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HomeMy WebLinkAboutAEA-REFAC_Meeting_Minutes_17JUN2013_Renewable Energy Fund Advisory Committee Meeting Minutes Page 1 of 7 June 17, 2013 Renewable Energy Fund Advisory Committee Meeting June 17, 2013 Alaska Energy Authority Board Room Anchorage, Alaska 10:01 am to 1:01 pm DRAFT MINUTES 1. Call to Order The Renewable Energy Fund Advisory Committee (REFAC) convened at 10:01 a.m., with Chairman Rose presiding. 2. Roll Call Committee Members Chairman Chris Rose Jodi Mitchell Representative Bryce Edgmon (phone) Brad Reeve Senator Anna Fairclough Senator Lyman Hoffman (phone) AEA Staff Sean Skaling Shawn Calfa David Lockard Alan Baldivieso Doug Ott Josh Craft Devany Plentovich Helen Traylor Patrick Johnson Yolanda Inga Chris Gobah Mariusz Sawicki Sara Fisher-Goad Other Participants Representative Paul Seaton (phone) Wyn Menefree, DNR Trey Atkinson, SEAPA Al Roskam, Alaska Pellet Supply Sandy Burd, Senator Hoffman's Office Jeff Turner, Representative Millett's Office Sunny Morrison, ATD Meghan Cavanaugh, Representative Josephson's Office 3. Committee Members Changes Chairman Rose recognized Vince Beltrami, who was the Chairman for the last four-and-a-half years and is sorry to see him go. Chairman Rose welcomed Kathie Wasserman, who is the new representative from the Denali Commission. She is not present today. 4. Public Comments There were no public comments. 5. Agenda Comments The agenda is approved as presented. Renewable Energy Fund Advisory Committee Meeting Minutes Page 2 of 7 June 17, 2013 6. Approval of Meeting Minutes - April 4, 2013 Ms. Mitchell requested the approval of the meeting minutes from April 4, 2013 be moved to a later point in the meeting because she has not reviewed them yet. Chairman Rose stated the approval of the meeting minutes will be moved to after the break. 7. Evaluation Process Review Mr. Skaling gave a historical review of the process AEA uses to evaluate applications. He included updated pieces of information in the packet. Senator Hoffman requested a breakdown of the areas that are entitled to the law by high energy cost, what they have received for the last 4.5 years and what is proposed. Mr. Skaling stated he will address that in his presentation and asked Senator Hoffman to ask the question again if it is not answered adequately. Chairman Rose asked if there was any plan to have economist Mr. Szymoniak complete more of the review process and if ISER would remain on contract in the future. Mr. Skaling stated Mr. Szymoniak will be used more in the future as the process is more streamlined inhouse, but ISER will continue to provide information. Chairman Rose asked Mr. Skaling to explain what it means for ISER to provide quality assurance reviews. Mr. Skaling stated they want to make sure all the economists are on a level playing field and using the same criteria and model. Mr. Skaling explained the scoring for Stage Two technical and economic evaluation with a minimum score of about 30 points to proceed to Stage Three, which is the ranking. Mr. Skaling stated the answer to Senator Hoffman's question has to do with the highest weighting score is the cost of energy in the community, which ranks as 35% of the total weight. Senator Hoffman commented at least 51% of funding should go to high energy areas of the state. He said that effort has failed miserably. Chairman Rose wanted everybody to understand, particularly the new members of the Committee, the project feasibility score from Stage Two is weighted currently at 20%. He stated there is a tug of war between the feasibility of the project and the statutory criteria of high cost of energy. Chairman Rose commented this underscores the need for making sure the applicant does not get out of Stage Two, unless they are technically and economically feasible. Senator Hoffman commented high energy costs have to be the number one priority. Chairman Rose agreed. Mr. Skaling believes most of the funding has gone to the high cost energy areas. Senator Hoffman differs with that opinion and requested Mr. Skaling provide the heat analysis he is referring to. Mr. Skaling stated he would provide the information. Chairman Rose asked Mr. Reeve if the technical assistance staff are providing outreach to high cost energy communities. Mr. Reeve stated this issue relates to regional planning. He said the Northwest Arctic Borough has an energy coordinator that is working to try to filter through projects, but believes there needs to be other forms of resources like project managers or other engineering companies brought in as well. Chairman Rose asked Mr. Skaling if that is Renewable Energy Fund Advisory Committee Meeting Minutes Page 3 of 7 June 17, 2013 happening internally at AEA. Mr. Skaling stated this is taking multiple forms, including technical assistance providers, program managers, community meetings and regional planning. He believes there is more that can be done. Senator Fairclough asked Mr. Skaling to provide the definition of a high cost energy community. Mr. Skaling stated a definition is currently being proposed, which would use the median weighted electrical cost of 20 cents per kWh as the dividing point. Anything above 20 cents is high and anything below 20 cents is low. Senator Hoffman believes the 20 cents median should be higher so the program money goes to the communities who are hurting the most. He suggested looking at Kotzebue, Dillingham, Barrow and Bethel to see what they are paying and above that is where the cutoff should be. Senator Hoffman believes by lowering the limit, it is allowing Mat-Su and Southeast into the program. He stated this program is for the high cost energy communities, who are struggling to make a living with $10 a gallon for