A Free-Market Energy Blog

Alaska Bad Bill 2: Electric Utility Regulation (SB 257)

By -- April 4, 2024

“Our utilities are working in collusion with NGOs and ENGOs that promote decarbonization over affordability and reliability. Compromised utility board members will waste no time using this change in statute to gaslight everyone around them into believing this is what is best for them.”

The short title of Alaska’s SB 257 – Electric Utility Regulation refers to a monstrous process of government-on-government:

“An Act relating to the Regulatory Commission of Alaska; relating to public utilities; relating to electric reliability organizations; relating to the Alaska Energy Authority; relating to the Railbelt Transmission Organization; and providing for an effective date.”

This bill was introduced by the Alaska Senate Resources Committee on March 1, 2024. Per the sponsor statement, “Senate Bill 257 lays the groundwork for an electric system that is more affordable, more sustainable, more equitable, a grid that can power a prosperous future for generations of Alaskans to come.”

Sustainability and equity in our electric system? The last thing needed is an energy framework based on the highly politicized and dangerous United Nations Sustainability Goals. Equity means socialism.  Sustainability is the Tyranny of the 21st Century. Our legislators should be protecting us by rejecting these constructs with every ounce of “energy” they have.

Senate Bill 257 was referred to three committees – Senate Labor and Commerce, Senate Resources, and Senate Finance.  The bill is currently in the Senate Labor and Commerce Committee, chaired by Jesse Bjorkman.  The bill is being heavily sold by Senator Cathy Giessel, her staff, as well as Gwen Holdmann with University of Alaska Fairbanks’s Alaska Center for Energy and Power (ACEP). Gwen’s expertise includes decarbonization, energy transitions, and greenhouse gas inventories. 

The sponsor statement claims that the bill’s “open-access transmission network … will provide sound long-term governance and planning.” Planning? Government or market? Why central planning by unelected bureaucrats and technocrats where we can least afford it? They go on to state, scarily, that this “open-access transmission network” will enable and accelerate the energy transition in Alaska. 

Further justification for this bill reads:

The electric transmission system that provides electricity from Homer to Fairbanks serves more than 70% of our population along a 700 mile-long corridor. This system, however, is challenged with insufficient transfer capacity, outdated technology, and inefficient pricing, all of which threaten reliability and prevent new, diverse generation sources from serving ratepayers at the lowest possible cost.

The open-access idea is for Independent Power Producers (IPPs) to come onto the grid and provide power without paying for fees and upgrades required. ACEP’s presentation suggests we should adopt Texas’s methodology to “pool backbone transmission system costs and allocate those costs based on a coincident peak or load share ratio basis.” After-all, Texas (the state most hampered by government intervention) had it all right during the historical energy crisis from Winter Storm Uri. These policies in Texas actually cost blood. Must we follow?

The bill amends the statute that defines what a utility can request rate changes for. It adds clarification that the RCA “may” consider diversity of energy supply, promotion of load growth or enhanced energy reliability or security in determining if an electric utility’s rate is just and reasonable. Non distinctly it erodes and redefines the RCA’s mission which is to “Ensure that safe, efficient, and reliable utility and pipeline services are provided to the public at just and reasonable rates, thereby protecting consumer interests and promoting economic development.” 

Our utilities are working in collusion with NGOs and ENGOs that promote decarbonization over affordability and reliability. Compromised utility board members will waste no time using this change in statute to gaslight everyone around them into believing this is what is best for them.

Senate Bill 257 stands up and transfers power to yet another bureaucracy, the Railbelt Transmission Organization (RTO), and gives them the right to identify and transfer assets that may fall under the ownership of our member-owned co-ops. The bill states the transfer of management of assets to the RTO shall be done on or before July 1, 2026.  If they do not transfer the management of the assets, they will be subject to fines as determined by the RCA.

This bill appears to remove a lot of the duties originally granted to the Electric Reliability Organization (ERO).  It repeals the ERO tariff, which we are currently paying for (see ERO surcharge on your power bill).  It removes the entire ERO Integrated Resource Planning statute and sets out the ability for the RTO to establish tariffs related to the backbone transmission system. Upon RCA approval, it creates a revenue mechanism so the RTO can recover costs for their central planning services – to the tune of over $4M per year for agencies estimated. It is unclear what will happen with the existing ERO, the Railbelt Reliability Council (RRC). 

