Alaska Legislature: House Finance, 6/1/26, 1:30pm

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Okay. I'll call this meeting in the House Finance Committee to order. And let the record reflect that the time is currently 1:42pm on Monday, June 1, 2026. And present we have Representative Moore is online. And we have representative staff online.

Representative Tomashevsky online. Representative Hannon is online.

Let's see here. I believe it looks like Representative Underwood was online earlier. I know she's also been online in terms of not the phones, but watching. So just want to note that on the other online, the web online. And then in the room we have Representative Allard, Representative Bob, Representative Co Chair Shragi, Representative Co Chair Josephson, Representative Jimmy, Representative Galvin, and myself, Co Chair Foster in the room.

I believe we've got a number of legislators here as well. Representative Eischide, Representative Mina, Representative Mears, Representative Holland, Representative Colomb. Did I miss anyone? Looks like we've got everybody. Thanks for joining us today.

And I got a note here about reps and staff, which I mentioned already. And so with that, we have before us also, just a reminder, folks can mute their cell phones. We have before US House Bill 381, that is the gasoline bill, of course. And we've got invited testimony today from Merrill of France with Municipality of Anchorage, nstar, Chugach Electric association and Matanuska Electric Association. So first up, I'd like to invite up Mayor Suzanne Lafrance with the Municipality of Anchorage.

Thanks for being here today and if you could put yourself on the record, we sure appreciate your popping in to give us your thoughts on the gas line.

Thank you, Chair. I am Mayor Suzanne Lafrance of the Municipality of Anchorage, and with your permission, Mr. Chair, I'd like to ask Nolan Claude, Policy director for my team, to join me here as he is the subject matter expert on this topic. Okay. Please feel free to come up and put yourself on the record.

Thank you, Mr. Chair. I'm Nolan Clauda, Policy Director at the Municipality of Anchorage.

Please. Thank you, Mr. Chair. Members of the committee, thank you all for the opportunity to testify today. And let me begin by saying thank you to all of you for working hard on this legislation and ensuring that Alaskans can weigh in on how we move the Alaska LNG Project forward.

This project represents a tremendous opportunity for Anchorage and for Alaska as a whole. It will strengthen our economy, improve long term energy security, increase affordability for residents and businesses, and create jobs. I also appreciate the committee's work to ensure that the benefits and the impacts of the project are addressed fairly and thoughtfully. Anchorage is in a somewhat unique position in this discussion. As you all know, the LNG pipeline itself does not cross our municipal boundaries, although it comes within 20 miles under either a property tax or alternative volumetric tax.

We would not receive direct tax revenues associated with pipeline infrastructure. But we know that Anchorage will be deeply impacted by the project. We expect many of the thousands of workers associated with construction and related economic activities activity will be based in Anchorage. Our community will serve as a logistical, operational, transportation and administrative hub throughout the life of the project. That will bring important economic benefits, but it will also create real demands on local government services.

The Anchorage Community Development Authority commissioned a report from economist Jonathan King to analyze the fiscal impacts on the municipality. The analysis shows that providing services to workers and their families will cost more than locally generated revenues can support. Over the nine year project period, new service costs would exceed revenues by as much as $170 million. Since we rely on property taxes, we don't get new tax revenues from an influx of people until new homes and commercial properties are built and added to our tax rolls. That takes years.

But there will be immediate pressure on public safety, emergency response, roads, schools, and other municipal services. We also expect significant impacts on housing demand at a time when Anchorage is already facing a constrained housing market. The report highlights our our existing housing shortage, which will make it difficult to accommodate large scale workforce growth that would raise housing costs for current residents. That is why we support the approach in this bill to provide a community impact fund as well as AVT revenue sharing on a per capita basis. Impact funds would help us prepare for increased service and housing demand.

Revenue sharing would close the gap between our local tax revenues and the delivery of services. We're not looking for a windfall. We are looking for a practical and reliable way to help address the real impacts that project related growth will have in our community and on the services that residents depend on every day. A predictable revenue stream would help communities prepare, plan and invest responsibly while supporting the successful delivery of a project that will benefit all Alaskans. Again, thank you for your work on this legislation.