fuel. Senator Fairclough stated the projects need to be cost effective and supports Senator Hoffman in making priority investments in rural Alaska. She stated Fairbanks is on the Railbelt and is experiencing high cost energy. She notes the focus of the program is for high cost of energy and moving to 50% renewable energy. Chairman Rose asked Mr. Skaling if there is a high energy cost definition for heat. Mr. Skaling stated on page 10 of 27 of the working draft shows the table with high energy cost of heat. If an area does not have natural gas, they are considered a high heat energy cost area. Ms. Mitchell commented the larger populations can sustain and support debt service and the smaller communities cannot. She stated the smaller communities lose their economic feasibility because of borrowing too much. She believes the focus needs to be on the smaller communities. Chairman Rose requested Mr. Skaling to explain the difference between how a community would be scored if they were 20 cents and 60 cents. Senator Hoffman commented communities who are paying 20 cents shouldn't be eligible. He stated there is a village that pays $1.17 and the people that are really hurting should be addressed. Mr. Skaling stated out of a score of 10, Nenana received a score of 2.8 at 22-cent power and Pedro Bay received a score of 10 at 91-cent power. Those numbers are then weighted as 35% of the total score. Senator Fairclough asked Mr. Skaling to explain what is happening inside the application process and why staff is making these weighted recommendations. Mr. Skaling stated the only part that has changed is modernizing the cost line based on what the current costs are. Chairman Rose suggested not calling the above 20-cent energy areas high cost energy areas, because it is confusing to say a 20-cent area is high cost, when the high energy cost areas are the areas Senator Hoffman is talking about, which are 50, 60, 70 cents. Mr. Reeve commented it might be appropriate to have another judging criteria based on the ability to finance and the size of the community, which could relate to a greater need of the program. Chairman Rose asked Mr. Skaling if the ability to finance is considered in Stage Two of the economic feasibility. Mr. Skaling stated matching funds is currently considered. Senator Fairclough asked Mr. Skaling what is being considered to ensure communities who do utilize Renewable Energy Fund Advisory Committee Meeting Minutes Page 4 of 7 June 17, 2013 this program are able to maintain the invested assets. Mr. Skaling stated the RFA and grant document has language that requires the grantee to maintain and operate the facility for its entire economic life. Senator Hoffman asked how these proposed application criteria are lowering the cost of energy in rural Alaska, which is the thrust of the bill. Senator Hoffman stated the primary issue is how to get rural Alaska to 20-cent energy. The secondary issue is sustainability. Mr. Reeve requested an update at some point on regional energy planning and current projects. Senator Fairclough asked Senator Hoffman if the state has not been investing enough so that the high cost energy communities can qualify or if the communities are not ready to submit an application. She asked if the high cost energy communities are applying and not succeeding or if they are not even applying. Senator Hoffman stated it is probably both. He said Eek, Alaska does not know what is available and they don't have the capacity to submit an application. Ms. Fisher-Goad stated there has been the effort to help communities be able to prepare applications. The two positions that were provided for FY13 have been filled. They have been working with communities and regional planning to ensure they can operate and maintain the projects that go in. Ms. Fisher-Goad stated this is one way AEA is addressing the high cost of energy. She said there are other programs including the powerhouse, the distribution system and the bulk fuel tank farms which are part of a portfolio of projects to address the issue. Ms. Fisher-Goad stated she is happy to work with Senator Hoffman and specific communities with respect to additional assistance they need and what AEA can provide. Senator Hoffman stated he would like 20-cent power statewide. Ms. Fisher-Goad stated that was one of the recognitions of the Power Cost Equalization Program, which does provide less than 20-cent per Kwh for a portion of the Kw that are sold in a community. Mr. Reeve commented that heat is still a problem. Ms. Fisher-Goad stated they want to address heat differently and want to continue to emphasize heat, especially in the areas that have high cost of diesel heating fuel. Senator Hoffman appreciates all the work Ms. Fisher-Goad has done. He stated the Committee members have a lot more work to be done regarding the high cost of heat energy in villages who are hurting the most and is not concerned about regional balance. Chairman Rose stated regional balance is in the statute and has to be addressed. Chairman Rose requested a color-coded graph be developed which shows where the funding has gone based on the cost of energy in the communities. Ms. Fisher-Goad stated the information is available and the graph can be provided. Senator Hoffman suggested a delay on finalizing this scoring criteria recommendation until the next meeting, because of serious concerns the intent of the law is not being followed. He would like to continue to look at this process, without holding up the issuance of the applications. 