Committee will now come to order.
The time is 1.05 p.m. on Thursday, January 29th.
Members present in are present.
I did that twice in a row.
Representative Cop, Representative Costello,
Co-chair Holland, and myself, Co Chair Mears.
We have a quorum to conduct business,
so we're just gonna go ahead.
I'd like to remind members to please silence your cell phones.
A reminder for staff and members of the audience may not approach the table.
If you need to pass a note to community members, please get the attention of Co-Chair Holland's
Committee aid, Tim Chure.
And he'll take care of it.
Importantly, I'd like to thank Cheryl Cole, the House Energy Committee Secretary, and
Doug Bridges from the Juneau LIO for tech and teleconferencing support.
I wanted to provide a short update on our last meeting
where we heard presentations from the RCA,
Harvest Midstream, and N-Star Natural Gas Company,
represented from R CA followed up with our committee aides
with a message stating that they had acted
upon co-chair Holland suggested,
suggestion that the RCAA could perhaps bring all the players
into a room to facilitate some direct confidential
communication to work on some of the issues
surrounding the dueling proposals
for natural gas import facilities.
Responding to the suggestion during our last meeting, RCA Charis Mendola stated he would
bring the topic up for discussion with the commissioners at a public RTA meeting scheduled
for yesterday.
The topic was indeed brought up yesterday and the commission unanimously voted to open
informational docket in which the Commission will convene a Public and Confidential setting
for Chugach Electric Association and NSTAR Natural Gas Company to discuss the issue of
LNG import facilities.
And with that announcement, the first item of business before the committee is an introduction
of House Bill 252, Electric Utility Fire Prevention Plan by Representative Kai Holland.
Please approach the bench, introduce yourselves for the record and begin your presentation.
Good afternoon chair mirrors. Thank you for the introduction and to the rest of the committee.
Thank You for opportunity to present House bill 252.
I'm Kai Holland House district nine representative for getting to introduce myself and staff.
Aidan nickel will be assisting me with the presentation today.
I do want to take a second though and just kind of frame.
What we're doing here with a little bit of background some of you will recall that
In the last session we had house joint resolution 15 that was a
resolution addressing the critical and urgent concerns about the wildfire danger we were
anticipating in the spring of 2025 due to low snow levels. And that resolution that we
developed through the course of the session was eventually passed and transmitted on by the
governor addressed a broad set of issues around what we could do to reduce the wildfire risk to
developing that work from Division of Forestry,
from the Anchorage Fire Department,
and many other jurisdictions came together to,
I think last spring, do more sooner to be prepared
for the wildfire season than I've seen
in a number of years, and I appreciate all the work
and all of the projects that happened during the summer.
A lot of the work that I've done in this area actually though goes back to 2018 and just briefly
if you recall in the summer of 2018 we had the Paradise Camp Fire in California with a tremendous
loss of life and building structures in california that really brought to bear in
the consciousness of many communities around the country this growing issue of large-scale fires
In the course of that then, later in the year, we had the earthquake in November in Anchorage
where we then saw the impact of a large disaster and the difficulty that we all had in finding
current information and...
realizing we weren't that well organized and prepared for being able to respond to a major
incident. And it began work that I did first off in my local community council and then
interest in the work we were doing in resilience expanded out to other hillside community councils
and eventually has included community counsels from the Eagle River Chugak area all around to
to understand what we could do to reduce the exposure to wildfires.
And in that work, we also learned from our wildfire science
professionals that the view was that
a large catastrophic fire on the hillside
was not a question of if it could happen.
It was only a questions of when will it happen
and I...
didn't want to accept that as the answer that we were just going to have to wait to figure out when
will we be a palisades, when will be lahaina, any number of other communities that have had to
suffer a major catastrophic wildfire.
So I've begun over, you know, at that time working through the community,
working with other professionals and organizations to explore different ways we can understand
and reduce the chances of a catastrophic wildfire. And it's my hope that we
can change where we're headed with large urban perimeter wildfires. If we go back 100 plus years
we had large urban core fires. We can think of Chicago, London, Seattle, Fairbanks, Seward,
places where there was a major catastrophic fire within the core of the city that burned out a
bunch of it. And that was because of building construction, density, lack of apparatus and
water systems. Remarkably over decades, we essentially solved and eliminated the urban
massive wildfire risk. We still burn buildings downtown, but we don't ever
think these days about losing an entire downtown urban area and all of the
downtown neighborhoods.
We've put together sprinkler systems, fire hydrants, we have fire departments,
we've building codes,
we'll have firearms,
we will have secondary exit,
we're done a bunch of
changes to the way we construct, manage, and create the response apparatus so that we don't
have to worry about burning down all of a urban core. But today we're confronted with a new
risk that has surprised us, especially when we saw Lahaina burn and realize that even a place is
can still suffer a major fire.
So where I'm headed with this bill and other work I am doing and what I want to encourage
people as we explore this legislation is to see this as a part of a broader framework
exploring the questions and the steps we can take next that would allow us to work towards
a day when massive urban perimeter fires are no longer something we tell residents that
We will always have forest fires, and to some degree, we need forest
fires. That's a healthy, natural thing. But I believe we can get to a point where
we could have urban perimeter fires and we may scorch a lot of paint. We may have
to have people, you know, evacuating to get out of the way of it. And perhaps we
may still lose a house once in a while, but we don't have to sit and worry about
will we be the next Fort McMurray, the Next Palisades, where we lose the
This bill is one piece of a lot of interesting work going on that builds upon what is already happening.
Utilities are working very hard to understand their role in managing their.
utility assets and the right of ways that they manage, which are really critical portions
of, in the case of our hillside, the infrastructure there that's creating the power we need, but
also those rights away are critical for access in there.