Their continued presence is mentioned in the bill and clarifies their responsibility is to “ensure the stable operation of the interconnect bulk-electric system served by the ERO and specifically require coordination with the RTO when developing reliability standards.” It is also unclear how the board seats of the RRC will evolve as the RTO states it will have representatives from each of the Railbelt utilities. The RRC has co-op members on their board today. Utility rate payers sure pay a lot of money for their executives to facilitate central planning and energy transitions to be done to us.

Public testimony is scheduled for Friday, April 5th at 1:30 PM in the Senate Labor and Commerce Committee. Oppose the creation of another state-owned enterprise.

  • Email the committee at Senate.Labor.And.Commerce@akleg.gov.
  • You can also submit a 50 word Public Opinion Message (POM) to the committee through the AK Leg website.

If the makers of this bill are heartfelt about the sales pitch and propaganda behind “reliable and affordable,” we propose an amendment that calls for repeal of this bill when it does not deliver as promised, and that promise is an overall reduction in cost to ratepayers and demonstrated increase of reliability. Similar to United States Senator Lisa Murkowski’s carbon tariff, PROVE IT act, we call this the PROVE IT amendment to demand performance for all of the empty promises to come.

Legislative Scoring

To summarize – this bill is a monstrosity. This as demonstrated in the detailed legislative scoring:

The score for this bill in its present state is a -8 with -9 being the worst, 0 neutral and +9 being the best in the way of freedom and liberty.

1.     Expand/Contract Government?

Does it create, expand or enlarge an agency, board or function/activity of government? Conversely, does it reduce the size/scope of government?

Score -1.  This bill increases the size of government, expanding and enlarging multiple agencies.  The fiscal notes at present is over $27M through FY 2030 to build government within the Alaska Energy Authority, (AEA) Regulatory Commission of Alaska (RCA) and the Alaska Industrial Development and Export Authority (AIDEA) This is all in addition to what we already pay for power and government, for nothing in return. 

2.     Govt Free Market Interference?

Does it give the government any new/expanded power to prohibit, restrict or regulate the free market? Conversely, does it eliminate/reduce govt intervention in the free market?

Score -1.  The RTO will be a state-owned enterprise under the Alaska Energy Authority.  Central planning is government free market interference.  This sets up the framework for authoritarianism to make people do things they might not want to do.  This is especially dangerous when this control can be used against the people.  This legislation unfairly games power production, instituting fraud on a massive scale that IPPs are reliable and affordable.  It places too many aspects of our economy and infrastructure and capital in the hands of unelected bureaucrats.

3.     Create / Remove Barriers to Enter Market?

Does it increase barriers to entry into the market?  Conversely, does it remove barriers to market entry?

Score -1.  It creates a lobsided playing field.  If it was an open market, you would not make rate payers pay for the infrastructure and entry fees of Independent Power Producers to come onto the grid.  This is taking the open market and subjecting it to corrupt crony controls. This is being setup by people calling themselves “stakeholders” when in reality they are nothing but rent seeking grifters.  This bill is not removing barriers, it just makes someone else pay for them.  If we were removing barriers, no power producers would be subjected to taxes and fees.  Additionally, it creates expense for existing generators to make up for the expense of the IPPs.  Voltage and frequency are stable when controlled by the utilities.  The IPPs show up when we don’t need them, they don’t show up when they are needed most, and the utilities bear the brunt of thermal cycling.  These decisions to prop up a market that doesn’t exist are placed in the hands of unelected bureaucrats that are not responsible to the rate payer.

4.     Increase Taxes, Fees, Etc.

Direct/Indirect increase of taxes, fees/assessments?  Conversely, does it reduce them?

Score -1.  Section 5 repeals the Electric Reliability Organization’s Railbelt Reliability Council tariff and moves it over to state control to allow for the creation of yet another middleman, the RTO.  Per the bill the “RTO is also given the authority to purchase, lease or acquire backbone transmission assets; construct, own, and operate new transmission assets; establish tariffs subject to the approval of the RCA” We see this charge on our electric bill currently, see “ERO Surcharge.”  The only problem that we have today with energy transmission are the problems created by instituting the IRA to facilitate installation of IPP renewables and storage to enable them.  These are solutions in search of a problem.  The state has no business inserting itself into the process of picking winners and losers.  This bill is wholesale state takeover and consolidation of power distribution assets where the RTO gets to “identify existing backbone transmission assets and that the Railbelt utilities will transfer management of those assets to the RTO by July 1, 2026.”  The ERO Surcharge on your electric bill is only just the beginning.