Thank you for your service to our State of Alaska and our communities and for the opportunity today to testify. I would be happy to take any questions. Great. Thank you, Representative Gelvin. Thank you, Co Chair Foster.

Thank you both for being here. I don't know if this is a question for Mr. Claudia or for you, Mary, or Thank you, Mayor. So I heard you refer to a study and I don't believe I have that in my packet and Correct me if I'm wrong, Mr. Anderson, but I don't see that Anchorage study. I would like to know who put it out, the date of it, and if we may, as a finance committee, have that study, I think that would be helpful for us at least the. The executive summary, if you will.

I appreciate that. I think what I heard from you is that you are very supportive of this project and you want to make sure that. I heard 170 million. And again, I'd like to see that study so that I could make sure to confirm over nine years on costs. So I'm thinking about the different bills that we have floating right now, and they do have significant amount of money coming to Anchorage to help with the impacts in addition to the volumetric once the gas is flowing.

And I guess I'd like to compare that to when these costs are incurred in the study. Unless you can give us a report on that, Mr. Claude. Yes, through the chair to Representative Galvin. So the report that the mayor mentioned was commissioned by the Anchorage Community Development Authority, which is a municipal entity looking at the impacts from a fiscal and housing standpoint. That report I actually emailed out earlier to legislators, but it wasn't submitted to this committee in time to be included in the materials.

But it was completed in April and early May and we had been waiting to release it until we just did. The question about the 170 million, that's kind of. There's a. We don't have an exact number, but there's a range of values by which revenue, by which service costs would exceed revenues. And so 170 was kind of the worst case scenario.

But even under the best case scenario, where there's perfectly adequate supply of housing that gets built for all the new workers expecting about 9,800 people over the nine year project span, that Anchorage's population could go up. That's workers and families. And if all of them were in new housing and that was added to our tax base, we would still have a gap over that nine year period of about $25 million, the difference between service costs and new revenues. And so a lot of that has to do with the structure of our tax cap and also our reliance on property taxes. There will always be a lag with new revenues after we incur those service demands.

Thank you. And I apologize that I did not see that in my email. I'll make sure to get staff to print that out for me so that I can be looking at that. I appreciate it. Thank you.

Thank you. Okay. Any further questions? Representative Bynum, thank you. Co Chair Foster, through the chair.

Thank you, Mayor, for being here. Appreciate your thoughts on the project and what impacts you think it might have for Anchorage specifically. I got a couple quick questions for you about impacts and then also if there's any other strategies that the municipality might be considering to deal with impacts outside of revenue from the line itself. As you'd indicated, the exposure of the line and the project within the Anchorage is smaller compared to the Kenai or the North Slope. And in between, are you exploring or looking at other tax mechanisms or structures that might help you better deal with an influx of workers or people?

Only for the period of the time that the project is under development.

Thank you for the question. We are not specifically looking at any other kinds of revenues for this. However, we are definitely looking at other revenue measures that could benefit the municipality in the long run. We were having a larger conversation about our fiscal future here in the municipality, but nothing specific to the gas line. I'm looking at you, Nolan, to see if there's anything that I may have missed.

I would add through the chair to Representative Bynum. One piece I would add is that I think we're pursuing a lot of strategies to get housing built and to be more responsive to housing demand, to help get infrastructure into areas to open up subdivision development. That all has really strong fiscal impacts and also just a community need in general. So that's certainly one element in addition to the fiscal strategies that the mayor mentioned. Representative Bynum, thank you.

Co Chair Foster, through the chair. Also, when we look at the workforce necessary to develop the line, have you considered how much of that workforce will actually be here in Anchorage versus down on the Keen Eye or up in the Valley or other places? Have you done any kind of evaluation or worked with Glen Farn or any of the other develop development partners to kind of get a better idea of what that might look like for your municipality? Mr. Clota? Yeah, I think yes, I can.

Through the chair. Representative Bynum, the best information that we have about. About that. The most detailed information we have came from the gas line environmental impact Statement that was put out in 2020. So that was.

