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CS FOR HOUSE BILL NO. 368(ENE)
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-THIRD LEGISLATURE - SECOND SESSION
BY THE HOUSE SPECIAL COMMITTEE ON ENERGY
Offered: 3/22/24
Referred: Finance
Sponsor(s): HOUSE SPECIAL COMMITTEE ON ENERGY
A BILL
FOR AN ACT ENTITLED
"An Act relating to clean energy standards and a clean energy transferable tax credit; 1
and providing for an effective date." 2
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 3
* Section 1. The uncodified law of the State of Alaska is amended by adding a new section 4
to read: 5
PURPOSE. The purpose of this Act is to establish a clean energy standard that 6
requires certain electric utilities to derive increasing percentages of the utility's net electricity 7
sales from clean energy sources. Nothing in this Act is intended to constitute implementation 8
by the Regulatory Commission of Alaska of the federal Public Utility Regulatory Policies Act 9
of 1978 (16 U.S.C. 2705). 10
* Sec. 2. AS 42.05.381 is amended by adding a new subsection to read: 11
(p) The rate for transmission of clean energy generated from capacity 12
constructed on or after July 1, 2024, to comply with a clean energy standard under 13
AS 42.05.900 shall be a uniform transmission services rate, developed by the electric 14 33-LS1170\Y
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reliability organization for the Railbelt, subject to review and approval by the 1
commission. A load-serving entity may not charge more than the uniform transmission 2
services rate for energy transmitted to comply with a clean energy standard under 3
AS 42.05.900. 4
* Sec. 3. AS 42.05.780(a) is amended to read: 5
(a) An electric reliability organization shall file with the commission in a 6
petition for approval an integrated resource plan for meeting the reliability 7
requirements of all customers within its interconnected electric energy transmission 8
network in a manner that provides the greatest value, consistent with the load-serving 9
entities' obligations. An integrated resource plan must contain an evaluation of the full 10
range of cost-effective means for load-serving entities to meet the service 11
requirements of all customers, including additional generation, transmission, battery 12
storage, and conservation or similar improvements in efficiency. An integrated 13
resource plan must include options to meet customers' collective needs in a manner 14
that provides the greatest value, consistent with the public interest, regardless of the 15
location or ownership of new facilities or conservation activities. An integrated 16
resource plan must identify the most cost-effective strategies for the 17
interconnected electric energy transmission network to satisfy the clean energy 18
standard under AS 42.05.900. 19
* Sec. 4. AS 42.05.785(a) is amended to read: 20
(a) A public utility, including a public utility that is exempt from other 21
regulation under AS 42.05.711 or another provision of this chapter, that is 22
interconnected with an interconnected electric energy transmission network served by 23
an electric reliability organization certificated by the commission may not construct a 24
large energy facility unless the commission determines that the facility 25
(1) is necessary to the interconnected electric energy transmission 26
network with which it would be interconnected; 27
(2) complies with reliability standards; [AND] 28
(3) would, in a cost-effective manner, meet the needs of a load-serving 29
entity that is substantially served by the facility; and 30
(4) is not detrimental to a load-serving entity's ability to meet the 31 33-LS1170\Y
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clean energy standard under AS 42.05.900. 1
* Sec. 5. AS 42.05 is amended by adding new sections to read: 2
Article 11A. Clean Energy Standard. 3
Sec. 42.05.900. Clean energy standard. (a) A load-serving entity that is 4
subject to the standards of an electric reliability organization under AS 42.05.760 shall 5
comply with the clean energy standard established in this section. Under the clean 6
energy standard, a load-serving entity's portfolio shall include clean energy in the 7
following percentages: 8
(1) 35 percent by December 31, 2036; 9
(2) 60 percent by December 31, 2051. 10
(b) A power purchase agreement entered into between a load-serving entity 11
and a clean energy producer may be included when calculating the load-serving 12
entity's compliance with the clean energy standard required under this section if 13
(1) the effective date of the power purchase agreement is before the 14
