Comments No comments on the agenda were made. The agenda is approved as presented. 5. Approval of meeting minutes - May 9, 2012 and June 14, 2012 MOTION: Mr. Rose moved to approve the meeting minutes from May 9, 2012, Renewable Energy Fund Advisory Committee meeting. Seconded by Mr. Reeve. The minutes were unanimously approved. MOTION: Mr. Rose moved to approve the meeting minutes from June 14, 2012, Renewable Energy Fund Advisory Committee meeting. Seconded by Mr. Reeve. The minutes were unanimously approved. 6. Impact Evaluation Report, Vermont Energy Investment Corp. Renewable Energy Fund Advisory Committee Meeting Minutes Page 2 of 5 November 15, 2012 Mr. Skaling stated AEA retained the services of Vermont Energy Investment Corporation to evaluate the Renewable Energy Fund through the process evaluation and the impact evaluation report. Mr. Hill and Mr. Badger, from Vermont Energy Investment Corporation, gave a PowerPoint presentation. Mr. Rose requested the leverage number be included in either of the tables on pages seven or 11 in the executive summary. Mr. Rose asked Mr. Badger to give an example of how the PCE program would pay less to a community after the community installs a renewable energy project under the program. Mr. Badger said in order to understand the PCE payments to the community, that they are really looking at the cost of the diesel in order to generate the electricity that would go to the residential or community facilities. He gave the example of a renewable energy project that is generating electricity and offsetting the use of diesel, that is reducing the cost of the electricity within that community and because of that, it will reduce the percentage that the PCE program needs to offset in order to bring their annual rate down. Mr. Rose asked Mr. Hill if the projected return on investment ratio is expected to increase. Mr. Hill stated it is designed to improve over time and there is a potential for significant long-term benefits. Mr. Badger noted there is a wide disparity of performance across the different renewable energy sectors. Mr. Rose asked if EIA projections for oil prices are being used in their cost and benefit analysis. Mr. Badger stated the EIA projections are being used, as well as local data by community. Senator Stedman asked Mr. Hill for a clarification of how oil is valued in the analysis and what discount factors are being used. Mr. Hill said the values used in the cost/benefit analysis are consistent with the values ISER and AEA uses for the project evaluation. He said they are not using any discount factors for this study. Mr. Hill stated the future escalation rate is driven off the EIA projects, but ISER also provides significant data on a community specific energy cost information. Senator Stedman asked what discount value are they using in the net present value calculation. Mr. Badger stated a discount rate of 3% is used in the total resource cost and the participant tests. Mr. Skaling requested Mr. Szymoniak, AEA economist, address the question. Mr. Szymoniak confirmed the discount rate of 3% is used in the ISER analysis as well. He stated the oil price forecast is different for each community, but it is driven off of crude oil prices by the EIA. He said it starts at about $110 in 2014/2015 and escalates a couple of dollars a year. Mr. Rose recommended AEA continue tracking and reporting the levelized costs. He suggested combining all the different recommendations throughout the report into one place. This could be an appendix to the report. Mr. Reeve agreed there needs to be a section in the report that summarizes all of the recommendations. Senator Stedman asked Mr. Badger if the net present value factors are related back to the village customer's actual bill they receive. Mr. Badger stated it is a different case for each community, but it is offsetting the cost of diesel or thermal generation within the community. He said the savings are reflected in different ways as the electricity is offset. Mr. Hill stated there is a participant test at the community level and for the residents who are eligible for PCE support may not see that much of a change in their annual energy bill as a result of the project. The Renewable Energy Fund Advisory Committee Meeting Minutes Page 3 of 5 November 15, 2012 project will potentially reduce the PCE payments to a particular community and will add significant savings benefits for those community members who are not eligible for the PCE rates. Mr. Rose suggested Mr. Hill and Mr. Badger graphically represent the difference between stabilizing costs and lowering costs. Mr. Rose stated the intent is to keep costs from going up by displacing the amount of diesel being used, which is subject to volatile market prices. He said it could be useful to show how those stabilized prices benefit the community. Mr. Rose suggested another graphic that breaks down the 5.1 million dollars in reduced PCE payments and shows which communities have been impacted. Mr. Rose asked if there