That's. That has the most detail that's referred to in this report. And that's where the source of the estimate of about 9,800 people at its peak over the nine year project lifespan would be in. And those are folks that are physically in Anchorage. So that's the best information that we have on that at this point in time.

And one final follow up, Representative Bynum thank you. Through the chair we have some presentations from some of the energy providers and utilities and we've had a few of those as we went through the process. Can you talk a little bit about what you feel that the overall benefits of having a phase one completed outside of maybe phase two? I know there's been a lot of conversation about that, but what you feel like a phase one completion of would mean for your municipality, stability and growth in the economy.

Through the chair, Representative Bynum, I think the phase one. Develop the phase one component of the project for the in state supply. I think that's what you're referring to, if I understand correctly. I think that we recognize that having, you know, we're in a situation with the long term prospects for our Cook Inlet natural gas supply. You know, it's a legacy field that's dwindling.

And so it is pretty important to see a new source come online. Realize there's some project economics of what the end cost looks like, things that we're not the experts in necessarily. But I think that a phase one completion that allows for inline in state supply of gas is something that we look very favorably upon. That looks like something that would help us with energy security and resilience. Thank you, Representative Allard.

Thank you. And through the co chair. Thank you, Mayor Lafrance for being here today. It feels like Anchorage is going to be more of a pass through and I know that there'll be things to impact our infrastructure and our roads with all the, I guess the man camps, the traveling and everything. I don't want to see the taxes go up in the municipality of Anchorage.

I know that Representative Biden had mentioned that, but that's not what we want. But I definitely want to commend you for being here and being a team player because we do need this. And I know we just had a conversation and. And you're all in and I appreciate that. I just heard I forgot your first or your name.

Sorry about that. Nolan Cloda. What's that? Nolan Clauda. Can you say the Last name louder?

Mr. Clauda. Nolan Clouda. Mr. Clauden. Yeah. I know you just spoke about building and expanding because we know that here in Anchorage there's really nowhere else to kind of build except out in Chugiaki Go river kind of expanding, which is great.

I know there's going to be quite a bit of housing going up because in Anchorage we can build up. And how do you believe that the gas line being put in? I know we're going to do phase one and then phase two. But with phase one also, with so many people coming in, do you. Have you thought about how the growth of individuals are going to impact the schools?

Right, Because I hear a lot that they're. They say the schools are crowded. Well, we need to consolidate our schools. How are we going to do that? How are you guys going to base it and kind of follow through with the education system?

I know we're the assembly, but it still impacts, even though we work with the ASD and then the housing, because we do have a shortage in Anchorage. So I guess I want to know how you. How the municipality is going to as a whole, support the Chuggiak Eagle river area of the impacts of the gas line. It's a lot, but it goes down to schools building. That's the bottom line.

Mr. Clota. Yes. Through the chair, Representative Allard, we. I think it's an important point. You're mentioning that the largest tracts of land probably within the municipality that are not currently developed but that are very suitable for development are in Chugiak Eagle River.

That's certainly true. And that's something that we've looked at very closely. We have a close partnership, for example, with Eklutina Inc. Who owns a lot of that land. And we have worked hard to help them get infrastructure to help do some subdivision development. We have some very active efforts going on with that right now.

Powder Reserve west is one of the areas. So. So we definitely see that there's a need to get the infrastructure there to allow development to take place. That also does have to happen on terms that are favorable to the residents of Chugiak Eagle River. We understand that as well.

We're trying a very multifaceted approach under the mayor's 10,000 Homes in 10 Years initiative. And so we aren't wanting to try to target any one place with all the home building. We're trying to have it be something that works out for the whole municipality of Anchorage and something that works with community Priorities. Neighborhood Priorities also makes use of some of the undeveloped and underutilized spaces that we have. There are several large lots, large areas that are suitable for housing development that we're moving to, working to get online soon, and they are spread throughout the municipality.

Okay, may I just. You represent Ballard? Because what I hear you saying is the gas line, I want people to stay, right? So even when as we're building it, I want people to say, I love Alaska. Let's stay here and stay, stuff like that.