And they've been working diligently on improving how they managed their right-of-ways and across
this type of legislation now becoming an essential component of helping utilities have the framework
under which they can create their plans, engage with other partners that are doing community
wildfire protection plans or managing forestry in response to let the utilities and their
that overall reduce the risk of wildfires in our communities.
And so I'm appreciative of letting me have a moment to kind of tee up where we're going with this.
What I'd like to do now is turn it over to Aiden Nichols of staff who can start walking us through some of the details of this bill.
And I look forward to the questions and discussion later and future opportunities to develop this, thanks.
Thank you representative representative Holland. Thank You chair mirrors for the record. I'm Aiden nickel staff to represent an appolent
And I want to start here by presenting a scenario
So we have a power line in a narrow right-of-way
The utility company can only clear vegetation in this narrow way, but it's surrounded by trees taller than this
Narrow strip is wide
The Jason property owner may not know that the trees on their property post a risk to power lines
So it happens when a warm dry wind comes along and blows the tree into the power line, causing a shower of sparks.
Not only do we have a severe wildfire risk, we also have public utility being sued for damages from this wildfire,
and there's a high likelihood the ratepayers are going to feel that cost.
This isn't a hypothetical. It's the scenario like this that produced the McKinley fire.
that burned 3,200 acres and 52 residences in Willow in 2019.
And to make matters worse, in the lower 48,
some utilities are so worried about being bankrupted
for wildfire liability that they are shutting down
entire portions of their grid when wildfire risk is high.
So Representative Holland's proposed statute builds
on a solution that's been adopted in Montana, Utah, Idaho,
and other western states.
the bill would require utilities to adopt wildfire mitigation plans.
If they have these plans approved by DNR's Division of Forestry
and they follow their plans, they receive limited liability protection
for damages from wildfires. The plans require
utilities, to assess wildfire risk, and notify neighboring property owners
if there's a situation where a tree on their property is threatening power lines.
And so the intended result is we have a lower risk of wildfires,
we keep utility rates from rising through the lawsuits, we reduce the risk of indiscriminate
shutoffs, and property owners are notified about risks on their land. The key part of
section one creates a presumption that a utility is not liable for causing or failing to prevent
a wildfire, so long as it is followed a wildfire mitigation plan. But importantly, this is
outline the areas where it doesn't apply. The utility is not protected if it acts with gross
negligence. It's not detected if vegetation in its right-of-way causes the fire.
It is protected when it's working outside of its property or right of way when
it is authorized to do so. And it isn't protected
Additionally, this section allows a neighboring property owner to enter an agreement with
the utility for the facility to manage vegetation on that neighboring
property.
It clarifies that a neighbouring property
owner is not liable for any damages caused by the
utility doing work on their property
Section 2 describes what must be in a wildfire mitigation plan.
The plan must
It must be approved by the Department of Natural Resources.
It has to assess the likelihood both of a fire starting in the utilities property
or right-of-way and of the fire
starting and neighboring property and spreading into that utilities area.
The plan has have to contain procedures for maintaining and upgrading
electrical infrastructure for shutting down power lines when wildfire risk
is extremely high. Procedures for vegetation management.
fire detection, and the notification of emergency response agencies and procedures for maintaining
access routes to high-risk areas. The plan must contain a process for balancing the impacts
to consumers of a shut-off against the risk of fire. And finally, the plan requires a utility
to notify owners and occupants of an adjacent property if its assessment shows a high wildfire
Section 3 simply applies the act to lawsuits occurring after the effective date.
I'd like to add here that we have received two fiscal notes, a zero note from DCCED
and a fiscal note of 674,000 from the Department of Natural Resources for staff and travel.
Thank you for the time, chair Mears. I'm going to turn things back over to representative Holland for some further comments before questions
Just a for-the-record to note that I've representative Edgman joined us at quarter after and we also have on the line
For questions or McDonald's from DNR. Great. Thanks
Again, Kai Holland house district 9 just to wrap up on this. So I appreciate the
opportunity to develop this, you know the
The fiscal notes that we've got, you know, represent a
intent that we would engage the Department or Division of Forestry in being able to review
these plans and to ensure that there's coordination with these plan with the community wildfire
protection plans, and the rest of their planning area.
There's some more work I think to be done to assess the scope, I mean right now, the
way the bill is drafted, it is fairly broad in terms of the number of utilities that
So there's also some options of being able
to potentially look at the fiscal note
in terms of changing or limiting the scope of involvement.
But for the moment, we introduced this
with a fairly broad desire to provide the Division 4th Street,
a lot of latitude in considering how they would be involved
and we appreciate the response they've given us
in assessing this plan.
Thank you very much, Representative Costello.
Thank-you.
Thank very very-much.
I was curious, what is the process right now, and I imagine we're going to have the utilities weigh in on this, but what what
is a process, right, now that the utility is used for their fire mitigation?
I imagined that there are plans in place.
What what authority does the department have or does this bill contemplate if
a mitigation plan is not approved and there needs to be changes.
I mean, would the department be directing the utility then to make changes and
You know, what does the bill say about that?
And then my third question is,
are you aware of any opposition to this bill?
And if so, could you talk about what that is?
Sure, thank you.
Through the chair to Representative Costello.
In terms of the current approach to mitigation efforts
along right of way,
what I've learned from discussions
with the five primary utilities in a rail belt,
Each of the utilities do have their own plans and they are all very actively working on this.
So this is not something new for them to do.
But to that degree, what I've learned is that each utility right now has their
own approach to different levels of technology that they're using to
do their assessments and their coming up with schedules on when they do
their work. I think it has allowed the
develop plans that they felt were prudent for their lines and the vegetation and
the exposure that that have. So I don't expect that and certainly not the intent
of this legislation to fundamentally change the ability of the utilities to
have a lot of autonomy to develop their own methods of being able to address the
mitigation efforts that are there.
a division of forestry review of the plans.
