HB 307 — An Act relating to the Regulatory Commission of Alaska; relating to regulation of public utilities and pipeline carriers; relating to approval of wholesale power agreements; relating to electric reliability organizations; relating to loans for renewable energy resources projects from the power project fund; relating to the taxation of new electricity generation and storage facilities; relating to the Alaska Energy Authority; relating to the Railbelt Transmission Organization; and providing for an effective date.

(f) Members of the commission are in the exempt service and are entitled to a monthly salary equal to a step in Range 29 [RANGE 27] of the salary schedule in AS 39.27.011(a) for Juneau, Alaska.

The chair of the commission is entitled to a monthly salary equal to a step in Range 29 [RANGE 27] of the salary schedule in AS 39.27.011(a) for Juneau, Alaska.

* Sec.

5.

AS 42.05.141(b) is amended to read:

Enrolled HB 307 -2- (b) The commission shall perform the duties assigned to it under AS 42.45.100 - 42.45.190 and AS 44.83.700 - 44.83.720.

* Sec.

6.

AS 42.05.141 is amended by adding a new subsection to read:

(g) Nothing in this chapter limits the authority of the commission under this section or AS 42.05.151 necessary to implement provisions that remain applicable under AS 42.05.321(b) or 42.05.711.

* Sec.

7.

AS 42.05.254(a) is amended to read:

(a) A regulated public utility or a certificated utility that provides telecommunications services operating in the state shall pay to the commission an annual regulatory cost charge in an amount not to exceed the maximum percentage of adjusted gross revenue that applies to the utility sector of which the utility is a part.

The regulatory cost charges that the commission expects to collect from all regulated utilities and certificated utilities providing telecommunications services may not exceed the sum of the following percentages of the total adjusted gross revenue of all regulated public utilities and certificated utilities providing telecommunications services derived from operations in the state:

(1) not more than .98 [.7] percent to fund the operations of the commission, and (2) not more than .22 [.17] percent to fund operations of the public advocacy function under AS 42.04.070(c) and AS 44.23.020(e) within the Department of Law.

An exempt utility that does not provide telecommunications services shall pay the actual cost of services provided to it by the commission.

* Sec.

8.

AS 42.05.381 is amended by adding a new subsection to read:

(p) A determination of whether an electric utility's rate is just and reasonable may consider whether the purpose of the rate is to increase diversity of supply, promote load growth, or enhance energy reliability or energy security.

* Sec.

9.

AS 42.05.431(b) is amended to read:

(b) A wholesale power agreement between public utilities, or between a public utility and an independent power producer, is subject to advance approval of the commission.

A rate set in accordance with a wholesale power agreement must disclose a state or local tax exemption provided to a utility or independent power producer.

After a wholesale power agreement is in effect, the commission -3- Enrolled HB 307 may not invalidate any purchase or sale obligation under the agreement.

However, if the commission finds that rates set in accordance with the agreement violate this subsection or are not just and reasonable, the commission may order the parties to negotiate an amendment to the agreement and if the parties fail to agree, to use the dispute resolution procedures contained in the contract.

In this subsection, "independent power producer" means a legal entity, other than a public utility or a joint action agency established under AS 42.45.310, that owns or operates a facility for the generation of electricity.

* Sec.

10.

AS 42.05.711(b) is amended to read:

(b) Except as otherwise provided in this subsection, [AND IN] (o) of this section, and AS 44.83.700(d), public utilities owned and operated by a political subdivision of the state, or electric operating entities established as the instrumentality of two or more public utilities owned and operated by political subdivisions of the state, are exempt from this chapter, other than AS 42.05.221 - 42.05.281 and 42.05.385.

However, (1) the governing body of a political subdivision may elect to be subject to this chapter;

and (2) a utility or electric operating entity that is owned and operated by a political subdivision and that directly competes with another utility or electric operating entity is subject to this chapter and any other utility or electric operating entity owned and operated by the political subdivision is also subject to this chapter;

this paragraph does not apply to a utility or electric operating entity owned and operated by a political subdivision that competes with a telecommunications utility.