So have you seen how it's going to impact Schools, I mean, people are going to be up here. A lot of them bring their families. We're looking at what, 12,000 direct jobs, maybe 6,000 indirect across the state. But I think it's going to be more than that. Have you addressed, have you thought about how it's going to impact our schools here in the ASD?

Mayor LaFrance and through the chair to Representative Allard, thank you for the question. And with the issue of schools, I mean, that is one thing. As far as projected enrollments and ages, we would work with the school district because as they are in a process of. They've been closing, as you noted, schools. And if there is any shifting impact, since the municipality technically is the owner of all those buildings, this is part of that conversation as they project those enrollments that we'll want to be in close contact with them on.

I would say, too, for both the questions of student enrollments and populations, especially in your area, we would want to be working closely with the assembly members in the district as well. And the housing piece is one that, you know, right now we're in a housing shortage crisis, as you all know here in Anchorage and in other parts of the state. And so that the influx of more individuals, workers and anyone who hopefully would stay. I'm with you. We want them to stay.

We would certainly need to pick up those efforts and do even more to create more housing. Thank you. And just a quick comment, if I may, represent Ballard. So again, I just want to thank you for being here, being a team player. We're not giving away the farm.

I know a lot of people say, stop giving away the farm. I don't see the municipality of Anchorage doing that. I see you being a team player wanting to get this project done. Because I believe, and I know many others believe, Mayor LaFrance, who support you, too, and our community in general. We have to move forward with something, and it's important.

I mean, Cook inlet, they said 20, 28. That's it. So we need to do something. So thank you for being here today. Thank you.

Coucher. Thank you. We've got Representative Shragi and then Bynum. Representative Shragi, thank you. Co Chair Foster.

Madam Mayor, good to see you. Mr. Claude, always good to talk and good to see you again. Similar to Representative Allard, I wanted to thank you for being here and being a part of this process. I know you've been early and enthusiastic partner in the mayoral workforce group on the pipeline, and I think a solid contributor to that. And more than just your support of trying to find a responsible way to move this gas line forward.

I think you've been doing a lot of the things that not only strengthen our community, but also better prepare us for a possible pipeline. Specifically, your focus on housing our workforce and childcare and core services, public safety, I think we all know is going to be impacted if this big project moves forward. And I think you're doing a lot to try and get us in the right direction so that we're prepared for what comes tomorrow. And hopefully that's a brighter tomorrow. But to that end, I think Representative Allard has highlighted some of the concerns that folks have about the impact that this pipeline project would have on our community.

And you've talked a little bit about this study and the fact that even if everything goes perfect, all the housing's built, you've still got a revenue shortfall. And I think the idea that everything goes perfect, all the housing's built, is absurd. You know, I think there's always challenges we find. And so I think we know that there's definitely going to be a fiscal impact on the community. Can you talk about how or if the fact that there's a delay in being able to capture revenue off of these workers and otherwise that come here, you know, the positives of people coming here, if that delay makes there more of a need for upfront community impact assistance as part of this project, and do you have thoughts on how that can be best distributed?

I know there's been a couple of different methods that have been put out there, one by population or through community assistance. Can you talk about the importance of having something that recognizes that it's not just the communities directly attached to the pipeline or with the pipeline running through it that are impacted, but also communities like Anchorage that are off of that track but clearly impacted by a project like this. Through the chair to Representative Shrogi. Thank you for those questions and I will turn to Mr. Claude to address them. Yes, through the chair.

Representative Shragi. The Yeah, I think, you know, you bring some really good points up about when it comes to the timeliness of assistance. I think that up front aid is something that would be very helpful because of the lag in any kind of new revenues that we get. You'll realize service demands right up front. Soon as people land, they need things, right.

That a municipality provides, but revenue comes later. So the upfront impact funds would be very helpful. And I think that there'd obviously be a big process of figuring out the best use of those to mitigate some of the kinds of Fiscal impacts that we'd see. One likely candidate for that is to help encourage more housing development that builds our tax base, for example. So the impact aid is something that would be very important.