We have not been prescriptive at this point.
The original outline of this legislation from other states simply
asked utilities to create a wildfire or in some cases a wild land mitigation plan.
And to simply file those plans with their regulatory agency, PUC or
And we wanted to, in the case of Alaska,
recognizing the work being done by the Division
to help catalog and be engaged with the Community
Wildfire Protection Plans, we want
to have more of the subject matter expertise
that the division brings to be the Subject Matter
Expert to review those plans rather than.
Asking the RCA to have to become a subject matter expert on looking at these plans or just simply having a rubber stamp file it
Nobody ever even looks at it at all
So that's a long-winded way of saying we haven't
Outlined what the administrative process would be for the division to actually review the plan and their criteria to
assess whether or not they're
accepting it or pushing back and maybe suggesting some changes. I'm hoping that
that dialogue perhaps on the more the regulatory administrative side might
develop versus needing to have that level of prescription in there. And I think I
lost track of the third piece of your question.
Thank you. Is there any opposition to the bill? Thank thank you didn't mean to lose track of that one
Thank You through the chair
Costello, there's two areas of concern that have been raised so far
one has been the concern about the fiscal note and
I take it as a friendly concern in the sense that I think
The utility that raises concern genuinely would like to see this legislation move
ahead and they're sensitive to the fact that there's a fiscal note on it. It might jeopardize.
being able to move this ahead and their effort is more to help ensure that we can move
this a head.
So their suggestion has been to try and dial down the scope or level of involvement of
Division 4 Street as a way to reduce the fiscal note.
That being said, you know, we'll be looking at a supplemental appropriation, will be
or more on wildfire work.
So starting off, if there is a fiscal note with this,
if this is the way for us to reduce some
of the wildfire exposure and to save millions of dollars
on maybe catching a fire sooner or reducing it,
I think it's worth having a discussion about,
is this the kind of fiscal that we should keep?
So at any rate.
But there is a concern about trying to get rid of the fiscal note in order to reduce the
chance of this bill being stuck.
The other concern, of course, and predictably is coming from the insurance industry, that
we have met with them in an initial meeting yesterday.
I will offer that this Bill comes out of work in Montana in terms of finding a way to create
flexibility in the liability shield that the utilities get.
This type of bill has been through the legislature or reviewed a couple times in
past years and the old version of this bill that created a significant amount
of industry or insurance industry pushback generally was a type
of Bill that basically said utilities can't be sued and
said that level of shield was too much.
So as staff and Nichols went through,
this one offers a balance, we think,
of still providing not complete immunity
and not a complete shield, there's responsibility.
But to your point, the insurance industry will be
and has expressed concerns about this bill
Protections against who's going to pay for the cost.
They would like to limit the protections
that this might provide the utilities.
Representative Cop.
Thank you, Representative Poland.
Your staff for bringing forward this bill.
I think it's covering a lot of important topics.
I want to kind of narrow in on one issue
Build is a pretty good job talking about
The the property the easements the rights of way that the utilities own
And that they control but it seems less clear to me that
When the risk is coming from outside of the right of Way that we're
doing anything here to
Provide utilities a vehicle for giving notice to an owner. Your tree is leaning towards the power line
You know, we haven't walked over on your property, but just walking our own easement that tree looks really questionable and
Giving them notice and then they're not doing anything about it
And then ultimately it becomes a crisis for the utility as you're able staff to say when the wind blows and and things
So, how are we addressing those situations where you have an adjacent property owner
who's been given notice that their vegetation is creating a real problem in the utilities
right-of-way?
How do we balance that?
Yeah.
Yeah, thank you for the question through the co-chair mirrors to Representative Comp.
That is fundamentally what I hope this bill is really advancing.
because in the legislation and other states that we've looked at, that issue is not addressed at all.
The existing legislation in other States, and we work through CSG West that's working with other
states, they've primarily looked as this legislation, in terms of what's in
the right of way, providing some negotiated levels of responsibility for that,
and that is where it stops.
Informed by two things, one is we now know that utilities are doing some
pretty sophisticated scanning of their utility lines. That includes not only
what's right in the canyon of the line, but they know exactly what is beside the
lines, they're using light, our techniques are using satellite techniques.
So that data is really amazing. And so this bill is requiring that they
that information and that notice to those adjacent property owners when they find that
there is vegetation that would be a hazard to the line and to ensure that there's some
mechanism for them to be aware of it. And where this idea originally actually came from was
we've been approached earlier on about how could we create a structure that
let the utility while they're already out with crews and doing all the work,
let them be able to take care of some stuff that they find outside the right
away that might be on public land. And so this was really an outgrowth of
trying to create that ability to work together.
So the specific point you're getting to, though,
which is really the hard place, which, you know, where's the balance
This bill is not prescriptively placing a requirement on the owner to do anything.
The owner can voluntarily participate in a vegetation management plan with utility.
That is they can enter it into an agreement that says if there's something on
the adjacent property, they could enter into agreement to allow the utility to just take care of it.
And I could anticipate that'll happen in the case, again, of state property, municipal property.
It'd make a lot of sense, all the equipment's there.
If this is a private property owner, they're going to get information saying you've got some hazardous vegetation.
We've not said in this anything about any requirement on what they must do.
