Senate Republican Caucus urges Senate Coalition to Address Energy Needs Now

Juneau – Today the Senate Republican Caucus urged their colleagues in the Senate to address energy relief for Alaskans now.  One possible solution, SB 217, sits in the Senate Finance Committee.  The legislation would provide a direct reduction to citizens’ electric bills by about $750 a year.

SB 217, introduced at the beginning of this session by Sen. Tom Wagoner, R – Kenai, and co-sponsored by Sen. Gene Therriault, R – North Pole, has sat in the Senate Finance Committee since January 16.

“It’s shameful,” Sen. Gary Wilken, R – Fairbanks, said.  “We’ve got $13 billion sitting in a coffee can and we can’t even help people across the state who are hurting.  We have nine days left to do something.  If we don’t do something while we are here, shame on us.

“We have ways to do it and we have the money,” Wilken argued.  “We’ve got the Low Income Home Energy Assistance Program already set up that we could fund to provide additional relief to the needy, or there is Senator Wagoner’s bill.  We have the means, we have the knowledge, and we have programs in place that we could fund to help.  Why wouldn’t we give people a hand?”

During debate on the floor Sen. Wagoner even offered to remove his name from the bill, arguing that if his minority status was causing the bill to be held in committee, he would be happy to let a member of the Senate majority, made up of both Democrats and Republicans, take authorship in order for the bill to move.

“We have energy costs in Alaska all year around,” Wagoner said.  “This bill could provide relief to Alaskans now by lowering electric bills $750 in this coming year.  The way the bill is set up, it could take care of about 90% of all Alaskans.”

Alaskan residents without an electric meter would be able to apply for the same benefit from the Department of Commerce, Community & Economic Development.

“The sad irony,” Wagoner pointed out, “is that the state is getting rich with the high price of oil, but our people are being hit hard by those same prices.  The windfall we have been busy spending and saving is the very windfall that’s creating the burden on Alaskans.

“While we’re here in the capitol building enjoying the problem of what to do with the surplus, people on fixed incomes, people in Bush Alaska, in urban areas, in Southeast, all over the state, have to decide whether to pay for their medications, their food, or their energy bills.”  Wagoner said.

During the floor debate some members of the Senate majority highlighted other bills passed and under consideration that address some long-term energy issues.

“The weatherization bill the Senate recently passed is a good package,” Therriault agreed, “but it doesn’t address the immediate need.  Winterizing homes is good for lowering fuel consumption and will reduce the cost to home owners, but we haven’t done anything to deal with costs suffered by home owners now, this winter, or next year.  It would take a number of years to realize the benefits of winterization.  We’re talking about some kind of relief now.”

The relief afforded under SB 217, also called the Alaska Power Cost Reduction Program, would take affect when oil prices reach the level where the state’s ACES tax progressivity is triggered, about $60 per barrel, and stays at that level for at least 12 consecutive months.

SB 217 also sets up a commission that would be tasked with preparing an energy plan to address residential, municipal, and rural community energy delivery and needs in the years to come.

Senator Wilken Calls for Capital Budget Reform – Presents Roadmap for Change

Juneau – Sen. Gary Wilken, R-Fairbanks, in a letter to the House and Senate Finance Committee Co-chairs, today formally requested the Finance Committees initiate three key changes to the procedure normally used to develop and pass the State’s capital budget.

“Last year the capital budget process broke down and resulted in the Governor using her veto power, leaving a blemish on the legislature, the administration, and our capital budget process.” Wilken explained. “We need a review of the current capital budget process and ultimately we need to revamp the way our State’s capital budget is built. The three changes to the process that I propose will help the legislature begin that journey.”

The three steps Wilken proposes are

1. establish clear spending limits, agreed upon by the leadership of the Senate and House of Representatives and the Governor,
2. alternate introduction of the capital budget bill each year between the House and the Senate to create a check and balance between the two bodies,
3. reclassify public dollars that do not carry a “General Fund” label, yet in practice spend like general fund dollars in the budget process, and label those funds “Alaska Funds” so they are better identified and tracked when spent.