And then also you mentioned the ongoing support, revenue sharing or another mechanism like that. Also very important that that be somewhat be something that we can predict and that we can count on that helps make up for the tax revenues that we're not receiving from the project directly. So that would be something that would help us a lot. Thank you, that's very helpful. Okay.

Representative Bynum, thank you. Co Chair Foster, through the chair, two quick follow up questions. One specifically dealing around the port. I was wondering what kind of communications you've had with the port project developer and those that might be involved with the development of the project and the usage of the port and whether or not there would be any impacts to the project due to the port project going forward.

Through the chair to Representative Bynum. I will say before I turn to Mr. Claude that we have had initial conversations and I believe that the port is ready to handle whatever comes through it to support this project. Mr. Claude? Yes, through the chair to Representative Bynum. As the mayor said, the port is, you know, able and willing to play the role that it has.

I would mention that what we have to go off of as far as the use of the port for the project is that in the environmental impact statement that I had, that I had mentioned earlier, the Port of Anchorage or Port of Alaska in Anchorage was. It was kind of one of the key points for construction of the gas line because everything except the steel in that report, everything except the steel needed to come through the Port of Alaska. So I think the steel for the piping would go through Seward and then virtually all of the other materials and construction equipment would come through the Port of Alaska. So it would play a really important role. And also the need to use it in this way for the gas line is something that underscores the importance of having a resilient port of Alaska so that it's there for all kinds of needs, including that.

Appreciate that. I think it's. Sometimes we forget the importance of the port, not just for Anchorage, but for the road connected system as a whole. Development of a project like this, but also making sure that. That we have a good flow of reliable goods throughout the road system into Alaska.

So I think that's a good thing for us to keep on the top of our heads and make sure that we highlight the importance of the port and making sure that it is healthy so the other thing that I think that one of the things we've maybe not focused too much on, like to get your thoughts on, is the long term, the long term impact of low cost energy, especially if we go to. Or not if, but when we go to phase two on this, I mean the numbers that we're seeing for cost of electricity, gas to the home are going to be dramatically improved. And I was just hoping that you might. We've talked about negative finance impact to the municipality, but maybe the positive impact to the community and to the municipality with low cost energy. Thought you might want to comment on.

That briefly through the chair to Representative Bynum. We love the idea of low cost energy and a stable, reliable source is something that we certainly need. And I know you asked for more specifics around the long term impact. And Mr. Collid, do you want to add anything? Yes, through the chair to Representative Bynum, the super important question.

And I think that especially when the export component is there, that really improves the economies of scale and you get to where the cost of the gas is very affordable in Anchorage and elsewhere. That's great. That's a huge boost for our economy. I think in terms of the affordability, we're always very concerned about anything that could cause the cost of living to go up and you know, anywhere in the Anchorage. But it's not, it's a statewide issue.

Right. And so I think that being able to hold those costs down and also for the cost of doing business, the cost of any kind of economic development, any kind of any kind of industrial development is really becomes prohibitive as those energy costs go up. So I think that having low cost heating and power from that natural gas is really critical for our economy. This is a quick final comment, Representative. Let's get prepared.

When phase two happens, I think Anchorage will see a revitalization of industry coming. And so you got a lot of challenges with figuring out how we're going to house all those folks that are going to be here working in the community, not just for the pipeline, but for generations in the future and making sure that our schools are growing again and families are staying right here in Alaska. So appreciate your partnership on this and making sure that we're going to have a healthy Alaska. Healthy Anchorage means healthy Alaska. So look forward to that opportunity coming to us.

Representative Ballard, thank you. Thank you. Through the co chair. So there's a couple of things too, I think hitting on the port. And so thank you, Representative Bynum, for bringing that back.

I don't think that they're going to use the port as much to bring the big items through Copper Landing. Right. They're going to hit on Soldotna and Nikiski that way. I just don't see that's dangerous and there's. That's going to be terrible.

To bring everything through Copper Landing or. Yeah, Copper. The other thing is have you thought about Port mackenzie? Because one's going to go down south and then Port Mackenzie can be accessed to go north. Have we, have you brought up, have you thought about the use of Port Mackenzie for less impact on Anchorage?