This is problem, and I think it's a challenge for us, because in essence,
letting the property owners know what they are essentially responsible for anyway,
but we will have provided a pathway for them to be noticed about it and they're going to have to
consider their decision of whether or not they take down that tree, if it's a tree.
or leave it there because they like the tree and you know on the whole side in
the area where I'm at people love their trees and they have been very
frustrated with the utilities even taking down the trees within their
right-of-way much less going a little further out. So there's a gray area here
we've not been prescriptive about it but we're trying to make sure that those
adjacent property owners are going to learn about the vegetation. The final
Program through the utilities on how they handled dangerous or hazard trees
So if the utility finds out that there is a hazard tree a danger tree in some cases
They call it that is
a tree that
Is dead like a spruce dead spruced tree or a trees that's damaged
There is already a very explicit pathway for that utility to go to the private property owner and say you have a dangerous tree
Right on line. We need to take care of it
And this notice to adjacent property owners is dealing more with where you may have healthy live trees beside the line.
But they could still in a high wind situation like the McKinley fire created danger.
I'm not giving you a very clear answer, but this is not a clear situation.
But we're trying to bring more information into the assessment, the data that we have to understand where these risks are.
And then how we might help property owner's.
I mean, property owners and rights away in Eastman's is a subject to minus
exactly something we'll tell you about. But yeah, I just I'm recognizing there is
a shared duty, a
shared responsibility when you live next to a power line, but you don't
contribute to
a public disaster. And and so your property interest has to be
balanced by if you are given notice that you have a high
And you do nothing about it, maybe this is a department of law question, but it would
be nice to know that, because I think from the utilities perspective, they certainly
want the liability protection, being protected from liability still doesn't save them from
that tree falling into the line, and they're not liable for the forest fire,
but there's still a massive job ahead of them.
And it seems like there needs to be a vehicle to do a preemptive strike on that.
if they really see a high risk tree because some property owners simply don't want you on their
land no matter what and you know that can be considered the Alaskan way sometimes and so
but that there is a duty to keep your neighbors safe and and, you
know, we recognize that in a more urban environment speaking in more rural environments and
sometimes that that duty you have to other people isn't quite as clear so I appreciate
But, um, I follow up.
Yeah.
Thank you.
Uh, to chair mirrors, just two quick comments, because you're, you
raising a really valuable point.
Uh and thank you for bringing it up and perhaps we ought to bring
in department law just to kind of make sure we're clear on the
liability as being created here.
But two things that I would note that we've tried to be attentive
the utilities and when we were working on this with them also expressed the
concern that if we create this structure of doing the assessment of the right of
ways and we now make this a statutory thing that we have to do this assessment
share the data but what happens to us is a utility if when
we do a scan we happen to miss
a piece of vegetation. It's not in our right-of-way, but maybe our technology that we use just didn't catch that particular tree, or maybe it changes.
Maybe they scan the line in August, and in September we have a big windstorm.
And now the property owner doesn't know that that wind storm damaged the tree.
Their scan was done before that. So the utility is saying, you know, don't make us now.
responsible for a level of vegetation scanning and assessment that creates a liability for us.
So there's also that side we're trying to thread here. And so we've got some language in there
that is trying, to make it clear that...
We're not asking utilities to do some sort of exceptional level of scanning and fidelity
of data that is unusual here, that we're asking them to what they feel is prudent, document
it, do it.
But if there's some vegetation that's missed or changes, we don't want them be liable
There's also language in here in terms of the wild land mitigation or a mitigation plan that is really looking beyond all of this
Because to the degree that the utilities can come up with and they are in many cases using new technology that can do fault detection
So that if the lines start touching a piece of vegetation
They're more sensitive. They can just shut off right away
Not stay on until they cook something and turn it into a fire
That if there is a high
Wildfire danger situation they can turn off their automatic reset system because right now most of the lines are set up
So if there's a fault it will try and automatically reconnect and it may try two or three times before it finally says something's wrong
Well, they now have new technology that kind of essentially in a red flag type of day
Say if you detect any fault, we're gonna shut that line down. We're going to go look at it first
So we are trying to move also beyond just the vegetation
Contact. There's other pieces of this plan. Thank you. Yeah, thank you
I just I'll interject for the record
representative Johnson
Join us at half past and how's the question? Well, I would just say that if our shut off every time something a branch
Tenses a line I we would never have power
In the Valley there's so many trees and so much, but what I'm wondering and I I apologize for not being here for
the detailed explanation that
I did have a very special, large, expensive tree that I didn't think they needed to,
I don't know why they were cutting it down, but it was there and it wasn't the city.
And, you know, eventually, with a little bit of complaining from me and a
little of, starting this way and that way,
eventually we got to where to get, at least in cup hole thing down.
prescriptive. They aren't going to negotiate on anything.
They're going, they're not going
to try.
They are going
to say we're gonna cut down everything in the right way.
And I don't know if that's what this leads to or not,
but we've got to make sure that it, you know, it doesn't matter
so much if you got 20 acres, but if
you have a teeny tiny lot in one tree, then, and because they
certainly have the rights to do that.
And if they, as it is now,
they can kind of be a little bit reasonable.
an unattent consequence of actually by making the law,
then you end up having the flip side of it be a problem,
which I think you already addressed.
If I can, Chairman.
Yeah, you raise really valid concerns
and in my own neighborhoods,
we've had the same issue of the utility coming through
and wanting to trim everything down
and the neighbors all come out in force saying,
no, don't do that.
And the utilities said, but we got to.
And so they come in, they chop the tops off the trees,
but they leave the bottom so we get them shielded.
So we've been down that.
And in some cases, what they've wanted to take out
is mental too much in people's opinion
because they depended upon the screening,
the buffering that's there.
But that being said, two things.
One is we do know that some utilities have now already
moved into what I think is sometimes called a ground
approach. That is everything in utility from the ground up is going away and
they've in the case of the the lines in my neighborhood. They've come in
the last time and said, okay, this is the Last Time. We're gonna do a partial trim. Next time we're here.
