The House Finance Committee reversed course Monday on a natural gas project for Fairbanks, reworking amendments by Anchorage Rep. Mike Hawker that had drawn heavy fire from Fairbanks officials and the administration of Alaska Gov. Bill Walker.
The finance committee version of a bill offered Monday is more in keeping with the original from Gov. Bill Walker in that it does not require future legislative approval for a gas project and allows flexibility for the Alaska Industrial Development and Export Authority to execute a deal. At Hawker's urging, the House Resources Committee adopted a version last week with strict limits on AIDEA that Gov. Bill Walker said would handcuff the project.
Fairbanks North Star Borough Mayor Luke Hopkins, one of several people to testify Monday, said the revisions in the finance committee version of House Bill 105 would solve most or all of the issues that led Hopkins and two other local mayors to write a letter last week asking Hawker to "cease and desist."
"We certainly need to stay on track for what we're trying to do to resolve our air quality, but the biggest issue is what we're trying to do for our economy and for our residents with getting low-cost energy here as soon as possible," Hopkins told the committee.
The requirement backed by Hawker for additional legislative authorization was redundant, unnecessary and put the "whole project at risk," said Derek Miller, the chairman of the government relations committee of the Fairbanks Chamber of Commerce.
The finance version would also allow the agency more flexibility to put a package together, allowing such steps as negotiating contracts to acquire a natural gas supply. Fairbanks officials said they worried that the limits proposed by the resources committee would have made it impossible to finish the job.
HB 105 would revise a 2013 law that had been exclusively focused on a North Slope trucking operation, which turned out to be uneconomic because of high costs for a treatment plant at Deadhorse. The Walker administration is seeking the ability now to use gas from Cook Inlet, propane from Canada and other alternatives to lower energy costs in Fairbanks.
The bill and an accompanying appropriation would allow financing a project at a cost of up to $332 million, most of it with borrowed money, that includes development and construction of a natural gas plant and distribution system.
The financing authorization approved in 2013 included a $57 million grant to benefit the Interior Energy Project. About $45 million of that remains in savings and may be reallocated to the project as part of the capital budget. The rest of the financing would come from up to $275 million in loans and bonds.
The finance committee plans to consider amendments to its version early Tuesday. The committee is co-chaired by Fairbanks Rep. Steve Thompson and has three other members from the Fairbanks area -- Reps. David Guttenberg, Tammie Wilson and Scott Kawasaki.
It remains to be seen what version of the bill emerges as the final product, however, because the House Rules Committee, next stop for the bill, includes a majority of members -- none of them from Fairbanks -- who backed Hawker's amendments in the resources committee.
The bill is related to the AIDEA plan to purchase the company that owns Fairbanks Natural Gas, a small private utility, a small LNG plant at Point MacKenzie and other assets. AIDEA is conducting a review of the proposed $52.5 million purchase.