22nd Alaska State Legislature
Information from the House Finance Committee Representative Eldon Mulder, Co-Chair
Represenative Bill Williams, Co-Chair

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Rep. Eldon Mulder
State Capitol, Room 507
Juneau, AK 99801-1182
Phone: (907) 465-2647
Fax: (907) 465-3518

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Rep. Bill Williams
State Capitol, Room 511
Juneau, AK 99801-1182
Phone: (907) 465-3424
Fax: (907) 465-3793

Sponsor Statement for HB 236
AIDEA Bonds for Gas Public Utilities

An Act relating to the contracting and financing authority of the Alaska Industrial Development and Export Authority; authorizing the authority to issue bonds in a principal amount not to exceed $76,000,000 to finance the acquisition, design, construction, inventory, and operation of natural gas, propane air, or manufactured gas public utility facilities; and providing for an effective date.

Released: April 21, 2001
Contact: Randy Ruaro, Legislative Aide to the House Finance Committee, at (907) 465-3424

HB 236 expresses the legislature's approval for AIDEA to proceed to evaluate the Southeast and Gulf of Alaska (SEAGA) gas project for bond funding under the AIDEA Development Finance Program. AS 44.88.095(g) prohibits AIDEA from issueing bonds for projects over the amount of $10,000,000 without the legislature's prior approval. The SEAGA gas project would continue to be evaluated by AIDEA for compliance with all other requirements under the law before bonds would be issued.

SEAGA will bring the benefits of gas utility service to the people and communities of Southeast Alaska and the Gulf of Alaska. On December 31, 1998 Alaska Intrastate Gas Company was granted Certificates of Public Convenience and Necessity by the Regulatory Commission of Alaska. The Certificates allow Alaska Intrastate Gas Company to provide gas utility service to homes and businesses in the following communities: the unified municipalities of Juneau and Sitka; the boroughs of Haines, Ketchikan, Kodiak, and Yakutat; the cities of Angoon, Cordova, Craig, Kake, Klawock, Petersburg, Skagway, Valdez, and Wrangell; and the communities of Klukwan and Metlakatla.

Gas utility service to these boroughs, cities and communities will be initiated in 2002 and completed by 2009. In the first two years gas utility service will be initiated in Juneau, Ketchikan and Sitka, and then expanded rapidly to cover the remaining communities. The overall cost to bring gas utility service to these 17 communities will exceed $100,000,000. The project will result in over 200 jobs during construction, and more than 35 permanent full time jobs within the region.

The project is based on the bulk movement of liquefied natural and petroleum gases by barge and/or ship throughout the service area. The utility gas is stored in each community as a liquid until needed. It is then re-gasified and distributed via buried pipeline to utility customers on demand. Gas supplies will initially be obtained from Canadian sources and shipped from the Port of Prince Rupert, BC, Canada. However, after initiation of gas utility service in the first three communities, utility service will transition to both Canadian and Alaskan gas resources as additional communities are brought on line.

The utility will primarily provide gas utility service to residential, small commercial, large commercial and industrial customers in the 17-community service area. Annual gas sales are expected to exceed 12 billion cubic feet within 10 years. Consumers will see immediate economic benefits from the availability of clean, efficient, and environmentally friendly utility gas service that can satisfy their space heating and hot water requirements. Replacing fuel oil with gas utility service is expected to generate energy cost savings of 15 - 40% for residents and businesses within the service area.

The AIDEA Development Finance Program focuses on the development, ownership, and operation of facilities within Alaska such as roads, ports and utilities which are essential to the economic well-being of an area; are financially feasible; and are supported by the communities in which they are located.

If AIDEA moves forward with project financing, which would depend upon the project meeting all requirements in the law, HB 236 places a limit of $76,000,000 on the amount of bonding provided to the project. Finally, HB 236 provides a sunset date for issuing bonds for this project of July 1, 2006.

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Alaska Industrial Development and Export Authority

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