* Sec.

11.

AS 42.05.760(a) is amended to read:

(a) An electric utility must participate in an electric reliability organization if the utility operates in an interconnected electric energy transmission network served by an electric reliability organization certificated by the commission.

The commission may not require an electric reliability organization for an interconnected bulk-electric system if (1) all of the load-serving entities operating in the interconnected bulk- electric system are exempt under AS 42.05.711(b);

or Enrolled HB 307 -4- (2) the sum of annual electric energy sales made by load-serving entities operating in the interconnected bulk-electric system is less than 3,000,000 megawatt-hours.

* Sec.

12.

AS 42.05.762 is amended to read:

42.05.900.42.05.762.

Findings.Duties of an electric reliability organization.

TheAn legislatureelectric findsreliability that,organization forshall an(1) integrateddevelop transmissionreliability systemstandards that isprovide subjectfor toan theadequate integratedlevel resourcesof planningreliability process of an interconnected electric reliabilityenergy organization, (1) the elimination of per-unit wholesale transmission chargesnetwork; will increase the efficiency by which electricity service is provided;

(2) thedevelop eliminationintegrated ofresource multipleplans pancakedunder ratesAS is42.05.780(a); essential to the people of the state;

and (3) theestablish actual,rules reasonableto costs(A) toensure ownthat andthe operatedirectors anof integratedthe transmissionelectric systemreliability shouldorganization beand fairlythe recoveredelectric reliability organization act independently from theusers, load-servingowners, entitiesand connectedoperators toof the integratedinterconnected electric energy transmission system.network;

(B) equitably allocate reasonable dues, fees, and other charges among all load-serving entities connected to the interconnected electric energy transmission network for all activities under AS 42.05.760 - 42.05.790;

(C) provide fair and impartial procedures for the enforcement of reliability standards;

(D) provide for reasonable notice and opportunity for public comment, due process, openness, and balancing of interests in exercising its duties;

[AND] (4) be governed by a board that (A) includes as nonvoting members the chair of the commission or the chair's designee and the attorney general or the attorney general's designee;

and (B) is formed as (i) an independent board;

(ii) a balanced stakeholder board;

or (iii) a combination independent and balanced stakeholder board;

and -5- Enrolled HB 307 (5) prioritize the reliability, stability, and cost to consumers of the interconnected bulk-electric system served by the electric reliability organization.

* Sec.

13.

AS 42.05.770 is amended to read:

42.05.905.42.05.770.

IntegratedRegulations. transmission system cost recovery.

(a) The commission shall establishadopt aregulations transmissiongoverning costelectric recoveryreliability mechanismorganizations, toreliability ensurestandards, that the actual, reasonable costs of owning and operatingmodifications an integrated transmission system are recovered to achievereliability thestandards findingsconsistent statedwith inthis ASsection. 42.05.900.

TheRegulations transmissionunder costAS recovery42.05.760 mechanism- 42.05.790 must take(1) intorequire accountthat eachan load-servingelectric entity'sreliability loadorganization's intariff comparisoninclude to[(A) theSTANDARDS totalFOR] loadnondiscriminatory onstandards thefor integrated[OPEN transmissionACCESS system.TRANSMISSION AND] interconnection;

(b)[(B) TheSTANDARDS commissionFOR shallTRANSMISSION developSYSTEM COST RECOVERY;] (2) provide a process to graduallyideny transitionand theresolve collectionconflicts ofbetween transmissiona costsreliability recoveredstandard throughand a load-servingfunction, entity'srule, basetariff, ratesrate andschedule, wheelingor chargesagreement tothat tariffshas thatbeen reflectaccepted, theapproved, transmissionadopted, costor recoveryordered mechanism.by the commission;

(3) allow an electric reliability organization to recover its costs through surcharges added to the rate for each participating load-serving entity.

