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As the session deadline approaches, Alaska lawmakers are focused on energy bills

JUNEAU — The final hours of Alaska legislative sessions are often devoted almost entirely to budget negotiations. Not this year.

With less than 60 hours remaining until the Alaska Legislature must adjourn its session, lawmakers appeared to turn their attention Monday to energy bills.

Lawmakers began the session by declaring they would focus on measures to address a looming shortage of Cook Inlet natural gas. However, with hours remaining in the session, no significant energy legislation had passed in either chamber, and the possibility of an agreement between Gov. Mike Dunleavy, House and Senate opinion on major measures appeared to be derailed.

Disagreements over key bills could result in lawmakers not passing them before Wednesday's session deadline – potentially forcing Dunleavy to call lawmakers into a special session to continue work on the bills.

Senate President Gary Stevens, a Republican from Kodiak, said the House and Senate had reached an agreement whereby the Senate would pass a carbon sequestration bill and the House would pass a bill creating an integrated energy transmission system – potentially allowing both policy areas to do so would be passed this year.

Neither had happened as of 5 p.m. Monday, when the House concluded a two-hour debate on a long list of amendments to the transfer bill.

“We're waiting on it,” Stevens said, adding that senators are “hesitant” to introduce the carbon storage bill to the House until the House makes “some progress” on their side of the deal.

Stevens said the two energy bills – carbon sequestration and transfer – are second only to the budget in importance this session.

Stevens said the governor could call lawmakers into a 30-day special session if they don't pass the energy bills by Wednesday.

“He would be right, because it is really crucial. The problem we have with the House is they can't move forward very quickly, so they can't get the energy (transmission) bill to us,” Stevens said. “What happens if we just don’t do it? Well, I guess the governor would call us into a special session.”

Asked whether Dunleavy would be willing to call the Legislature into a special session if the two major energy bills fail to pass, Jeff Turner, a spokesman for the governor's office, said Monday: “There is still time in the session to pass both bills.” .”

The House was expected to hold its final vote on the transfer bill on Tuesday.

Lawmakers repeatedly postponed meetings on Monday as they met behind closed doors to discuss energy regulations. The crush of bills clogging up the process was exacerbated by Saturday's 12-hour House debate over a divisive ban on transgender sports, which created a sense of bitterness among lawmakers.

The House of Representatives was scheduled to consider Bill 307 to modernize the Railbelt power grid on Sunday. The bill was ultimately postponed until Monday.

Rep. Will Stapp, a Republican from Fairbanks, said the bill focuses on “addressing and eliminating wheeling and pancaking fees and creating a more equitable energy system across the Railbelt.” Stapp called the current system of regional utilities “geographic fiefdoms.”

“It was a huge challenge to get all the different organizations and stakeholders together in a room to agree on something,” Stapp said, adding that “time and inertia” would not help the bill.

Several Republicans representing districts on the Kenai Peninsula expressed concerns about the measure, echoing opposition from the Homer Electric Association.

Rep. Justin Ruffridge, a Republican from Soldotna, said part of his concern is that Cook Inlet natural gas is in his “backyard” and he fears the bill would represent a shift away from that natural gas toward renewable energy production, including wind power, and solar projects.

“No internal resource production across the state. No Cook Inlet natural gas, no gas pipeline, nothing. “We will be a resource state that essentially imports our energy needs,” Ruffridge said.

The proposal for an integrated transmission system has divided Railbelt utilities. The bill is considered a priority for Dunleavy, whose energy policy adviser Andrew Jensen discussed the measure with lawmakers at the Capitol on Sunday after 10 p.m. Jensen was back in the House gallery when debate began around 3 p.m. on Monday. Jensen declined an interview request on Monday.

House Speaker Cathy Tilton, a Republican from Wasilla, said lawmakers could “absolutely” pass the necessary bills by Wednesday's deadline.

“However, it is a constantly moving target,” she added. “At this point I think we can. But like I said, it’s always fluid here.”

Tilton said the transmission bill and carbon storage bill are “high priorities” for the House “because it is important to help with energy costs.”

Meanwhile, the Senate was expected to pass House Bill 50 on Tuesday, which would create a legal framework for the state to lease depleted gas deposits to store carbon dioxide deep underground.

A carbon sequestration law once touted as a way to generate significant new state revenue is now being supported to boost oil and gas industry investment in the state. It's unclear how much carbon sequestration could cost or benefit Alaska. The Treasury Department stated that “the tax revenue potential of the bill is uncertain at this time.”

The House was also expected to take a final vote Monday on House Bill 223, which would provide royalty relief to natural gas producers. But even if the bill passes the chamber, key Senate members have expressed concerns about the prospect of forgoing government revenue without a guarantee of increased production.

Stevens said the most important task of the session remains passing the budget. Lawmakers still need to agree on one of the most critical — and controversial — parts of the budget, the size of the Permanent Fund dividend. The Senate supports a distribution of about $1,600 to eligible Alaska residents, while the House proposal — which would require a significant draw on already depleted state savings — called for a dividend of nearly $2,300.

Stevens said the Senate is “having difficulty arranging meetings” with the House to discuss the budget. “But now they have agreed to meet with us,” he said on Monday afternoon.

Sen. Bert Stedman, a Republican from Sitka and one of the main budget negotiators, said Monday afternoon that budget negotiations should be completed by 9 a.m. Tuesday.

If the conference committee does not complete its work by early Tuesday morning, it will become increasingly difficult to complete the task of approving the spending plan in both the House and Senate before the Wednesday evening deadline.

“People don’t like to stay here until midnight, but if we have to, we’ll do it,” Stevens said.

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Anna Harden

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