It's all gone. So we were working with the neighbors to let them know about that and saying now's the time to start planting some new things
right outside the right of way.
so that you have some buffer to do that but you know the other piece of this then is that at the
end of the day this is not prescribing how a utility develops their standards and their
procedures they're still going to be run by their co-op and they are members to
be able to come up with plans that are unique to that utility to
I've definitely with you on this we had trees in our backyard is utility wanted
to want to cut all the way down and we said gosh do you really have to I mean
where's that reasonable area but this legislation provides utilities the
flexibility to come up with their plan and work with Division of Forestry to do
that it's not requiring anything uniform that would be applied across all
utilities in the same way.
So, if a utility incurs a cost that cannot be by law passed on to the rate payer, how
then is that paid for?
Through the chair, I'm not sure if you could you explain what cost you're referring to
here?
Are you talking about the cost of doing utility maintenance and vegetation?
Or I lost track of which cost are you referring?
So the bill says that it keeps the cost down to the rate payer.
So, the legislation is basically saying that any activity related to this and
having the plan, writing the plans, getting it approved, keeping the vegetation away from the homeowners property and what have you next to line.
Any cost that is incurred, we're saying in this bill that, it won't be passed on to a ratepayer.
how can you protect the rate payer, how does the utility then pay for this?
I have to go back and look at that, there certainly is nothing in the bill that is intended
to change at all the ability, the utility to do this right-of-way maintenance and to
make that a part of their operational expenses.
If there's any mention about the costs we're trying to limit in this bill, it is trying
to protect the rate payers and the utilities from the cost of wildfire liability where
forced to pay a few years ago to
pay the cost of the damages from the wildfire.
So it's the wild fire costs that
we're trying to protect the utilities
from having to bear, particularly
in the case like the fire in 2019,
where the utility didn't actually,
it wasn't the Utilities vegetation
to even touch the line.
But.
they were the ones because they had a power line,
and vegetation from adjacent property touched their lines.
They were ones that had to pay the cost of that.
So it's those costs we're trying to reduce,
not the costs of the actual vegetation management activity.
Well, actually you asked my question.
So in that case that you gave,
did the rate payers end up paying
when the utility was found to be liable for the
the wildfire.
Yeah, thank you through the co-chair.
I'd have to ask the utilities to respond to that
because I don't know in the end how the utility, where
the money came from for their settlement at that point.
I be purely speculating whether or not they had reserves
or some sort of umbrella pot.
I dunno where that came.
We could ask them to come back and share with us a little more
about the story of what happened and how they handled that.
you know, maybe how this legislation might help them, I hope.
I'll interject a little bit, so I had the pleasure of attending the Alaska Power Association Conference
in Cordova in September, and concerns about
Risk for wildfire. I think it's fair to say was the single largest issue that came up over and over again
there and
You know some of the examples in the lower 48 of some in massive wildfires that could cause a lot of infrastructure damage
Not everybody's got the same business model and
We don't have lots and lots of customers to spread.
We do not have a lot of customer to spend some of those costs along, but we are looking
at bankrupting utilities because of this.
Up here we have co-op models and local governments are owning our electrical utilities, so it's
a difference.
Yeah, thank you and chair mirrors. I don't you may want to perhaps see if the division director of McDonald's is I think on the line
Perhaps he has some thoughts
I
Don't know on what we've just been talking about that maybe wants to fill in but I just wanted to just ignore
Acknowledge I
Think he's online here if we need a resource and he may know more of the details you're gonna you gonna pitch him a specific
Questioner you going to ask him for everything
Thank you, you know, I
I guess I'm just wondering if he has any more specific information about the McKinley
fire and what happened there and how those costs were born if if it doesn't you know
it'd be appropriate for us to contact the utility and perhaps ask them to come
in a subsequent hearing but I just want to recognize we're talking about a lot
of things that he knows a a lotta about. Thank you Mr. McDonald can you chime in
here with some some support for Representative Holland.
Yeah, absolutely. And a good afternoon for the record. My name is Norm Powell. I'm Deputy Director of the Division of Forestry and Fire Protection, and I will see the fire side in the house.
I can't speak to how the costs were just varied by the utilities.
I cannot tell you from the state of Alaska we did not go after cost recovery.
So that was all done through insurance companies and some sort of class action, but that is not through the State of Alaskan.
But we'll work on trying to invite them when we get the next hearing schedule, the utility
to come and answer that question or give us a little more background they can share.
And thank you.
And of course, one of the less direct costs is insurance costs.
And if there's mitigation, then you're a better risk.
And, if these costs go up all over the place,
then the cost of insurance goes up.
So the better we can keep this in hand, I think, it's better globally as well.
any further questions? All right, thank you for that. We will set this bill aside
and take it up next Tuesday with invited testimony. At this time we'll take a
brief at ease.
Back on the record. So as I've got the next bill presentation
I will turn the gavel over to
Representative cop to chair the Next portion of the meeting
Thank You representative mirrors the
Next item of business before the committee is an introduction of house bill 259 large energy use facilities
Appreciate you and you're very able staff coming forward
Please introduce yourselves for the record and begin your overview for The Committee
Thank you representative cop
Representative Costello and virtually anyone else that's listening to this elsewhere. I
Am representative Donna mirrors.
I represent the South Maldon district in East Anchorage
Thank You for opportunity to present my bill House bill 259 large energy use facilities
If it's the committee's will, I'll get on with the presentation and my staff, Ariel
Svetlick, will conclude with this sectional summary.
Hospital 259 establishes a clear framework to support large new energy users in Alaska.
It provides consumer protection and community involvement.
We have a small local energy demand along the rail belt and off.
In order for new energy projects like renewables to grow, our supply we need to
grow demand. Drawing on lessons from other states where inadequate consumer
protections is now resulting in project opposition, House Bill 259 balances
flexibility for future incentives with safeguards for communities.
positioning Alaska to attract new industries, support long-term economic growth, and build a
more secure and sustainable energy future, rather than managing a decline status quo.