* Sec.

14.

AS 42.06.286(a) is amended to read:

(a) A pipeline carrier operating in the state shall pay to the commission an annual regulatory cost charge in an amount not to exceed the sum of the following percentages of gross revenue derived from operations in the state:

(1) not more than .98 [.7] percent to fund the operations of the commission, and (2) not more than .22 [.17] percent to fund operations of the public advocacy function under AS 42.04.070(c) and AS 44.23.020(e) within the Department of Law.

A regulatory cost charge may not be assessed on pipeline carrier operations unless the operations are within the jurisdiction of the commission.

* Sec.

15.

AS 42.45.010 is amended by adding new subsections to read:

(m) A loan for a renewable energy resources project in which the cumulative state monetary involvement, through loans, grants, and bonds, is at least $5,000,000 may not be granted for a term that exceeds 50 years and may, notwithstanding (f)(2) of this section, be granted at an interest rate that is the lesser of Enrolled HB 307 -6- (1) three percent lower than the rate determined under (f)(2)(A) of this section, but not less than one percent;

or (2) a rate equivalent to the rate determined under (f)(2)(B) of this section.

(n) In (m) of this section, "renewable energy resources" has the meaning given in AS 42.45.045(l).

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16.

AS 43.98 is amended by adding a new section to read:

Article 2A.

Taxation of New Electricity Generation and Storage Facilities.

42.05.910.43.98.100.

IntegratedTaxation transmissionof systemnew association.electricity generation and storage facilities.

(a) TheAn commissionelectricity shallgeneration requirefacility allor utilitieselectricity thatstorage ownfacility orthat operateis aconstructed portionand ofplaced aninto integratedservice transmissionon systemor andafter areJuly subject1, to2024, anis electricnot reliabilitysubject organization to formstate anand HBlocal 307ad -2-valorem, HB0307aincome, Newand Textexcise Underlinedtaxes [DELETEDif TEXTthe BRACKETED]electricity 33-GH2489\Ageneration integratedfacility transmissionis system(1) associationoperated toby assista inpublic administeringutility theor systemjoint ofaction transmissionagency costestablished recovery.under AS 42.45.310;

Theor commission(2) shalloperated requireby thean associationentity toother filethan tariffsa topublic achieveutility theand purposesprovides ofpower ASonly 42.05.900to -a 42.05.915.public utility.

(b) TheIn integratedthis transmissionsection, system"public associationutility" mayhas notthe ownmeaning assetsgiven ofin theAS integrated42.05.990. transmission system.

(c)* NotwithstandingSec. (b) of this section, the integrated transmission system association is a public utility.

17.

AS 44.83.030 is amended to read:

42.05.915.44.83.030.

Membership of the authority.

The members of the board of directors of the authority [ALASKA ENERGY AUTHORITY] are (1) the commissioner of revenue;

(2) the commissioner of commerce, community, and economic development;

and (3) six public members appointed by the governor as follows:

(A) one member with expertise or experience in managing or operating an electric utility that is not connected to an interconnected electric energy transmission network as defined in AS 42.05.790;

(B) one member with expertise or experience in developing energy projects in rural communities;

(C) one member with expertise or experience in managing or operating an electric utility connected to an interconnected electric -7- Enrolled HB 307 energy transmission network as defined in AS 42.05.790;

(D) one member with expertise or experience in managing a municipally owned utility located off the interconnected road system or joint action agency established under AS 42.45.310 located off the interconnected road system;

(E) one member with financial expertise in large power generation project development;

and (F) one member with expertise or experience in finance, energy policy, energy technology, engineering, law, or economics [THE MEMBERS OF THE ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY].

* Sec.

18.

AS 44.83.030 is amended by adding new subsections to read:

(b) If the commissioner described in (a)(1) or (a)(2) of this section is unable to attend a meeting of the authority, the commissioner may, by an instrument in writing filed with the authority, designate a deputy or director to act in the commissioner's place as a member of the board at the meeting.