end of the compliance period; 15
(2) the power purchase agreement guarantees that the clean electrical 16
energy producer will deliver the clean energy to the load-serving entity not later than 17
two years after the compliance period; and 18
(3) the power purchase agreement is approved by the commission in 19
accordance with AS 42.05.381 and 42.05.431(a) and (b) before the end of the 20
compliance period. 21
(c) A load-serving entity may satisfy the clean energy standard through energy 22
produced by distributed energy systems, regardless of whether the energy is acquired 23
by the load-serving entity or used by the customer. 24
(d) A load-serving entity's compliance with the clean energy standard shall be 25
based on historical data, collected in a manner consistent with industry standards and 26
commission regulations. 27
(e) A load-serving entity shall design and implement an accounting system to 28
verify compliance with the clean energy standard, to ensure that clean energy is 29
counted only once for the purpose of meeting the clean energy standard, and to track 30
energy consumption displaced because of energy efficiency investments under (g) of 31 33-LS1170\Y
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this section. The accounting system must be approved by the commission. 1
(f) The commission shall, by regulation, develop a proxy for the ratio of net 2
energy acquired by a load-serving entity at metered intervals to total energy produced 3
from distributed energy systems. Using the proxy, the commission shall determine an 4
estimate of total energy produced by distributed energy systems available to satisfy a 5
load-serving entity's clean energy standard. The commission shall update the proxy 6
developed under this subsection not less than once every five years. 7
(g) A load-serving entity may satisfy the clean energy standard with energy 8
consumption displaced because of energy efficiency investments, including 9
investment in consumer efficiency upgrades, if the displaced consumption is 10
documented by the accounting system required under (e) of this section. 11
(h) The commission shall adopt a minimum standard for electric power 12
transmission lines sufficient to ensure seamless end-to-end electrical energy 13
transmission. A load-serving entity may not increase rates paid by ratepayers to fund 14
transmission intertie upgrades required under this subsection, but a load-serving entity 15
may increase rates to fund other required transmission line upgrades. Notwithstanding 16
AS 42.05.900 - 42.05.935, load-serving entities subject to the standards of an electric 17
reliability organization are not subject to the clean energy standard before electric 18
power transmission lines in the interconnected electric energy transmission network 19
served by the electric reliability organization are upgraded to the minimum standard 20
required by this subsection. If the upgrade required under this subsection is not 21
completed before December 31, 2026, 22
(1) 35 percent of sales in the load-serving entity's portfolio must be 23
from clean energy within 10 years after the upgrade is complete; and 24
(2) 60 percent of sales must be from clean energy within 25 years after 25
the upgrade is complete, or when electric power transmission lines connect the 26
interconnected electric energy transmission network in the Railbelt to the service area 27
of the Copper Valley Electric Association, whichever is later. 28
Sec. 42.05.905. Reporting. (a) Beginning March 1, 2025, a load-serving entity 29
subject to the clean energy standard shall submit an annual report to the commission 30
that documents the load-serving entity's progress toward satisf
ying the clean energy 31 33-LS1170\Y
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standard in the preceding calendar year. The annual report must document the entity's 1
total production from distributed energy systems and net electricity sales from clean 2
energy for the applicable calendar year and include the information required by the 3
commission. 4
(b) The commission shall adopt regulations governing the reporting 5
requirements to document compliance and minimize the administrative costs and 6
burden on a load-serving entity. 7
(c) The commission may investigate a load-serving entity's compliance with a 8
clean energy standard and collect any information reasonably necessary to verify and 9
audit the information provided to the commission by the load-serving entity. 10
Sec. 42.05.910. Clean energy transferable tax credits. (a) A load-serving 11
entity or independent power producer may apply for the clean energy transferable tax 12