The three changes Wilken proposes would open the process for more public scrutiny and install needed checks and balances on the system.

Senator Wilken will explain his plan in more detail and make available copies of his letter to the House and Senate Finance Committee Co-chairs at the Republican Minority Caucus press availability today at 11:00 a.m. in the Capitol Building.

Eni Offshore Project Positive for Future Oil Development in Alaska

Juneau – Members of the legislature were briefed today about Eni’s recently announced Nikaitchuq oil field project at a presentation hosted by the Senate Republican Minority.

Kevin Banks, Acting Director, Division of Oil & Gas, described the Italian based international company Eni as “a major oil company” and the project as “sizeable, with 73 wells, a 3.8 mile subsea pipeline, a 14 mile above ground pipeline and a separate dedicated processing facility. Production is expected to peak in 2010 at 40,000 barrel’s per day.”

Senator Tom Wagoner, R-Kenai, noted that, “the State’s royalty modification program successfully attracted Eni to develop its first producing oil field in Alaska. With a capital spending program of $1.45 billion, this project will add jobs to the Alaska economy during construction and expected 25 year operating life.”

Senator Therriault also observed that “with expected future declines in TAPS through-put rates, Eni’s 40,000 barrels per day is material, alone it will not save the day, but it will improve the TAPS through-put over the next 25 years.”

Mr. Banks explained that “Eni will get a royalty reduction when oil prices drop below $42.64 dollars a barrel during the first 25 years or if production rates fall below 4,000 barrels of oil per day from the field. This gives them an important down-side risk assurance that helps make their project economic in times of low oil prices or declining production and it also protects the state. When prices are higher the state continues to receive its full royalty rate.”

According to Mr. Banks, to apply for the royalty modification companies must provide detailed confidential economic modeling that proves that a royalty modification is justified.

Senator Gary Wilken, R- Fairbanks, noting that Eni will build it’s own processing facility, rather than rely on another producer’s facility, questioned if Eni has plans for the facility beyond the Nikaitchuq productive life. According to Mr. Banks, Eni has other property offshore so it could be expecting to use the facility for additional oil development projects.

Senator Gene Therriault, R-North Pole, said in comments after the briefing, “we were told during the Special Session on ACES that we were taxing Alaska out of the competitive market and would lose our oil and gas investors. Eni’s sizeable investment in Alaska is clear evidence to the contrary and shows that major oil companies still want a position in Alaska as part of a balanced global portfolio.”

Senator Wilken Announces He Won’t Run for Fifth Term

Juneau – In a personal statement to the press today, Senator Wilken explained: Sue and I have chosen today, January 24, 2008, which is my (and my mother’s) birthday, to announce I will be retiring from service in the State Senate as of January 2009. I will not be seeking re-election this November.

Education Task Force Wraps Up

Juneau – The Joint Legislative Education Funding Task Force met for a final time Thursday, August 30 to finalize the report it is mandated to submit to the Governor by Sept. 1.

The Task Force made several recommendations for policies to be implemented during the second regular session of the Twenty-fifth Legislature, including the creation of a standing Education Committee that would be separate from the current Health, Education and Social Services Committee. The Task Force referred many of the more contentious items to this Committee.

Sen. Gary Wilken, who represented the Senate Minority on the Task Force, authored a dissenting opinion that is included in the final report. Among his concerns is a recommendation to phase in funding over four years to cover district cost factors as outlined in a report by the University of Alaska’s Institute of Social and Economic Research. Sen. Wilken believes that the artificial deadline of Sept. 1 established by the resolution creating the Task Force resulted in the dismissal of all long-term options that would have included reviewing the entire K-12 education funding formula in total, rather than recommending a substantial adjustment to a single component. Sen. Wilken hopes that the entire Legislature, in cooperation with the Governor, will take the time necessary to thoroughly review the ISER study and question some of its basic assumptions.

Task Force Final Report – Adobe Acrobat file is 28 megs:
http://www.housemajority.org/coms/hlef/final_report_20070831.pdf
Dissenting Opinion by Senator Wilken:
http://www.aksenateminority.com/pdfs/25/wilken_20070829.pdf