Through the chair to Representative Allard, thank you for the question. We have had different conversations with folks at Point Mackenzie but. Or Port McKenzie but not around. I have not been engaged around this one. But I know that there are a number of different needs that the our state, our community has when it comes to ports and that there is a role for different ports here.

And you know, how that fits into this particular project is not something that I have details about. Is that Mr. Khloud, is that something you have awareness of or. Yes. And through the chair to Representative Allard, I think that there's still pieces of the Port Mackenzie to be developed before it can fulfill that role to the. To a full extent because there isn't the rail extension built all the way to the port.

We do have a rail extension at the Port of Alaska and that's one piece. I know that's pretty critical for it. Whether there are other project components that can be delivered through Port mackenzie, I'm not certain and I can't speak to. But I do know that the published documents do speak to the Port of Alaska being pretty pivotal. Thank you.

And just I can help you with getting information on Port mackenzie. That's why I brought it up. So thank you, Co Chair. Thank you, Mayor LaFrance. Okay.

I don't see any further questions. And so with that, appreciate your being available today, Mayor LaFrance and Mr. Clauda. So we'll move on to the next. I believe it's nstar. Thank you, Chair.

Thank you. And so next up we have John Sims, chief financial officer. And if you'd like to maybe put yourself on the record. And thank you for joining us as well. Thank you, Chair Foster, for allowing me to be here.

My name is John Sims. I'm the president of nstar. That's what I thought. I saw a CFO there and I thought, I think that might be wrong. Well, my apologies for submitting the right information.

Sometimes I wish I was a financial operator. Anyway, thank you for the opportunity to be here today, I wanted to just provide some initial thoughts on nstar and where we currently sit as far as gas supply, and then I'll specifically get into some of the contract terms that we have with Glen Foreign today. So kicking off, I wanted to provide some foundational information about gas supply. It's really a component of three main things. The first off is annual supply.

You have to have the annual volumes available to your customers, you have to have deliverability, and then you have to have the balance sheet to move forward with the infrastructure and for the capital investments that are required to actually go out and find the gas. So this is a historical look back at Cook Inlet annual production. You can see in the heydays of Cook Inlet back in the 90s, we were up over 300 BCF per year. So how does that relate to NStar? NStar on an annual basis right now, today, depending on temperatures, is anywhere from 33 to 38 BCF.

So we used to be a small fraction of what we were able to get out of the Coke inlet or what the producers were able to get out of the Coke inlet back in the early 90s. As you fast forward to 2026, you can see that the annual gas production has dropped to about 70 BCF, which is one of the reasons why we're having some of the challenges we are today.

As I mentioned, gas supply is a function of three different things. We first touched on the annual volumes. The second chart is showing the daily gas production that comes from Cook Inlet. This is a little bit different time frame. We're starting this one from 2010.

And you can see that we've dropped from about 350 million a day down to around 200 million a day. One of the reasons why that's important, and we'll get into that in the next slide, is in the winter months, NSTAR has to be prepared to deliver up to 320 million a day. So what's being produced out of Cook Inlet today by itself isn't enough to meet annual, or, excuse me, daily demand for customers in the wintertime.

And this chart here, this is directly showing that daily demand. There's a couple things. Starting off on the left, you can see that red line going across the top. That is our design day peak of 320 million a day. So assuming worst case scenario and temperatures in Anchorage, we're at a sustained 25 below zero in the wintertime.

That's where we would expect that peak to hit. The gray charts that are going up and down that's a reflection of the numbers that are presented over to the right, which are kind of various examples of weather variances from warmer temperatures to colder temperatures. And then the solid orange down there in the bottom is HEA or Homer Electric's load. They are a gas sales customer of NStar's, so we procure gas on their behalf directly with the producers. That chart on the right that you can see just really speaks to the variability that we have.

So between a cold winter and a warm winter, or a cold year and a warm year, NSTAR needs up to 7 BCF per year difference, depending on if it's warm or cold, which is quite a swing and something that's challenging for us to get out of the Cook Inlet, especially today.