credit under AS 43.98.080 in the amount of 0.2 cents for each kilowatt-hour of clean 13
energy that is 14
(1) produced by the load-serving entity or independent power producer 15
at a facility that meets the qualifications in (b) of this section; and 16
(2) sold by the load-serving entity or independent power producer to 17
an unrelated person during the taxable year. 18
(b) A facility qualifies for the clean energy transferable tax credit under this 19
section if the facility 20
(1) is owned by the load-serving entity or independent power producer; 21
(2) is used to generate clean energy; 22
(3) is placed into service after the effective date of this section; and 23
(4) has been in service for 10 years or less. 24
(c) If the owner of a facility places a new generating unit or additional 25
generating capacity into service that is used to generate clean energy at the facility 26
after the effective date of this section, the owner may apply for the clean energy 27
transferable tax credit for 10 years from the date the new unit or additional capacity is 28
placed into service, but only to the extent of the increased amount of clean energy 29
produced at the facility because of the new unit or additional capacity. 30
(d) A school district may apply for the clean energy transferable tax credit 31 33-LS1170\Y
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under AS 43.98.080 for clean energy produced from a distributed energy system that 1
is located on property owned by the school district and that meets the qualifications in 2
(b)(2) - (4) of this section, regardless of whether the energy is sold to an unrelated 3
person. A school district is entitled to the same amount of credit as a load-serving 4
entity under this section for the number of kilowatt-hours of clean energy produced by 5
the school district's distributed energy system. In this subsection, "school district" 6
means a city or borough school district or regional educational attendance area. 7
(e) The owner of a facility that qualifies for a clean energy transferable tax 8
credit under (b) of this section and produces clean energy for an electric utility that 9
receives power cost equalization under AS 42.45.100 - 42.45.150 is eligible for an 10
increased clean energy transferable tax credit in the amount of an additional one cent 11
for each kilowatt-hour of clean energy that meets the requirements in (a) of this 12
section and is produced for the electric utility. The owner of the facility may be the 13
electric utility. In this subsection, "electric utility" has the meaning given in 14
AS 42.45.150. 15
Sec. 42.05.915. Waiver. (a) The commission may waive the requirement that a 16
load-serving entity comply with the clean energy standard if, after notice and 17
opportunity for a hearing, the commission determines that a load-serving entity is 18
unable to meet the clean energy standard because of reasons outside the reasonable 19
control of the load-serving entity as set out in (b) of this section or the entity 20
establishes a good cause as set out in (c) of this section. The commission may grant a 21
waiver under this section for a period of not longer than five years. 22
(b) The following events or circumstances are outside of a load-serving 23
entity's reasonable control: 24
(1) weather-related damage; 25
(2) natural disasters; 26
(3) failure of clean energy producers to meet contractual obligations to 27
the load-serving entity; 28
(4) transmission network constraint that prevents the load-serving 29
entity from partially or fully using clean energy for net electricity sales; 30
(5) global pandemics; and 31 33-LS1170\Y
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(6) acts of war. 1
(c) The following factors may establish good cause for a waiver: 2
(1) the actions taken by the load-serving entity to procure the clean 3
energy; 4
(2) the extent of good faith efforts by the load-serving entity to 5
comply; 6
(3) the lack of past failures to comply; 7
(4) the likelihood and amount of future clean energy to be procured by 8
the load-serving entity; 9
(5) the effect of the noncompliance fine on the load-serving entity 10
considering the size or ownership of the load-serving entity; 11
(6) the good faith effort by the load-serving entity to meet the clean 12
energy standard after an event or circumstance enumerated in (b) of this section. 13
Sec. 42.05.920. Exemptions. (a) A load-serving entity is exempt from 14
compliance with the clean energy standard if the aggregate net electricity sales for all 15
load-serving entities on the interconnected electric energy transmission network meets 16