For all purposes of this chapter, the designee is a member of the board at the meeting.

(c) Public board members described in (a)(3) of this section serve for three- year terms.

(d) If a vacancy occurs in the membership of the board, the governor shall immediately appoint a member for the unexpired portion of the term.

* Sec.

19.

AS 44.83.040(a) is amended to read:

(a) The board of directors of the authority shall elect a chair and vice-chair every two years from among its members [OF THE ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY SHALL SERVE AS OFFICERS OF THE ALASKA ENERGY AUTHORITY].

The powers of the authority [ALASKA ENERGY AUTHORITY] are vested in the board of directors, and five board members [FOUR DIRECTORS OF THE AUTHORITY] constitute a quorum.

Action may be taken and motions and resolutions adopted by the authority [ALASKA ENERGY AUTHORITY] at a meeting by the affirmative vote of at least five board members [A MAJORITY OF THE DIRECTORS].

The members of the Enrolled HB 307 -8- board of directors of the authority [ALASKA ENERGY AUTHORITY] serve without compensation, but they shall receive the same travel pay and per diem as provided by law for board members under AS 39.20.180.

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20.

AS 44.83.040 is amended by adding a new subsection to read:

(e) The authority may, as the authority considers advisable, appoint persons as officers, including an executive director, and employ professional advisors, counsel, technical experts, agents, and other employees.

The executive director and employees of the authority are in the exempt service under AS 39.25.

* Sec.

21.

AS 44.83.080 is amended to read:

Sec.

44.83.080.

Powers of the authority.

In furtherance of its corporate purposes, the authority has the following powers in addition to its other powers:

(1) to sue and be sued;

(2) to have a seal and alter it at pleasure;

(3) to make and alter bylaws for its organization and internal management;

(4) to adopt regulations governing the exercise of its corporate powers;

(5) to improve, equip, operate, and maintain power projects and bulk fuel, waste energy, energy conservation, energy efficiency, and alternative energy facilities and equipment;

(6) to issue bonds to carry out any of its corporate purposes and powers, including the establishment or increase of reserves to secure or to pay the bonds or interest on them, and the payment of all other costs or expenses of the authority incident to and necessary or convenient to carry out its corporate purposes and powers;

(7) to sell, lease as lessor or lessee, exchange, donate, convey, or encumber in any manner by mortgage or by creation of any other security interest, real or personal property owned by it, or in which it has an interest, when, in the judgment of the authority, the action is in furtherance of its corporate purposes;

(8) to accept gifts, grants, or loans from, and enter into contracts or other transactions regarding them, with any person;

(9) to deposit or invest its funds, subject to agreements with -9- Enrolled HB 307 bondholders;

(10) to enter into contracts with the United States or any person and, subject to the laws of the United States and subject to concurrence of the legislature, with a foreign country or its agencies, for the construction, financing, operation, and maintenance of all or any part of a power project or bulk fuel, waste energy, energy conservation, energy efficiency, or alternative energy facilities or equipment, either inside or outside the state, and for the sale or transmission of power from a project or any right to the capacity of it or for the security of any bonds of the authority issued or to be issued for the project;

(11) to enter into contracts with any person and with the United States and, subject to the laws of the United States and subject to the concurrence of the legislature, with a foreign country or its agencies for the purchase, sale, exchange, transmission, or use of power from a project, or any right to the capacity of it;

(12) to apply to the appropriate agencies of the state, the United States, and a foreign country and any other proper agency for the permits, licenses, or approvals as may be necessary, to acquire, construct, maintain, and operate power projects in accordance with the licenses or permits, and to obtain, hold, and use the licenses and permits in the same manner as any other person or operating unit;

(13) to enter into contracts or agreements with respect to the exercise of any of its powers, and do all things necessary or convenient to carry out its corporate purposes and exercise the powers granted in this chapter;