Slide two.
Thank you last year.
When we set out to work on House Bill 259,
large energy use facilities,
I had specific goals in mind.
And before I get to that,
I wanted to also note that we have some folks
on the line for support.
One of them is Erin McKittrick.
She's an Alaska energy analyst and writer,
and she also worked for my office during the interim,
and that she was a big part of working on this bill.
We also have
from the regulatory commission of Alaska,
Chair John Espindola, Commissioner John Springsteen,
as well as Julie Vogler and Claire Knudson.
Thank you all for being online
and I'll do my best to answer questions,
but remember we do have some folks on the line
that can also help with some technical questions and support.
So specific goals for the bill.
I wanted to support new large users coming to Alaska.
Whether that is on-the-rail bill
or in our islanded systems.
I wanted to find a way to do this that would be good for both Alaskans and for business.
So have this idea come about slide three.
Alaska has boundless untapped energy resources.
The potential wind, tidal, and geothermal energy alone in Cook Inlet could power the
entire rail belt many times over.
I'm just going to put in a plug for the renewables because I think that's where that potential
growth could really come from.
I have frustrations when the legislators provided graphs where the energy demand line
is flat far into the future.
We had this presented to us again last week in resources.
Flat energy demands does not encourage economic growth.
We're all familiar with the grid resilience and infrastructure partnerships, which generally
we call in this building grip.
The state has made the investment to match federal funds to upgrade our electrical transmission
system, but that's just one example of our aging infrastructure.
The introduction of anchor tenants, new large energy users, can help make our electric grids
more resilient, spread the cost for infrastructure upgrades, and therefore reduce unit energy costs
for customers through demand growth.
So what increases demand? Some of these issues we discussed in committee last year,
it included simple things like beneficial electrification. I had a great chat with
AELNP last week about how things, like heat pumps and electric vehicles,
are changing the grid's electrical demand down here in Juneau. The local grid is also
Like the J-Bear Joint Integrated Test and Training Center, which broke ground in Anchorage
last September.
Energy demand for mining project like Ken Ross' Fort Knox is Golden Valley Electric's largest
customer, and their cooperation stabilizes the grid and lowers costs for Fairbanks
area customers.
That's the photo that's on here.
Drums there.
We've also talked about future fuel opportunities here,
like SAF, Sustainable Aviation Fuel.
The Alaska Department of Transportation and Public
Facilities is actively involved in development
and implementation initiatives for SIF.
And the newest big thing that's on the horizon?
Data centers.
Slide 5.
Data Centers have been exploding in the lower 48.
And there is interest in expanding to Alaska.
There are several smaller projects already in existence and more are being explored.
Data centers can invigorate local economies, deliver a new slate of business tools and
computing power, generate public income, and provide flexibility to utilities.
I want to be ready to welcome them onto our grids responsibly.
If we learn lessons from others, this could be a really great thing.
that you get can be a bit of an ex-bag, but there's real concerns that they're
spiking rate payer bills and many states are scrambling to institute customer
protections. Utilities are facing planning risks
from projects that promise to come,
but they don't materialize as utilities have already begun making financial
investments to serve their new customers.
Communities are concerned about other impacts like noise and water use as this
about some of the mega data centers down south.
You'll note in your packet, there's an article in there
from the Wrangel Sentinel that makes these points.
This is just from, I think it was last week of
the week before, and the initial community concerns
were exactly that, utility rates and community impacts.
Slide six.
Alaska's uniquely poised to support
the development of data centres.
Alaska is a resource state.
and we have strong record of developing projects
to beneficially utilize our resources.
Cooling is a significant portion of the energy
needs for data centers, and as this winter keeps proving,
cool is an understatement in Alaska.
Access to water resources is also an advantage
we had over our areas in the lower 48,
where data center are being built in deserts
and densely urban areas.
We also have the potential for beneficial relationship
with other commercial or community projects
And as we have learned in this committee,
vast energy resources waiting to be tapped.
Cook Inlet alone has projects for title
and geothermal and development for hundreds of megawatts each.
And including offshore wind,
the potential energy is well over 30 gigawatts.
And, as you know, Cook inlet is just a very small part
of our state.
Our polar geography places us as a potential hub for global fiber optic interconnection
with projects like Far North Fiber exploring a connection from Ireland to Japan.
We already have a history of making strong local industrial economies like in Nikiski
and Alaska has both greenfield and brownfield development sites that already
have infrastructure in place.
Additionally, prime industrial sites are already zoned out in our state land plans.
Slide 7.
So my goal is for $2.59, create a regulatory framework so that project developers know
what to expect when they drop their business plans for Alaska.
To protect rate payers from new infrastructure investments that are made just for these large projects require fuel certainty,
but also allow utilities the flexibility to provide beneficial rates to large users if their usage profiles provide additional benefits to their systems.
This bill also requires buy-in through a community benefit agreement process, and I'll talk more about that shortly.
Slide 8.
We're not trying to reinvent the wheel here.
This bill reduces risks for utilities and creates certainty for investors and projects by laying out
take-or-pay stipulations, codifying a clear process based on previous rate cases the RCA has already approved.
And provisions from laws and tariff filings in the lower 48 for similar projects.
Slide 9.
One unique provision in this bill was brought to us by labor and community organizations in Alaska.
A community benefit agreement is often referred to as a CBA.
The CBI empowers local control and allows community buy-in in the project.
It creates a place for a municipality to have its direct negotiations with a new large
project, so this is where you'd negotiate on perhaps a property tax exemption.
And so I get for ad-libbing for negotiation.
So we don't require anything in the CBA.
Just that one exists.
The content is up to the communities and the developer.
So what Fairbanks and Keena might need out of a business
partner will probably be different.
And this bill leaves that flexibility.
