Session reaches halfway point

Energy legislation may be key accomplishment of lawmakers this year

Posted: Monday, March 08, 2010

The 2010 state legislative session is at the halfway mark of its 90-day session. It's unclear just what bills will pass the Legislature before adjournment April 19 besides the budget, which is required.

Courtesy Of Alaska Legislature
Courtesy Of Alaska Legislature

Energy legislation may be the key accomplishment of lawmakers this year, depending on what makes it through the logjam of bills that will inevitably pile up as the session approaches adjournment.

Despite the short session, the Legislature essentially shut down for three days last week as about a third of the 60 lawmakers attended an energy council meeting in Washington, D.C.

The trips prompted criticism but were defended by legislators as justified given Alaska's heavy dependence on oil and gas.

Rep. Berta Gardner, D-Anchorage, one lawmaker headed to the conference, said she and others will be tending to other business while in Washington, including meeting with an assistant secretary of the Army over the U.S. Army Corps of Engineers' rejection of a permit for ConocoPhillips Alaska's CD-5 oil development project on the North Slope.

CD-5 is important in opening up access to the National Petroleum Reserve-Alaska, which is vital in bringing new oil to the Trans-Alaska Pipeline System.

Among legislative priorities shaping up, the Senate Energy Committee is making amendments to Senate Bill 220, an "omnibus" measure wrapping many proposed changes to state energy programs into one bill.

Included in the bill are changes in the state's low-income fuel assistance program, establishment of a state loan program for energy-efficiency retrofits to public buildings, and among other changes a shift in state policy to allow nuclear power facilities licensed by the U.S. Nuclear Regulatory Commission to be sited in the state. The bill would give the state Department of Environmental Conservation the primary state responsibility for permitting nuclear plants.

A similar omnibus bill is in the state House, but House members appear to be waiting for the Senate to finish its changes before working on the bill.

Some of the provisions of the senate bill are also in separate legislation that is moving in the House. For example, the House Energy Committee recently approved House Bill 296, which sets up the energy-retrofit loan program for public buildings in the Alaska Housing Finance Corp.

On budget issues, budget subcommittees of the House Finance Committee finished their work on the fiscal year 2011 operating budget Feb. 26.

In a March 1 briefing, House Speaker Mike Chenault said the full Finance Committee is expected to bring its revised version of the operating budget to floor of the House about March 10.

On the state capital budget, which appropriates money mostly for construction, "discussions are continuing" between the House and Senate leaders and the governor, Chenault said.

The Senate will take the lead in actually writing the capital budget just as the House traditionally leads in writing the operating budget, but there are behind-the-scenes negotiations underway now on what projects are to be included in the document.

Gov. Sean Parnell is engaged in the talks because he can make line-item vetos of projects in the capital budget, and legislators would like to avoid that.

In his briefing, Chenault said the Senate is holding out for a higher level of spending in the capital budget, while the governor is hoping for a lower number and the House is "somewhere in between" on the issue.

Chenault also said the House may roll some projects into the regular capital budget from a $100 million package on major deferred maintenance on which the governor was hoping to see approval by early March.

Legislators put the brakes on because some of the deferred maintenance work hadn't been properly vetted by the state administration.

The result will be that some of the work may not be approved in time to have contracts let and be "on the street" for the 2010 summer construction season, as Parnell had hoped.

Chenault also said lawmakers are concerned about the financing mechanisms proposed by the governor for two major buildings included in the capital budget, a $90 million new crime lab in Anchorage and a $120 million new biological sciences building at the University of Alaska Fairbanks.

Parnell has proposed financing the buildings with certificates of participation, a kind of lease-build arrangement where state or federal agencies sign up to use the facilities and guarantee notes issued to finance construction.

This approach avoids having the state lay out cash for the buildings but it is also expensive when financing and other costs are included, Chenault said.

"We may look at other forms of bonding," Chenault said, including going to the public with a general obligation bond issue. "We'll see if the public supports these big projects."

Other potential big-ticket projects in the capital budget, which are not yet included, are new schools needed to replace obsolete facilities in three Western Alaska communities. These are a priority for Sens. Lyman Hoffman, D-Bethel, and Donny Olson, D-Nome, and discussions are underway with the governor and the House on including these schools in the budget.

On other legislation, also energy-related, new bills in the House and Senate by Chenault and Sen. Lesil McGuire, R-Anchorage, would reorganize how the state is pursuing work on a bullet line, a 24-inch gas pipeline from the North Slope to Southcentral Alaska that could be pursued if a large gas pipeline is delayed.

The bullet line planning work is currently being done by the governor's office, but Chenault and McGuire feel a stronger institutional structure is needed to avoid political pressures affecting the work.

Chenault's House Bill 369 would bring the Alaska Railroad Corp., the Alaska Natural Gas Development Authority and the state Department of Transportation and Public Facilities into a formal structure that would include the team in the governor's office now working on the bullet line.

The state-owned railroad and the state transportation department have existing rights-of-way that could be used for a pipeline, and the state gas authority has done substantial work and acquired preliminary rights-of-way on an alternative route for a "spur" gas line.

McGuire's bill, Senate Bill 287, would put the bullet line work under the Alaska Railroad and would also bring in Alaska Housing Finance Corp., which has experience in bonding and financing for a variety of projects.

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