8. Review Draft Round 7 RFA and Application Forms Renewable Energy Fund Advisory Committee Meeting Minutes Page 5 of 7 June 17, 2013 Mr. Skaling stated there is only going to be one request form for either of the two application forms. The applicant will request a heat application or an application for anything other than heat, such as electricity or a transmission project. The heat applications and all other applications will be reviewed separately and will have separate recommendation lists to the Legislature. Mr. Reeve suggested the information from Item #5 be reported in terms of BTUs saved, as opposed to the variable cost of heat. Mr. Skaling stated REFAC recommended changing the data requirement from 5 years to 10 years. He stated there has been a good discussion and debate on whether to make that change, how that change would be made and what level of information is required. Senator Fairclough wants 10 years' worth of data collection included in these application changes. Ms. Fisher-Goad stated AEA wants to make sure the acquisition of the data is not burdensome for the projects and the information is relevant. Mr. Skaling said getting 10 years' worth of data is included in the current applications. Chairman Rose recommended having a separate work session to determine what data points to collect and who will analyze the data collection. 9. Discussion Points from Previous Meeting 9.a. Funding Resource Assessments for Emerging Tech Chairman Rose suggested to staff to make it clear to proposers in the next application period that they can apply for money to do resource assessments for emerging technology like river hydrokinetics, tidal and wave power. They will have to go back to the EETF to actually fund a pilot project. Senator Fairclough asked if the funding for resource assessments for emerging technologies would help or hinder Senator Hoffman's communities by reducing the availability of funds. Mr. Skaling thinks it could do both, depending on the situation. Senator Fairclough asked if there is consideration of parameters of how much money will be invested in the assessments. Mr. Skaling stated on page 10 of 27 in the Request for Application Draft, under Eligibility of Resource Assessments for Emerging Energy Technologies, it outlines the process and recommendations. There is a recommendation of a maximum target of 4% of the fund for any given year for these assessments. Senator Fairclough suggested modifying the language to include the words "may award from 0 to 4%," so there is not an expectation of automatic approval. The will of the Committee is to include the section and change the title to Eligibility of Resource Assessments for Wave, Tidal and In-River Hydrokinetic Systems in the Request for Application Draft with the modifications discussed. Mr. Reeve asked if there is a way to get a global resource assessment of all of the areas that are available. Chairman Rose stated the resource assessment is specific to a particular area and not Renewable Energy Fund Advisory Committee Meeting Minutes Page 6 of 7 June 17, 2013 for the whole state. The resource assessments would be discreet and tie in with a potential EETF pilot project. 9.b. Excluding Heat Recovery as Eligible Project Chairman Rose stated this issue is about what the Committee and AEA wants to emphasize. He believes the heat recovery projects are some of the best projects that have been funded, but should be funded from another source of money because they are not renewable energy projects, even though they are eligible projects under the statute. Ms. Mitchell believes heat recovery projects should remain eligible until there is another source of funding available. Chairman Rose posed the question of why the state doesn't have its own funding mechanism to have a heat recovery project for every single diesel system in the state. He does not believe the money should be coming from the Renewable Energy Fund. He requested a concrete discussion on the issue. 9.c. Requiring Project Performance Standards Chairman Rose stated he wanted to keep this issue on the agenda and it could either be called project performance or project design and it ties into the data collection discussion. He recommended that a minimum requirement of design criteria should eventually be part of the application in order to target the technologies that are really working. Chairman Rose wants to brainstorm on how to incentivize project performance. 10. Committee Member Comments Mr. Reeve stated having a workshop is a good idea to discuss these issues. MOTION: Senator Fairclough moved to approve the meeting minutes from April 4, 2013, Renewable Energy Fund Advisory Committee meeting. Seconded by Ms. Mitchell. The minutes were approved as amended. Senator Fairclough stated it is a privilege to be part of this Committee and will ask questions without embarrassment of not knowing. She believes in a process that should have all opinions on the table. Senator Fairclough stated she joins Senator Hoffman in wanting to make sure rural Alaska has the opportunity to have lower cost energy, while still having some regional consideration to funds. She said the state's financing ability is being restricted and if there are not other opportunities for the people of Alaska, the funding will continue to stay tight. Ms. Mitchell stated she is appreciative of the program and have done a good job of policing the grants. She said she is proud of what has been done. Chairman Rose thanked staff for all of the work and preparation for the meeting and for making the July 1st deadline for the application. 11. Next Meeting Date Renewable Energy Fund Advisory Committee Meeting Minutes Page 7 of 7 June 17, 2013 The next meeting was suggested to be within a few months and held as a workshop with the Alaska Center for Energy and Power to provide ideas on how best to acquire data. Chairman Rose will contact members to determine the best date for the next meeting. 12. Adjournment The meeting was adjourned at 1:01 p.m.