were any particular concerns or recommendations regarding the number of grant agreements that have not been reached. Mr. Badger stated that was addressed in the process evaluation. He said Mr. Skaling could talk about their efforts with these issues. Mr. Rose also asked if it was worth comparing the leverage in the program with other programs around the country. Mr. Badger said he could look at the data and see if there are any other examples of studies that have focussed on the amount of leverage funds within their program. Mr. Hill stated many renewable markets are seeing the ability to move the market with roughly 25% of the installed cost. He said it is possible for states to put a dollar on the table and to be leveraging roughly 3/4 of the installed cost. Mr. Hill believes the incentives required in the form of state funds might be somewhat reduced as the market becomes more sophisticated, grows and is shown to be operational and cost effective. Mr. Reeve asked for clarification regarding the levelized cost of energy and how it doesn't capture the relative scale of benefits and costs associated with each project. Mr. Badger said a levelized cost of energy doesn't identify whether the data is from a very small-scale project or a larger utility-scale project. He stated the reason to look at present value costs and benefits is that it shows an overall scale of what the economic savings and costs are for the state. Mr. Badger stated if an evaluation was performed strictly based on comparing levelized costs of energy, the total net benefits would not be 500-million-dollars. The cost comparison would be between a small wind turbine, a medium-scale wind turbine and a large wind turbine. He said that further context is needed to help give a sense of the overall impacts to the state economy. Mr. Badger stated the levelized cost of energy is a helpful metric and has value, but it doesn't give the magnitude effect of the associated total net benefits and costs. Representative Thomas asked if the study was done before the Governor signed the current 10- year renewal bill. Mr. Badger said it was completed before the recent renewal bill and that needs to be reflected in a footnote or other appropriate place in the report. 7. RE Fund Round 6 Update Mr. Skaling stated evaluations are currently ongoing and gave an update on that process. Chairman Beltrami asked how many projects have been disqualified. Mr. Skaling said two were ineligible and therefore disqualified. Senator Stedman asked Mr. Skaling if the low scoring of geothermal in this analysis will be taken into consideration during the evaluation. Mr. Skaling stated the economic evaluation levels the playing field for everyone. Renewable Energy Fund Advisory Committee Meeting Minutes Page 4 of 5 November 15, 2012 Mr. Rose asked what kinds of assessments will be made to the operational projects since they have been performing less than expected. Mr. Skaling stated adjustments have already been made to the economic model to account for some of that. Mr. Reeve asked Mr. Skaling to explain the methodology used to address economic variables in the evaluation process. Mr. Skaling stated the review consists of taking the information the applicant provides and combining it with additional current information from AEA. Mr. Rose asked Mr. Skaling if regional planning is going to impact how competing projects within a community are viewed. Mr. Skaling stated there is an area of scoring in the process guidelines that relates to the Alaska energy plan. He recommends changing that language to the current regional energy plan. Mr. Skaling said there is at least one community that is addressing this issue currently. Chairman Beltrami asked for more specifics regarding the Stetson Creek Diversion project as it relates to the existing main hydro projects. Mr. Ott, hydro program manager for AEA, stated the Stetson Creek project came about during a settlement agreement that was reached in conjunction with the relicensing of Cooper Lake. This was a condition to Chugach Electric's license renewal with FERC. Mr. Rose asked Mr. Ott to explain the goals of the project. Mr. Ott stated the project diverts water from Stetson Creek into Cooper Lake, which increases the volume of water the Cooper Lake hydro turbines can utilize. Mr. Ott said this project allows for lake water to fill the upper regions of Cooper Creek, which will improve the spawning and rearing habitat for the salmon there. Mr. Rose requested AEA prepare for a discussion of the remaining recommendations to the program before the next round begins. Mr. Rose suggested the program managers of the different technologies give presentations to the Committee. Mr. Rose stated if the EETF does not get funded this year, then wave, tidal, river hydrokinetic power are in a state of limbo and it will then have to be determined if they will continue. 8. NEXT MEETING DATE The next meeting was scheduled for January 10th, 2013. 9. ADJOURNMENT The meeting was adjourned at 12:03 p.m.