So does a community need help with the fire response
training and equipment?
Do they want to utilize waste heat for your swimming pool?
Do you want create an apprenticeship course with your school district?
So there's lots of opportunities to customize what that CBA means for any particular project
and community.
And this provision creates a certain, certainty in process which helps foster partnerships
and helps new projects become something a community can rally around instead of against.
So at the end here by encouraging new energy demand and strengthening our electric grid
HB 259 positions Alaska for the future
Investing in sustainable economic growth and long-term energy security rather than managing decline
I'd like to thank the committee for their time and looking forward to questions and work on this legislation
I will now
Like to pass this over to my staff aerospet like who will read our sectional
Thank You House Energy Committee and representative mirrors through the through chair cop. I
Will now read the sectional for house bill 259 large use energy facilities version n
Section 1 amends Alaska statute 40 205 381 by adding a new subsection are
This states that utilities may not pass along generation, transmission or distribution costs
that exist only because they are serving a large energy use facility to other customers.
Those costs must be recovered solely from the large use energy facility and not during
And during rate cases, the utility must assign those specific costs directly to the facility,
not to general customer base.
The definitions used in the subsection are outlined in Alaska statute 42.05.435.
Section 2 adds new subsection 42 .05 .435 contracts for large energy users.
So paragraph A of the subsection, this paragraph creates parameters for contracts for large
energy use facilities that enter into a contract with an electric or gas utility.
Paragraph B, these contracts must, and then we break into our subparagraphs.
Set a minimum contract length of 12 years plus an optional ramp up period.
include buyout language requiring meeting 80%
of the remaining contract commitments,
commonly known as take or pay,
and require a minimum exit fee covering costs incurred
by the utility or the contract minimum,
whichever is greater, if the customer exits the
contract prior to concluding the period set in the
contract.
Ms. Spad, like me, I interrupted this for a moment.
I just want to recognize that Representative Ruffridge
has joined us at 2.03 p.m.
Thank you, Representative.
All right, through the chair, I believe I was at subsection C. The contracts may be
modified with approval from the RCA if the modification does not increase the rate cost
for other customers. Subsection D, the contracts, may not risk fuel supply for any utility
Further plans for any additional fuel supply must be in place if the current systems are not anticipated to provide sufficient supply.
Subsection E, the contract must cover the cost of new infrastructure required for the large energy facility.
Subception F, new transmission infrastructure built for new facility will not initially be considered part of the backbone transmission system.
This can be addressed in later rate cases.
Subsection G, a contract must include new variable costs and attribute them to the new user.
Sub section H, details the ways that rates may be set, requiring that cost caused by a large energy use facility,
must be paid by the large-energy use-facility.
It also allows rate reduction options for verifiable system benefits.
Subsection J allows the RCA to determine that multi-building units can qualify as a large energy use facility.
Sub section K requires a community benefit agreement for a larger energy user contract.
Sub Section L clarifies that this does not apply to utilities furnishing gas or electricity to other utilities.
And subsection M adds a couple of paragraphs with definitions.
A contract refers to contracts between gas or electric utilities
and a large energy use facility.
Paragraph 2 defines electric utility as a public utility
that provides electric service.
Paragraph 3 defines facility to mean all buildings, equipment, structures and other fixed infrastructure
owned and operated by the same entity if the commission decides they should be treated as a single
facility. Parograph 4 defines gas utility as public utility that transmits or distributes natural
Five defines large energy use facility as a facility that consumes either 20
megawatts or more of peak electrical demand or at least 20% of an electric
utilities annual electric sales. Two billion standard cubic feet of natural
gas per year or 20 percent of the utilities' annual sales, whichever is
the smaller amount.
paragraph six defines municipality as within Alaska statute 2971-800 and then
we get to section three which amends the un-cautrified law with a new section
that states that this bill applies when a gas or electric utility enters into a
new contract with the large energy use facility once this Bill takes effect.
Thank you.
Questions? Representative Reffridge.
Thanks, I promise I was listening online, apologies for not being here, thank you for
allowing me to come in late.
The definition of large energy use facility,
I didn't see in the presentation, are there facilities in Alaska that are currently fall
under that definition?
It's not retroactive, but yes, so for example, Fort Knox gold mine is I think like 20% of Golden Valley
electrics demand and it was contracts with GVA that we looked at to help inform the writing of the bill.
This bill would not affect current users, just new users.
It was the applicability section.
I didn't see when the effective date was.
Maybe that's not in there.
But there's no retroactivity to that.
through the Chair Representative Donamier's
for Representative Refriger, correct?
There's no retroactivity.
It's a standard bill, so I think it's 90 days
after signing into law,
so it whatever the standard process is, nothing special.
Okay, thank you.
Representative Costello.
Well, actually that was the exact question
that I was going to ask,
is whether we had any that meet the
the definition of large energy use facility.
Could you provide the committee with the list of all of them
if there are more than the one you had mentioned?
Representative Costello, through the chair,
to Representative costello.
I don't know the level of research that is, but there are multiple examples.
Juno here for AELNP, I believe, Green Creek Mine is a significant user and might fall
within this, But I Don't Know the specific size of it. If you don t mind, we can ask Erin
McKittrick and see if she has data on that as she
Is this legislation modeled after any other state and what what did you do when you were preparing this this bill?
Did you look around the country and did find other states that have similar
Approaches and along those lines. I've never heard of a community benefit agreement
Is that something new and where did where? Did that idea generate from?
Thank you through the chair to representative Costello
I'm thrilled to represent to Ms. McKittrick to answer the first bit about not only projects,
but like the other, yes, lots of states and other examples, including some in-state contracts
that we looked at to generate the legislation.
And then I'll answer about CBAs.
Ms McKettrick.
Yes, through the chair.
