Dunleavy signs three bills to address high energy costs and promote renewable power in Alaska

Gov. Mike Dunleavy signed three bills into law Wednesday to help address energy concerns in Alaska such as high costs and a lack of energy diversity.

The bills won’t immediately resolve a looming shortage of natural gas from Cook Inlet, but they create important changes in the right direction, observers said.

The bills are focused on helping the state tap into its energy sources to benefit Alaskans, including in areas such as wind, solar and geothermal power along with traditional fuels like natural gas, Dunleavy said.

The bills will also help set the stage for future initiatives, he said.

“I think we all agree that we’re behind the eight ball, but this helps us catch up,” he said. “And I just would caution folks to get ready for this coming year because I think there’s gonna be a lot of good initiatives that will be discussed and hopefully get across the finish line.”

The signing took place in Anchorage in the offices of the Alaska Energy Authority, a state entity tasked with reducing energy prices in Alaska.

The state faces dire concerns about energy supply. The Alaska Department of Natural Resources expects natural gas from Cook Inlet to begin falling short by 2027. That’s expected to force utilities to import gas, leading to higher prices for electricity and heat.

Enstar, the natural gas supplier in Southcentral Alaska, has said it’s working to resolve an estimated shortfall in its gas supply that could arise next year.

Flanked by lawmakers and state officials, the governor signed:

• House Bill 50: Creates a statutory framework that could allow, say, oil companies to store carbon dioxide in Alaska’s depleted oil and gas reservoirs. It’s designed to provide a revenue source for the state as companies lease the space as part of the fast-growing global carbon sequestration market.

• House Bill 273: Establishes a fund under the Alaska Housing Finance Corp. to assist with financing for the development of renewable energy projects. The fund would be intended to capture federal clean energy funding and offer loans for renewable energy projects such as residential solar power installations.

• House Bill 307: Establishes the integrated Railbelt electric transmission organization within the Alaska Energy Authority, an effort more than half a century in the making. The bill is designed to reduce power costs for ratepayers in the long term and integrate more renewable energy into the system. It phases out wheeling rates, which are fees charged by utilities to transmit power across their section of the grid.

House Bill 307 will incentivize new energy development, Dunleavy said. Under the bill, renewable power producers would be exempt from municipal property and sales taxes on new projects.

“House Bill 307 is one of the most important pieces of legislation affecting energy policy for the Railbelt in over 30 years,” said Curtis Thayer, head of the Alaska Energy Authority, who was also part of the signing ceremony.

The bill will help the entity reduce the cost of energy for Alaskans, he said.

The newly signed bills are a huge deal and will help the economy in a variety of ways, said state Sen. Cathy Giessel, an Anchorage Republican and co-chair of the Senate Resources Committee.

They will not immediately resolve concerns about a future shortage of gas supply from Cook Inlet, said Giessel, who was part of the signing ceremony.

But the carbon-capture bill could help resolve the shortage because it will allow the Alaska Industrial Development and Export Authority to provide loans to producers based on their reserves. That could potentially help small companies with limited financial resources pursue more gas production, she said.

It also can help expand the availability of natural gas storage in Cook Inlet, she said. That could help ensure that more gas is available in winter when demand for heat and power soars.

Concerns about those issues were highlighted in winter, when a severe cold streak boosted demand for gas and a critical gas storage facility in Cook Inlet struggled to deliver enough of the resource.

Chris Rose, head of the Renewable Energy Alaska Project, said House Bill 307 will encourage more renewable-power producers to put their power on the Railbelt grid between Homer and the Fairbanks area. That can help conserve Cook Inlet natural gas, he said.

Also, the fund under the Alaska Housing Finance Corp. will help provide affordable loans for Alaskans to help make their homes and businesses more energy efficient, he said. Widespread use of rooftop solar could provide a tremendous amount of summer electricity, reducing pressure for more natural gas, he said.

The bills “are a step forward, but there’s more to do,” he said.

The Legislature needs to establish a renewable portfolio standard to ensure that utilities provide a certain amount of renewable power, he said.

“We still need a requirement that the Railbelt utilities increase the percentage of renewable energy that they’re generating,” he said. “They talk a lot about adding renewables, but the fact is we’re still about 80 to 85% relying on natural gas, which is going to get way more expensive in a few years.”