Alaska House approves bill designed to unify Railbelt electric transmission system

Rep. George Rauscher, R-Sutton, speaks Tuesday on the floor of the Alaska House in favor of legislation that revamps the transmission system that Railbelt utilities use to ship energy. Rauscher is the bill's sponsor. (Photo by James Brooks/Alaska Beacon)

The Alaska House on Tuesday approved a bill that would overhaul the way electricity is transmitted along the most heavily populated region of the state.

The bill, originally introduced by Gov. Mike Dunleavy, is one of the highlights in a part of a broader effort to address impending shortages of deliverable natural gas used to fuel electricity and produce heat.

The measure, House Bill 307, seeks to unify the transmission system that runs along the corridor from Fairbanks to the Kenai Peninsula that is referred to as the Railbelt. The system is currently used by four separate utilities located in different geographic regions along the line. Each utility is a cooperative owned by the residents they serve.

Key provisions in the bill eliminate practices known as “wheeling” and “pancaking,” which refer to the added charges imposed on utilities for energy that runs through different segments of the system. Other provisions set up a new state-run system for managing the transmission line in its entirety. Additionally, the bill would allow independent power producers – a category including new solar farms and other producers of renewable energy – to be exempted from local property and other taxes, as utilities already are.

The bill “represents a significant step forward in aligning Alaska’s energy framework and aligning standards by enhancing competition, ensuring equitable recovery, promoting grid reliability and helping secure efficient and affordable energy,” said the prime sponsor, Rep. George Rauscher, R-Sutton.

While the bill passed by a wide margin, 36-4, getting it to the floor required much work and compromise, members said.

Rep. Zack Fields, D-Anchorage, called it “probably the most complicated legislation” being considered by lawmakers, and he thanked Rauscher for what he said was “very diligent and bipartisan and bicameral work” on the bill.

Supporters used a variety of metaphors to describe the problems of a transmission system they characterized as antiquated.

Fields said the bill would “end the balkanization” of the energy transmission up and down the Railbelt.

Rep. Kevin McCabe, R-Big Lake, likened the current system to not a grid but a flimsy and vulnerable extension cord. “Problem is, it’s not an extension cord. It’s four different cords right now that are all plugged in together,” he said. The utilities that use the different cords fight each other, though in a “gentlemanly” way, he said. It is a system that needs the overhaul provided by the bill, he said.

“We need a transmission line that is owned by somebody. And the only somebody that can possibly own that transmission line and buy the power from the co-ops is us, is the state,” McCabe said.

Rep. Alyse Galvin, D-Anchorage, said that while the bill may not be perfect, “this is a unique opportunity, where we are sending a message that we would like to see all of the utilities — which, by the way, are co-ops — to play any sandbox together,” she said.

Additionally, the bill is timely because of the large sums of federal infrastructure money coming into Alaska to supply renewable energy and make other energy modernizations, she said. “We may never see the kind of funds that are going to be coming into the state like this …. And I don’t want to lose that opportunity,” she said.

All three Kenai Peninsula members were opposed, along with Rep. David Eastman, R-Wasilla.

The system’s restructuring, as planned in the bill, affects each of the four utilities differently. Those on the northern end of the system have been more supportive, the two more southern utilities have expressed concerns about potential increases in costs of the energy they use.

In floor comments, Rauscher conceded that the Homer Electric Association, a Homer-based utility at the southern end of the Kenai Peninsula, could be negatively affected by the new system, at least in the short term. That’s because it would no longer enjoy a cost advantage from being close to the Bradley Lake hydropower plant. But in the long term, he said, the new system is expected to be fairer and more efficient.

Rep. Sarah Vance, R-Homer, said her opposition to the bill was reluctant.

“But I have to represent my constituents who have a lot of hesitation about the provisions,” she said. Electric rates have already increased in her district because of natural gas supply problems, she said.

She also objected to the way the unified transmission line would be managed. Instead of having it run by the state, she said, it should be owned by the utilities.

Rep. Ben Carpenter, R-Nikiski, also objected to what he said was a “monumental” change in the way the electrical system is operated.

“I can’t help but point out that the way that we are approaching the solution of this problem is a very, very socialist concept. It’s state-owned, state-run, state-directed. And I would challenge you to find where that actually has worked out well for the state of Alaska,” he said.

Also voting against the bill was Rep. Justin Ruffridge, R-Soldotna, who said his opposition was reluctant. He objected to the property tax exemption for independent power producers and the new organization that “will essentially create a third level of bureaucracy for the transmission of electricity in our state,” he said.

The bill now goes to the Senate for consideration in that body. Wednesday is the scheduled last day of the legislative session.

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