or exceeds the aggregate clean energy standard for all load-serving entities on the 17
interconnected electric energy transmission network. 18
(b) If an exemption under (a) of this section does not apply, a load-serving 19
entity is exempt from its first noncompliance with a clean energy standard. 20
Sec. 42.05.925. Net billing. (a) A load-serving entity subject to the clean 21
energy standard shall credit in a tariff the account of a retail customer for the number 22
of kilowatt-hours, at the export credit rate set by the commission in accordance with 23
(b) of this section, of electric energy supplied by the customer's distributed energy 24
system to the load-serving entity. The tariff may not limit the aggregate capacity that 25
customers may install unless the commission, after a hearing, finds that capacity 26
limitation is necessary to protect system reliability. 27
(b) The commission shall by regulation establish a method to determine 28
annually the amount of a reasonable seasonal and time variant export credit rate for 29
electric energy supplied to a load-serving entity by a customer's distributed energy 30
system. In determining the export credit rate, the commission may consider any 31 33-LS1170\Y
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relevant factors, including avoided costs of load-serving entities. 1
Sec. 42.05.930. Additional clean energy resources. At least once every five 2
years, the Alaska Energy Authority shall submit a report to the legislature identifying 3
whether the authority recommends that the legislature add any available technologies 4
to the definition of "clean energy" in AS 42.05.935 for purposes of complying with the 5
clean energy standard. The authority shall submit a report required under this section 6
to the senate secretary and the chief clerk of the house of representatives and notify the 7
legislature that the report is available. 8
Sec. 42.05.935. Definitions. In AS 42.05.900 - 42.05.935, 9
(1) "clean energy" means electrical energy that 10
(A) when generated by a load-serving entity, does not release 11
carbon dioxide or releases carbon dioxide in an amount that is offset by the 12
amount of carbon dioxide the load-serving entity absorbs or removes from the 13
atmosphere; 14
(B) is generated from coal with a sulfur content of one percent 15
or less by weight; 16
(C) is generated from renewable energy resources; or 17
(D) is generated from nuclear energy; 18
(2) "clean energy standard" means the required percentage of a load-19
serving entity's net electrical energy sales to customers in the entity's service area that 20
is represented by clean energy as required under AS 42.05.900; 21
(3) "compliance period" means each period identified in 22
AS 42.05.900(a) or (h); 23
(4) "distributed energy system" means a renewable energy resource 24
that is located on any property owned or leased by a customer within the service 25
territory of the load-serving entity that is interconnected on the customer's side of the 26
utility meter; 27
(5) "independent power producer" means a person, other than a load-28
serving entity, that owns or operates a facility for the generation of electricity for use 29
primarily by the public; 30
(6) "interconnected electric energy transmission network" has the 31 33-LS1170\Y
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meaning given in AS 42.05.790; 1
(7) "load-serving entity" has the meaning given in AS 42.05.790; 2
(8) "Railbelt" means the geographic region from the Kenai Peninsula 3
to Interior Alaska that is connected to a common electric transmission backbone; 4
(9) "renewable energy resource" means a resource, other than 5
petroleum, natural gas, or coal, that naturally replenishes over a human, not a 6
geological, time frame, is ultimately derived from solar power, water power, or wind 7
power, comes from the sun or from thermal inertia of the earth, and minimizes the 8
output of toxic material in the conversion of the energy; in this paragraph, "resource" 9
includes 10
(A) solar and solar thermal energy, wind energy, and kinetic 11
energy of moving water, including 12
(i) waves, tides, or currents; 13
(ii) run-of-river hydropower, in-river hydrokinetic; 14
(iii) conventional hydropower, lake tap hydropower; 15
(iv) water released through a dam; and 16
(v) geothermal energy; 17
(B) waste to energy systems, including 18
(i) wood; 19
(ii) landfill gas produced by municipal solid waste or 20
fuel that has been manufactured in whole or significant part from 21
waste; 22
(iii) biofuels produced in the state; and 23
(iv) thermal energy produced from a geothermal heat 24
