Bill Summary – FastDemocracy

State of Alaska
                                                        Fiscal Note
                                                                                           Bill Version:                    CSHB 301(L&C)
 2022 Legislative Session
                                                                                           Fiscal Note Number:              2
                                                                                           (H) Publish Date:                5/11/2022
 Identifier:        HB301(HL&C)-RCA-RCA-5-6-22                              Department:        Department of Commerce, Community and
 Title:             UTILITIES: RENEWABLE PORTFOLIO                                             Economic Development
                    STANDARD                                                Appropriation: Regulatory Commission of Alaska
 Sponsor:           RLS BY REQUEST OF THE GOVERNOR                          Allocation:        Regulatory Commission of Alaska
 Requester: House Labor and Commerce Committee                              OMB Component Number:               2417
 Expenditures/Revenues
 Note: Amounts do not include inflation unless otherwise noted below.                                                             (Thousands of Dollars)
                                                 Included in
                                    FY2023       Governor's
                                Appropriation      FY2023                                         Out-Year Cost Estimates
                                  Requested       Request
 OPERATING EXPENDITURES               FY 2023        FY 2023       FY 2024                   FY 2025           FY 2026            FY 2027        FY 2028
 Personal Services                       344.0                        344.0                    516.0             516.0              860.0          860.0
 Travel                                   12.0                         12.0                      18.0              18.0               30.0          30.0
 Services                                952.0                        527.0                    542.0             542.0              572.0          572.0
 Commodities                              20.0
 Capital Outlay
 Grants & Benefits
 Miscellaneous
 Total Operating                       1,328.0            0.0         883.0                   1,076.0           1,076.0            1,462.0        1,462.0
 Fund Source (Operating Only)
 1004 Gen Fund (UGF)                      1,328.0                            883.0            1,076.0           1,076.0            1,462.0        1,462.0
 Total                                    1,328.0              0.0           883.0            1,076.0           1,076.0            1,462.0        1,462.0
 Positions
 Full-time                                    2.0                                  2.0             3.0                3.0              5.0             5.0
 Part-time
 Temporary
 Change in Revenues
 None
 Total                                        0.0              0.0                 0.0             0.0                0.0              0.0             0.0
 Estimated SUPPLEMENTAL (FY2022) cost:                                0.0                (separate supplemental appropriation required)
 Estimated CAPITAL (FY2023) cost:                                     0.0                (separate capital appropriation required)
 Does the bill create or modify a new fund or account?       No
 (Supplemental/Capital/New Fund - discuss reasons and fund source(s) in analysis section)
 ASSOCIATED REGULATIONS
 Does the bill direct, or will the bill result in, regulation changes adopted by your agency?              Yes
 If yes, by what date are the regulations to be adopted, amended or repealed?                              07/01/24
 Why this fiscal note differs from previous version/comments:
 This fiscal note, amended by the House Labor and Commerce Committee, decreases the number of positions and their associated
 costs in the first two years and gradually adds positions and associated costs in the out-years, if necessary. A one-time estimated
 contractual cost of $425.0 is added in the first year for a capacity expansion study by the National Renewable Energy Laboratory.
 Prepared By:             Representative Fields                                                                  Phone:         (907)465-2647
                          House Labor and Commerce Committee                                                     Date:          05/06/2022
                          Representative Spohnholz
                          House Labor and Commerce Committee
Printed 5/11/2022                                                    Page 1 of 3                                                         Control Code: OVTsK
                                                                                                            CSHB 301(L&C) - Fiscal Note 2
                                                   FISCAL NOTE ANALYSIS
STATE OF ALASKA                                                                     BILL NO. HB 301
2022 LEGISLATIVE SESSION
Analysis
   This legislation is not intended to constitute implementation by the Regulatory Commission of Alaska (RCA). Federal law
   still applies and could create conflicting obligations.
   This bill only applies to loadserving entities (LSEs) and states that limiting transmission rates to "costs" is surplus. If this
   limits rates to the direct expense of the transmission system, it could result in confiscatory rates or the utility not meeting
   covenants in debt instruments. Existing statutory law balances this consideration with the "just and reasonable" standard,
   requiring a new standard be created exclusively for LSEowned transmission. Regulations will be adopted that address
   implementation and how the LSEs or other entities would pay for any required transmission system upgrade expense.