I can't off the top of my head give you a list of every facility currently that exists
that would qualify if it were new but it certainly includes large mines, refineries, that sort
of facility and I could do that offline and get back to you.
existing legislation for large energy facilities or proposed legislation and there are also a lot
of settlements and other proceedings at public utility commissions and we drew from a whole set
But I have a very long list on my computer,
but I don't know that that would be helpful
to read it off at this point.
Yes, Ms. Beth, go ahead.
Through the chair, I do have it in my notes,
and I can provide that to the committee at a later time.
And I could, do you want me to follow up on CBA's first?
So community benefit agreements, they're not new,
but they are catching on a bit.
They are, the Alaska Municipal League has been advocating for them, I believe, in other areas,
and it was brought to us by community groups and labor unions.
By having a direct relationship between a project and a local government,
you can work out a lot of things that might be issues later,
and also provide opportunities for mutual benefit.
I have a question, Mr. Chair.
Follow-up, yes.
Thank you.
So would the RCA need to be involved in any future project
that where there's a large energy use facility
coming into the state, or does it skirt the RCAs involvement?
Through the chair to Representative Costello,
Representative Donamier's.
it kind of depends. So if it is a large energy user that is on the grid, that
is coming in front of the meter to utility, it will require approval from
the RCA. If it's a project that's behind the
meter that doesn't that they're providing their own power, they bring in
their power then that would not need the contract from the RCAA, but they still
would require a community benefit agreement.
Thank you representative mere so question I have is are we hearing from our utility companies that they?
want this type of
Prescription for how they will do a contract with a large energy use facility. It seems like we're we really getting into what they would negotiate
And setting the parameters. What are you hearing for utilities?
I think you're representative cop fortunately the Alaska Power Association will be here
next week and we can ask a lot of them very specifically but we also we have been having
conversations with them and of course there's questions whenever there is a new process
that comes about and yeah a lotta this they're already doing and have the ability to negotiate
contracts for new energy users.
the requirements are is beneficial for anybody out of state looking to do
projects here. So when you know what the rules that you're going to play by that
that helps encourage stability and predictability for project development.
Okay. Thank you. You have a representative reference. Yeah, thank you um well through
More of just an observation first, then I'll get to my real question, which is all your friends left you in a room full of Republicans, and I don't know what happened there on an energy bill.
So, the community benefit agreement combined with the RCA component of this bill, do you anticipate there being a delay at all in the potential for a large energy user?
the case to bring them to Alaska.
Some of those things, though,
may be present in a potential barrier
where there's steps that someone has to go through
that may delay and any step where government
has a delay in the project I have concerns with.
So, in other spaces,
because you mentioned that community benefit agreements
are kind of newer.
Is there a thought of what time frame that adds to a potential project combined with the RCA need for approval?
through the chair to Representative
Representative Donamier's.
Thank you for the multi-part question
and the ability and rapid fire
so that I did not write them all down
so I'll do my best.
First off, Representative Roughridge,
I am the only Democrat on the Energy Committee,
so it does not matter how many people are in the room
at the table.
And I'm fine with that, I think I've holed in my own here.
As far as the RCA process, first off I'd like to note
that we have zero fiscal note from the RCAA,
of these contracts for where I imagine most of those facilities would happen.
already will need to go through this process with it within the RCA. There is
the potential for you know projects that come into communities that don't
currently have R CA processes that are required that will
need go though that I'd like Chair Espandola to get into that timeline a
little bit but as far as community benefit agreements go on are that time
process can happen at any point.
there. It is just the assurance of good process. A community
benefit agreement could be like, welcome to the neighborhood
glad to have you. And just acknowledgement that that
that the project is coming in and they've spoken.
But it could get longer.
And frankly, some of the municipal processes
that would be required could be quite lengthy
to begin with with existing land use regulations
or ordinances or other requirements that they have.
So that process can happen in parallel
and I think is assurance of good faith and good process.
Representative Costello. Thank you. Um, is it possible that a community benefit agreement could hold up or stall the a project?
Through the chair to representative Costello
I think we're seeing in the lower 48 that community resistance to project already is holding them up and providing a
requirement that that
Community needs be addressed
could actually make processes go faster.
But it does also assure local control.
We're not coming in as the state saying,
you know, these are coming to you.
It allows the local community to have that autonomy.
Yes, perhaps I'll.
So are there signers to a community benefit agreement?
And if so, who are they?
through the chair to Representative Costello.
We didn't line that out.
I would imagine it would be whoever is the authority.
We do have a definition of municipality
that's referred to AS 2971-800.
So it'd be, whoever, is in charge of that entity.
And one final question.
Yes.
Do you see this bill, if it were to pass into law, impacting or affecting the gas line?
Through the Chair to Representative Costello, I think that inviting
energy growth with new large users helps whatever energy project we're using, we are developing.
So the demand for more local natural gas and the utilization of frankly existing natural
gas electricity generation capacity.
is beneficial. Thank you. Any further questions?
Seeing none, we will now set House Bill 259 as said. I want a side, I
want to thank the bill sponsor and Representative Mears and Ariel Svetlick for that eloquent
presentation. We'll be taking this up again at Tuesday's meeting with invited and public
testimony. And we'll now take a brief at ease so I can turn the gavel back over to Representative
at ease.
Thank you for our discussion today and with that, seeing no further business before us
today, we will conclude the House Energy Committee for today.
We will meet this coming Tuesday, February 3rd, where we'll hear invited testimony on
both House Bill 252 and House bill 259 and public testimony, on HJR 27, with two minutes
per testifier. We will also hear public testimony on 2.59.
Reminder, we have set a amendment deadline for HJR 27, which is noon on Monday, February
2nd. If you'll recall, that's how we started off committee last week with the resolution
from Representative Holland's office. Seeing no further business before the committee, this