pump using municipal solid waste, including biogenic and 25
anthropogenic factions; 26
(10) "transmission network constraint" means a lack of transmission 27
line capacity to deliver electricity without exceeding thermal, voltage, and stability 28
limits designed to ensure reliability of the interconnected electric energy transmission 29
network. 30
* Sec. 6. AS 42.45.110(a) is amended to read: 31 33-LS1170\Y
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(a) The costs used to calculate the amount of power cost equalization for all 1
electric utilities eligible under AS 42.45.100 - 42.45.150 include all allowable costs, 2
except return on equity, used by the commission to determine the revenue requirement 3
for electric utilities subject to rate regulation under AS 42.05. The costs used in 4
determining the power cost equalization per kilowatt-hour shall exclude any other type 5
of assistance that reduces the customer's costs of power on a kilowatt-hour basis and 6
that is provided to the electric utility within 60 days before the commission determines 7
the power cost equalization per kilowatt-hour of the electric utility. In calculating 8
power cost equalization, the commission may not consider validated costs or kilowatt-9
hour sales associated with a United States Department of Defense facility or revenue 10
from the sale of recovered heat. 11
* Sec. 7. AS 43.98 is amended by adding a new section to read: 12
Article 5. Clean Energy Transferable Tax Credit. 13
Sec. 43.98.080. Clean energy transferable tax credit. (a) The department 14
shall provide a clean energy transferable tax credit certificate for qualified clean 15
energy production under AS 42.05.910. The department shall publish the name and 16
contact information for each person provided a clean energy transferable tax credit 17
certificate under this subsection. 18
(b) A clean energy transferable tax credit certificate may be sold, assigned, 19
exchanged, conveyed, or otherwise transferred in whole or in part. 20
(c) A taxpayer acquiring a clean energy transferable tax credit certificate may 21
use the credit or a portion of the credit to offset taxes imposed under AS 10.25 and this 22
title. Except as provided in (e) of this section, any portion of the credit not used may 23
be used at a later period or transferred under (b) of this section. 24
(d) The department shall adopt regulations necessary for the administration of 25
this section. 26
(e) A clean energy transferable tax credit certificate, whether sold, assigned, 27
exchanged, conveyed, or otherwise transferred, in whole or in part, must be used 28
within five years after being provided by the department. 29
(f) A clean energy transferable tax credit certificate may not be applied to 30
reduce a person's tax liability to below zero. 31 33-LS1170\Y
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(g) A person acquiring two or more clean energy transferable tax credit 1
certificates may combine the unused amounts of the credits for sale, assignment, 2
exchange, conveyance, or other transfer. At the request of a person holding a clean 3
energy transferable tax credit, the department shall replace a certificate that represents 4
the full amount of tax credits available with multiple certificates that each represent a 5
portion of the total tax credits available for the purpose of sale, assignment, exchange, 6
conveyance, or other transfer under this subsection or, upon request, shall provide one 7
tax credit certificate that represents the combined value of multiple tax credit 8
certificates. A tax credit certificate replaced or provided by the department under this 9
subsection must state the expiration date and the amount of each credit that is included 10
in the certificate. Combining or splitting unused amounts of credits under this 11
subsection does not change or extend the period in which each credit that is included 12
in the combination or split must be used. 13
* Sec. 8. AS 44.83.940 is amended by adding a new subsection to read: 14
(b) Not later than the first day of the first regular session of each legislature, 15
the authority shall submit a report to the senate secretary and chief clerk of the house 16
of representatives and notify the legislature that the report is available. The report 17
must identify the authority's progress in developing clean energy in rural regions of 18
the state, evaluate clean energy development in rural regions, identify infrastructure 19
necessary for rural clean energy projects, and evaluate the feasibility and cost of rural 20
clean energy projects. 21
* Sec. 9. This Act takes effect July 1, 2024. 22