5.     Increase Govt Spending?

Does it increase govt spending or debt?  Conversely, does it reduce govt spending/debt?

Score -1.  This bill increases the size of government, expanding multiple agencies.  The fiscal notes at present is over $27M through FY 2030 to build government within the Alaska Energy Authority, (AEA) Regulatory Commission of Alaska (RCA) and the Alaska Industrial Development and Export Authority (AIDEA). This is all in addition to what we already pay for power and government, for nothing in return. 

6.     Govt Growth/Displace Private Sector

Does it grow government by displacing the private sector in the market? Conversely, does it eliminate or return a function of government to the private sector?

Score -1.  Our co-ops are the private sector.  This legislation is building up a giant co-op for the state.  This legislation takes away the review and ownership from the utilities.  The utilities will be nothing more than a billing entity that will not be able to determine its fate to properly serve their customers.  Assets will be transferred to the state.  Rate payers will lose control and representation of the decision-making process because it will be in the hands of the unelected and appointed bureaucrats.  Revenues to be used to build and maintain utility reliability today will be spent on increased operations and maintenance costs caused by IPPs tomorrow. 

7.     Govt Redist. of Wealth Tax Policy Reward Special Interests

Does it increase govt. redistribution of wealth? Tax policy to reward special interests/businesses/govt. employees.  Conversely does it decrease govt. redistribution?

Score -1.  The major component of this bill aims to remove fees for IPPs to come onto the grid without paying for the upgrades needed for them to do so.  The bill sets up a framework that would not need to exist if not for bureaucrats and special interests chasing federal dollars to “Upgrade” the grid for the allowance of more renewables.  It shifts system reliability, operation and maintenance costs that shouldn’t exist to rate and taxpayers to enable opportunistic grifters to further take advantage of them for subsidies and credits while falsely claiming to be cheap and reliable.

8.     Restrict Public Access to Information?

Does it restrict public access to information related to govt. activity or reduce accountability? Conversely, does it increase government transparency/accountability?

Score 0.  Although this bill doesn’t restrict public access related to government activity, this bill adds layers of complexity to an already complex energy system.  It reduces accountability to the utility and the utility boards that represents the rate payer when the state creates laws whose sole purpose is to consolidate power for the executive branch.  How many different alphabet agencies need to be involved?  The Railbelt Reliability Council, the Alaska Energy Authority, Alaska Industrial Development and Export Authority, Regulatory Commission of Alaska, our local utilities and now the Railbelt Transmission Organization.  Undoubtedly this complexity erodes effective public access to information.  Interestingly, non-governmental organizations have more access and influence than private citizens, they are writing legislation and invited in as expert testimony to support what they authored.  Right now if people wanted to be involved they can and would be through participating in their co-ops.  How will it that look now with bureaucrats managing the process?  This rating could very well be -1. 

9.     Violate U.S. Constitution or Alaska Constitution

Does it violate the spirit or the letter of either the U.S. Constitution or the Alaska Constitution? Conversely, does it uphold either of those constitutions?

Score -1.  Through section ten, the RTO has the right to identify and transfer assets that may fall under the ownership of Railbelt utilities over to the state.  The Railbelt utilities shall transfer management of those assets to the RTO on or before July 1, 2026.  If the Railbelt utility does not transfer management of backbone transmission assets, they will be subject to fines.  This is seizure of private assets.  Our forefathers never foresaw the problem we are having with the federal reserve and inflation – inflation is the mother of all taxes.  This legislation would not exist if not for inflationary fed dollars.  The IRA was written to morph and take over the state with massive subsidies for renewables and restriction on generation that we could be utilizing our abundant resources.  This legislation is also in conflict with the Alaska Constitution Article 8 – “It is the policy of the State to encourage the settlement of its land and the development of its resources by making them available for maximum use consistent with the public interest.

Total Score -8.

Please see the energy bills on the docket to be scored along with the ratings here

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