The first step: Renewable energy

Here's the story I wrote for today on HB 152, the renewable energy fund bill. It's funny to me (odd rather than ha-ha) that all the talk is about saving money and not about the environmental benefits. Where other than Alaska?
In the nitty gritty, it will be interesting to see how the Alaska Energy Authority and the advisory board handle this thing if it pans out. AEA in the process of awarding alternative energy grants now, and has imposed the criteria that the projects actually save money. That sounds obvious, but it's not really, at least when you consider green power for its environmental benefits. It's actually a notable hurdle. The bottom line is that Alaskans are only putting money into green power because they're convinced it's cheaper than power from fossil fuels and simply needs a kick start. (I finally got it yesterday how people talk about high up-front costs -- green power's economic benefit comes from the lack of fuel cost, not the cheapness of installation.)
Greenies that talk about HB 152 often describe it as a good first step. It's not a huge amount of money -- about $12 million to $20 million a year in grants -- and wouldn't make a dent in, say, the Susitna hydro project.
Sen. Lyman Hoffman of Bethel is also considering the bill as one step among many -- or should I say one leg of a four-leg chair? (Inside joke in Juneau.) Hoffman already pushed through a one-time, $300 million cash infusion for energy efficiency and low-income weatherization programs. His staff told me yesterday he actually wants four things:
-something for low-income people, like a state match to the federal Low Income Home Energy Assistance Program
-something for now (I'm not sure what, but various cash handouts and rebates are being considered in Juneau)
-something to promote conservation (and therefore long-term savings), like the $300 million already approved, and
-something for the long-term, like renewable energy.
Pretty ambitious stuff.

JUNEAU — A popular bill aimed at developing renewable energy in Alaska is getting attention again after going without a hearing since last year.

The bill, HB 152, would set up a state fund for renewable energy projects and a system for evaluating proposals and awarding grants and loans.

The idea is that some projects that make sense economically won’t get built without a little help simply because of the high up-front costs. The ultimate goal is to lower the overall cost of electricity in Alaska.

Rep. Bill Thomas, a Republican from Haines and co-sponsor of the bill, pitched the idea at a hearing on Wednesday.

He said the cost of energy is getting so high in Alaska that people are having a hard time making ends meet. They don’t have as much money to buy other things, and that has a negative impact on the whole economy.

Alaska is known for its non-renewable resources, he added. “However, it’s also an excellent source of renewable energy. We have wind — lots of wind — geothermal, solar and hydro.”

The Senate Finance Committee, which has had HB 152 since last May, heard the bill Wednesday and Thursday.

One of the people who testified Wednesday was Chris Rose, the executive director of the Renewable Energy Alaska Project, a coalition of utilities and other groups supporting renewable energy.

Rose said renewable energy has the benefit of stabilizing electricity prices (because there’s no fuel cost to go up or down), and said the bill would set up a system for picking the best projects and getting them going.

“We’re looking at viable projects,” he said. “This is not a research and development fund.”

He added that grants from the system would leverage federal and other funds.

The bill has broad support from Republicans and Democrats in both bodies of the Legislature, and it passed the House last year without opposition. More than half of all lawmakers have signed on as co- or cross-sponsors.

In December, Gov. Sarah Palin proposed putting $250 million into an alternative energy fund like the one envisioned in HB 152, and she defended the idea in her state of the state address in January.

“These projects cannot even flirt with snake-oil science — they will be real, doable and economic,” she said in a written version of her speech.

The lawmaker responsible for holding up the bill is Sen. Bert Stedman, R-Sitka, the co-chair of the Senate Finance Committee, who deals with finance-related bills.

Stedman’s staffer Darwin Peterson said last week that Stedman generally didn’t like the idea of creating new funds for things because they limited the flexibility of lawmakers to appropriate the state’s money.

Peterson said Thursday that Stedman still has a “philosophical concern” about creating funds, but added, “Sometimes really good ideas come along.”

The other committee co-chair, Sen. Lyman Hoffman, D-Bethel, said during the hearing that he wholly supported the concept of the bill but wondered if there was a way to fund some projects right away.

“It seems to me that we need to take advantage of, or respond to, these oil prices by implementing these alternative energy projects now,” he said.

With its broad support, the bill seems likely to pass.

But some questions are still unanswered, including how much money lawmakers will put into the fund and what role they will play in awarding grants from it.

Thomas said Wednesday the original idea was to put $100 million into the fund. Palin then proposed $250 million, and the state ended up with a big budget surplus. So now sponsors are asking for $300 million.

Assuming a return of 5 to 7 percent, a $300 million fund would spin off $15 million to $21 million a year for grants.

John Bitney, a staff member to the bill’s sponsor, House Speaker John Harris, R-Valdez, testified that even $21 million probably wouldn’t meet the demand for grants.

When the Alaska Energy Authority teamed up with the Denali Commission this year to offer grants for “cost-effective” alternative energy projects (up to $5 million worth), it got 89 proposals asking for a total of $118 million. AEA is still reviewing the proposals, which include everything from biofuel made from fish oil to “run of the river” hydropower and energy harnessed from ocean waves.

With the renewable energy fund, lawmakers said they want some control in how the grants are awarded. HB 152 leaves it up to AEA to develop a system for allocating money from the fund, but Bitney said grants would be awarded as they are for things like village safe water projects — in a way that lawmakers would have a chance to approve or disapprove them.

Committee members are currently working with Harris on a substitute version of the bill.

The bill comes on top of another energy-related investment aimed at making homes more energy efficient. In a budget bill already approved, lawmakers put $300 million toward weatherization and energy efficiency programs.

Palin has expressed support for the idea.