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ARIZONA STATE LEGISLATURE
Forty-seventh Legislature – Second Regular Session
GENERATION AND ENERGY EFFICIENCY
Minutes of Meeting
HHR 5 -- 3:00 p.m. or upon recess or adjournment of Floor
Chairman Lucy Mason called the meeting to order at 3:39 p.m. and attendance was noted by the secretary.
Mr. Brown
Mr. Konopnicki
Mrs. Mason, Chair
Ms. Aguirre
Mrs. Chase
Mr. Jones
Mr. Nelson
Mr. Pierce
Mitch Menlove, Arizona Solar Industry Association
Tami Stowe, Majority Research Analyst
Representative Ted Downing
Yvonne Hunter, Arizona Public Service (APS)
Tom Dorn, Center for Energy and Economic Development (CEED)
Updates on Renewable Generation and Energy Efficiency Bills
Chairman Mason announced that the first order of business would be to inform the committee of the status of renewable generation and energy efficiency bills in this legislative session.
Mitch Menlove, Arizona Solar Industry Association, addressed the committee to update them on H.B. 2429, solar energy tax incentives, which he stated is currently sitting in the Senate Rules committee with all the other money bills.
He then described three specific concerns and requests which have been communicated to him from the Governor’s office:
1. regarding the $7M cap in tax credits, the Governor has requested a decrease to a $5M cap
2. regarding the removal of any cap on TPT (transaction privilege tax), the Governor has requested a $50K cap on TPT
3. regarding the property valuation, the Governor has requested the removal of a property valuation cap
Chairman Mason asked if there was a concern about abuse of the property valuation cap; Mr. Menlove replied that he thought the concern was that there would be no good way to determine a cap as solar projects become very expensive.
Chairman Mason stated her concern that if the Frito-Lay commercial project is unable to use incentives, increased costs will be passed on to consumers.
Mr. Menlove stated that Arizona must be able to compete with neighboring states of California, Nevada, and New Mexico which currently allow TPT and property valuation exemptions.
Chairman Mason then updated the committee on H.B. 2427, tax credit; renewable energy, which underwent significant changes, resulting in a combined heat and power (CHP) solution for emergency systems. A CHP system must continue working in times of emergency or power outage, and to get the tax credit the emergency system must be 70 percent more efficient than standard power sources, which can result in tremendous cost savings. This CHP bill is currently held in House Rules because it is a tax credit bill.
Tami Stowe, Majority Research Analyst, updated the committee on H.B. 2430, energy cost saving measures; requirements, which has been signed by the Governor and chaptered (137).
This bill increases the guaranteed energy cost savings performance contracting terms for school facilities to 25 years from 10 years, and it increases the life cycle cost methods and performance contracting terms for state buildings to 25 years from 15 years.
It also clarifies that the maximum performance contract term will be over the expected life of the energy cost savings measures implemented, or 25 years, whichever is shorter. It requires the performance contract to provide that the energy and operational savings generated cover all costs after accounting for any financial incentives or assistance provided by utilities, rather than the contractor bear all costs, and it adds the definition of combined heat and power to the performance contracting program, which is any system that simultaneously or sequentially generates both electric or mechanical energy and useful thermal energy using the same unit of fuel.
Presentation on Gasification Legislation
Representative Ted Downing addressed the committee to speak about the work that he and Mr. Konopnicki have done together on energy-related legislation. He stressed the significance of energy and thanked Chairman Mason for her focus on energy policy in Arizona, a desert state which, except for coal in the northern part, does not have a source of energy in it.
He described a discussion with Sally Fernandez, Vice President of Raytheon, where he learned details of a new focus on clean energy technologies coming out of the Administration; this was later presented in President Bush’s State of the Union address this year. Mr. Konopnicki was brought in, and the three of them discussed what might be done. Then they set up meetings with representatives from the power sector (SRP, APS, Unisource, Tucson Electric and Grand Canyon), as well as engineers from different fields.
A task force was formed, comprised of seventeen members, including the two Northern Arizona tribes with proven coal reserves, and focused on what kinds of clean energy technologies would be appropriate and applicable to Arizona. The purpose of the task force is four-fold:
1. to educate citizens and decision makers about emerging multi-emissions control technologies through private and public partnerships
2. to identify new and expanded businesses
3. to encourage manufacturing research and development in this area
4. to encourage research on mercury emissions in the coal industry, which is a landfill problem and does not produce an economically viable by-product (Mr. Downing described a bromine scrubbing technique, which can be used over and over, and whose by-products - sulfuric acid and hydrogen - are useful.)
He stated that he and Mr. Konopnicki are hoping for a lot of activity from this task force which is comprised of people who would typically be considered competitors, but who are working together on this important project.
Mr. Konopnicki asked about the expected outcomes, and Mr. Downing replied that the Federal government will pay half the cost of power plant construction, so he is hoping to get that contract for the state of Arizona.
Mr. Konopnicki asked about future technology, and Mr. Downing replied that the SRT Group came to Phoenix for meetings and is now considering relocation to Arizona. Mr. Konopnicki stated that that is an exciting prospect and expressed his optimism.
Chairman Mason expressed her thanks to both Representative Downing and Representative Konopnicki for their work, and reiterated her belief that Arizona must learn to incentivize its citizenry and corporations, and that this will result in a snowballing of the benefits of new technology.
Public Comment
Yvonne Hunter, Arizona Public Service (APS), expressed her strong support of Representatives Downing and Konopnicki’s task force and will work to help them meet their goals.
Ms. Hunter stated that APS is a regulated utility, and the Arizona Corporation Commission has influence over what can be included in APS’ portfolio of renewable supplies and how those are acquired in order to meet customer demand. APS added their one millionth customer this year, and has experienced extraordinary growth. Their newest project is a solar trough facility located on the Saguaro Power Plant location, which is connected to the grid and provides one megawatt of power, enough for 10,000 customers.
Other projects in which APS has an advisory role include:
· Phoenix Civic Plaza expansion with a solar array on the roof
· Credit Purchase Program, a renewable energy standard for approval by the Arizona Corporation Commission
¨ reimbursement to residential customers
¨ solar electricity provisions for commercial customers
¨ ability to purchase renewable resources from outside of Arizona
– TransWest Express Project, a transmission project wherein Wyoming coal and wind energy is brought to Arizona
¨ chicken manure resource
¨ partnership with a biomass plant in northeastern Arizona
Ms. Hunter stated that she looks forward to next year when APS will have other new ideas and opportunities to share with the Legislature.
Tom Dorn, Center for Energy and Economic Development (CEED), explained that CEED is a coalition of coal-related industries: transporters, mining, and generation. He commended the committee for the effort to discuss coal, which has a very bright future in this country. It’s not “your mom and dad’s coal” but a new clean technology that will help the US become more energy independent. Arizona is in a good position as this technology is developed, and he looks forward to working on a study committee.
Chairman Mason spoke about H.B. 2843, tax credit; energy efficient products, which started out with twelve energy efficient products which would save money for consumers and businesses and boost the economy through these savings, and protect the environment. Those twelve have now been pared down to three:
This is an incentive bill through state tax credits, to help people educate themselves on ways to conserve. It piggybacks onto federal tax credits, to result in more savings. Chairman Mason is trying to move this bill through the Legislature.
Without objection, the meeting adjourned at 4:19 p.m.
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Jane Dooley, Committee Secretary
April 25, 2006
(Original minutes, attachments and tape are on file in the Office of the Chief Clerk.)
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AD HOC COMMITTEE ON RENEWABLE
GENERATION AND ENERGY EFFICIENCY
2
April 24, 2006
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