(14) to recommend to the legislature (A) the pledge of the credit of the state to guarantee repayment of all or any portion of revenue bonds issued to assist in construction of power projects;

(B) an appropriation from the general fund (i) for debt service on bonds or other project purposes;

or (ii) to reduce the amount of debt financing for the project;

(15) to carry out the powers and duties assigned to it under AS 42.45 Enrolled HB 307 -10- and AS 44.83.700 - 44.83.720;

(16) to make grants or loans to any person and enter into contracts or other transactions regarding the grants or loans;

(17) to promote energy conservation, energy efficiency, and alternative energy through training and public education;

(18) to acquire a Susitna River power project, whether by construction, purchase, gift, or lease, including the acquisition of property rights and interests by eminent domain under AS 09;

(19) to perform feasibility studies and engineering and design with respect to power projects;

(20) to acquire battery and other energy storage systems, whether by direct ownership, purchase, grant, gift, or lease.

* Sec.

22.

AS 44.83.090(b) is amended to read:

(b) The authority is not subject to the jurisdiction of the Regulatory Commission of Alaska, except as provided in AS 44.83.700(d).

Nothing in this chapter, except as provided in AS 44.83.700 - 44.83.720, grants the authority jurisdiction over the services or rates of a public utility or diminishes or otherwise alters the jurisdiction of the Regulatory Commission of Alaska with respect to a public utility, including any right the commission may have to review and approve or disapprove contracts for the purchase of electricity by a public utility other than wholesale agreements and contracts described in AS 42.05.431(c)(1).

* Sec.

23.

AS 44.83 is amended by adding new sections to read:

Article 5A.

Railbelt Transmission Organization.

Sec.

44.83.700.

Railbelt Transmission Organization.

(a) The Railbelt Transmission Organization is created for the purpose of establishing an open access transmission tariff that (1) provides for recovery of transmission costs and related ancillary services;

and (2) replaces wholesale charges assessed by unit by each utility in the Railbelt with a new mechanism that fairly recovers and equitably allocates the costs of operating the backbone transmission system.

-11- Enrolled HB 307 (b) For administrative purposes, the transmission organization is a division of the Alaska Energy Authority.

(c) To assist in administering the open access transmission tariff, the governance structure for the transmission organization must be made up of a representative from the authority, a representative from each Railbelt utility, and, as an ex officio nonvoting representative, the chief executive officer of the applicable electric reliability organization or the chief executive officer's designee.

(d) Notwithstanding AS 42.05.711(b) and AS 44.83.090(b), the transmission organization is subject to the jurisdiction of the commission for the purposes of AS 44.83.700 - 44.83.720.

The commission shall require the transmission organization to apply for a certificate under AS 42.05.221 and file tariffs to achieve the purposes of AS 44.83.700 - 44.83.720.

Sec.

44.83.710.

Revenue mechanism.

(a) The transmission organization shall hold and administer a commission-approved nondiscriminatory open access transmission tariff for the backbone transmission system.

(b) The transmission organization shall file with the commission a nondiscriminatory open access transmission tariff consistent with Federal Energy Regulatory Commission standards to remove impediments to competition in the wholesale bulk power marketplace in the state.

If the transmission organization does not file a nondiscriminatory open access transmission tariff with the commission on or before July 1, 2025, the commission shall, after notice and opportunity for public comment, establish a nondiscriminatory open access transmission tariff consistent with this section.

(c) The nondiscriminatory open access transmission tariff must, as approved by the commission, (1) pool backbone transmission system costs and allocate those costs through certificated load-serving entities on a coincident peak or load ratio share basis, or a combination of both;

and (2) account for (A) required backbone transmission system ancillary services;

(B) backbone transmission system congestion;

Enrolled HB 307 -12- (C) disruptions to the backbone transmission system that result in the isolation of one geographical area of the backbone transmission system from another for more than 24 hours;

and (D) costs to own and operate the backbone transmission system, as established by the commission or by contract, including transmission costs associated with the Bradley Lake hydroelectric project.