   This bill states that a public utility constructing a facility may not do so unless the RCA determines that it is not detrimental
   to the LSEs ability to meet the renewable portfolio standard. It provides a broad definition of distributive energy systems
   that would include a customer rooftop solar installation. Distributive energy systems are subject to net metering tariffs.
   The RCAs powers are expanded to include an auditing function. These responsibilities will require additional resources
   and positions. It also establishes a noncompliance fine for LSEs that do not meet the renewable portfolio standard and
   provides for exemptions. The fines will be collected and held by the loadserving entities, and audited by the RCA to
   ensure that they will be invested in new renewable energy for each service area.
   Finally, this legislation also establishes Renewable Energy Credits that can be traded, sold, and transferred for value. Since
   the Credits system will not begin until FY2027, it is expected that contractor costs will gradually increase over time.
   Operations of the RCA are funded by the Regulatory Cost Charge (RCC), which is statutorily required to be set each year to
   fully support the RCA's operations. This legislation expands the responsibilities and scope of the RCA beyond current
   capacity, and the necessary increase in staff and costs will exceed the RCC cap. Therefore, this fiscal note reflects funding
   via an appropriation from the general fund.
   The RCA would not be able to accomplish the full scope of work in this bill with existing funding. The RCA would require
   additional positions, starting with two (2) in FY2023 to FY2024, three (3) in FY2025 to FY2026, and five (5) beginning in
   FY2027 and on; as well as outside support from contractors; and support for legal expenses. The RCA will contract with the
   National Renewable Energy Laboratory (NREL) for a onetime cost for an Alaska Capacity Expansion Model, estimated to
   be $425.0. NREL is a national laboratory of the U.S. Department of Energy, and this contract will offer a roadmap to
   inform the FY2023 to FY2050 implementation of this bill.
   Since the fulltime auditing capacity will not be needed until FY2027, the costs are expected to increase each year until
   FY2027, after which point they should remain fixed. The RCA will not be required to collect the fines, but rather audit that
   each loadserving entity collects the value of the fines for investment.
   Personal Services:                $ 344.0          Two new positions for auditing, complaint resolution, filings,
                                                      enforcement, etc in the first two years. Estimated at
                                                      $172.0/position/year
   Travel:                           $ 12.0           Travel for training and job duties
   Services:                         $ 922.0          Contractor support and legal costs
                                     $ 30.0           Core services costs ($15.0/position/year)
   Commodities:                      $ 20.0           New employee startup costs in FY2023 only ($10.0/position)
(Revised 11/23/2021 OMB/LFD)                                                                                            Page 2 of 2
HB301(HL&C)-RCA-RCA-5-6-22                                       Page 2 of 3                                                Control Code: OVTsK
                                                                                                        CSHB 301(L&C) - Fiscal Note 2
                                                 FISCAL NOTE ANALYSIS
STATE OF ALASKA                                                                  BILL NO. HB 301
2022 LEGISLATIVE SESSION
Analysis
   Operations of the RCA are funded by the regulatory cost charge, which is statutorily required to be set each year to fully
   support the RCA's operations. However, this increase in expenses will put the RCA over the statutory cap and would
   require a separate appropriation from the general fund.
(Revised 11/23/21 OMB/LFD)                                                                                         Page 3 of 3
HB301(HL&C)-RCA-RCA-5-6-22                                     Page 3 of 3                                              Control Code: OVTsK
Statutes affected: 
HB0301A, AM HB 301, introduced 02/04/2022: 42.05.770, 42.05.760, 42.05.790, 42.05.780, 42.05.900, 42.05.785, 42.05.711, 42.05.381, 42.05.431, 42.05.915, 42.05.905, 42.05.910, 42.05.920, 42.05.925
HB0301B, AM CSHB 301(ENE), introduced 04/29/2022: 42.05.381, 42.05.900, 42.05.770, 42.05.760, 42.05.790, 42.05.780, 42.05.785, 42.05.711, 42.05.431, 42.05.915, 42.05.910, 42.05.905, 42.05.920, 42.05.925, 44.83.940
HB0301C, AM CSHB 301(L&C), introduced 05/11/2022: 42.05.381, 42.05.900, 42.05.770, 42.05.760, 42.05.790, 42.05.780, 42.05.785, 42.05.711, 42.05.431, 42.05.915, 42.05.910, 42.05.905, 42.05.920, 42.05.925, 42.05.930, 44.83.940