(d) A Railbelt utility shall pass the commission-approved transmission costs directly and transparently to the utility's customers.

Sec.

44.83.720.

In AS 42.05.90044.83.700 - 42.05.915,44.83.720, (1) "electric"backbone reliabilitytransmission organization"system" hasmeans the meaningtransmission givenassets in ASthe 42.05.790;Railbelt that facilitate the transmission of electrical power under the standards established by the Federal Energy Regulatory Commission;

(2) "integrated"commission" transmission system" means the non-generationRegulatory assetsCommission of anAlaska; interconnected electric energy transmission network;

a(3) radial"Railbelt" transmissionmeans line constructed after the effectivegeographic dateregion offrom AS 42.05.900 - 42.05.915 for the purposeKenai ofPeninsula connecting a single generation asset to theInterior interconnectedAlaska electric energy transmission network to effectuate contractual sales of energy to load serving entities is part of the integrated transmission system only if the commission determines that the line is economicallyconnected necessary to enablea thecommon establishmentelectric oftransmission multiplebackbone; new generation assets;

(3)(4) "load-serving"Railbelt entity"utility" hasmeans thea meaningpublic givenelectric utility certificated to operate in ASthe 42.05.790;Railbelt that operates backbone transmission system assets;

(4)(5) "transmission costs"organization" includemeans the costsRailbelt toTransmission ownOrganization and operate the integrated transmission system, as established by theAS commission44.83.700. or by contract, including costs associated with the Bradley Lake hydroelectric project.

HB0307a* -3-Sec. HB 307 New Text Underlined [DELETED TEXT BRACKETED]

24.

The uncodified law of the State of Alaska is amended by adding a new section to read:

TRANSITION:

REGULATORY COMMISSION OF ALASKA MEMBERS.

An individual who is a member of the Regulatory Commission of Alaska on the day before the effective date of sec.

3 of this Act continues to serve on the Regulatory Commission of Alaska until the member's term expires and a successor is appointed and qualified.

The governor shall make appointments for vacancies that occur on or after the effective date of sec.

3 of this Act in accordance with AS 42.04.020(a), as amended by sec.

3 of this Act.

* Sec.

25.

The uncodified law of the State of Alaska is amended by adding a new section to read:

TRANSITION:

ALASKA ENERGY AUTHORITY BOARD MEMBERS.

Notwithstanding AS 44.83.030(c), added by sec.

18 of this Act, the governor shall appoint -13- Enrolled HB 307 two public members of the initial Alaska Energy Authority board of directors to one-year terms, two public members to two-year terms, and two public members to three-year terms.

* Sec.

26.

The uncodified law of the State of Alaska is amended by adding a new section to read:

TRANSITION:

RAILBELT TRANSMISSION ORGANIZATION.

To facilitate the development and management of the Railbelt backbone transmission system open access transmission tariff, the Alaska Energy Authority and the Railbelt utilities, as defined in AS 44.83.720, added by sec.

23 of this Act, shall form the Railbelt Transmission Organization under AS 44.83.700, added by sec.

23 of this Act, on or before January 1, 2025, modeled after the governance structure of the Bradley Lake Hydroelectric Project, as outlined in the Bradley Lake Power Sales Agreement, including the creation, duties, and methods of the Bradley Lake Project Management Committee, with any adjustments the parties to the agreement determine are necessary.

On or before January 1, 2025, the Railbelt Transmission Organization shall apply to the Regulatory Commission of Alaska for a certificate under AS 42.05.221 to achieve the purposes of AS 44.83.700 - 44.83.720, added by sec.

23 of this Act.

* Sec.

27.

Section 8 of this Act takes effect immediately under AS 01.10.070(c).

* Sec.

28.

Except as provided in sec.

27 of this Act, this Act takes effect July 1, 2024.

Enrolled HB 307 -14-