So this isn't the first time that we've been here. Back in 2009, when Marathon was still here in the inlet, we were once again having a hard time getting firm gas supply contracts from the producers. So Chugach MLP at the time and nstar hired Petrotechnical Resources of Alaska PRA to do a demand study to see what would have to happen in the inlet to make sure that we had gas starting from 2010 out until 2020. And just to quickly summarize this, Pra said that in order for the local producers to meet demand through 2020, there would have to be 185 new wells that were drilled between that time. And because of the significant drop in deliverability per well, it really makes it challenging.

Back in the old days where you saw the big glut of natural gas in the 90s, that was the result of large reservoirs that had large pools of gas. We don't have that today. They're getting smaller and smaller, and that's that significant drop in deliverability per well. They also estimated that about 1.8 to $2.8 billion in capital expenditures would be required to get to that 185 wells needing to be drilled. So the bottom line, they concluded, was if we average about 13.6 wells completed per year, then the shortage of gas will occur some point after 2018.

I highlighted the link there, just so you guys, if you want to go back and reference that, it was a great report. The PRA did another shout out to Pete Stokes, who did a fantastic job. So what's happened since then? This is information that was taken from Hilcorp's presentation to house Resources on January 28, 2026. And from 2012 to 2025, Hilcorp produced over 750 bcf of gas and they drilled over 192 wells.

So PRA was pretty spot on as far as the activity that would have to take place in order to meet Cook Inlet demand. They also spent about 1.5 billion in the Cook Inlet basin alone. Now this is just Hill Corp. It doesn't reflect some of the other producers that were out there over that time. We've had a number of them.

We've had Buccaneer vision. Fury of course is doing work today now called hecs. But the bottom line is they did the work necessary over 190 wells over a 10 year time frame, 13 year time frame to make sure that we could meet Cook Inlet demand. This is another slide from Hilcorp. One of the things that you see here, again the 192 wells.

But look at the difference in what other producers do did in the inlet compared to what Hilcorp did. Fury talks a lot hex about being the second largest producer in Cook Inlet. What is that in over that time frame they did 14 wells. So not even the annual average over that time frame to get us to where we need to be. It's the function of the balance sheet and the ability to carry forward that capital expenditure that's required in order to get get gas to the market.

And lastly the last slide I'll present from Hilcorp's presentation just showing the price. One addition that I did was I added that star up there where it says Hilcorp charged NStar in March 2026. Because of the cold temperatures that we had over this past winter, we were not able to get gas from any other location that we needed for our customers. Hilcorp provided that gas. They provided half a BCF and the price was $16.

You can see the latest Fury and NStar contract pricing that was there, that was about 1369. That's for a new contract. Because of the royalty relief that was passed by the Department of Natural Resources. We had a provision in our contract that stated if they have royalty relief they will drop the price down to $12.30. So we're receiving gas at that rate today.

But there's no doubt the price continues to increase as we move out in the future. Last thing I want to note about this slide, the green bar there where it says 836 for Hilcorp Gas going out into the future. There is an escalator on that. So the price for Hilcorp gas will not remain at 836. It will increase depending on what CPI inflation is capped at 1.5%.

Seems low. That's a great contract that we executed back then. Yes, sir. So what does that Hilcorp contract specifically mean to NStar? When you look at what it provides to our customers on an annual basis, this is a delivery profile.

So these are firm commitments that Hilcorp has to deliver us gas. This is the last contract like this you will ever see in the Cook Inlet. We cannot contract for firm supplies of this nature. We've tried for a number of years. No one is willing to provide it.

You can see in the summer months, obviously we're not consuming as much gas here as a community. So between 45 million a day and in the wintertime, that ramps up to 162 million a day. Reminder, our total peak demand day is 320. So how do we get to that 320? We supplant that with storage that we've procured, whether it's Cook Inlet, Natural Gas Storage, Alaska.

And we also leverage the HECS contract to get some gas for that purpose as well. But this is one of the largest challenges that we have. This contract expires in 2033 and we have to find a replacement for 162 million a day. And there's no one in the cooking that can provide that today.

Question, Representative Ballard, thank you. Thanks for being here. Mr. Sims, I got a question. So you said 2033? Yes.

Do you have a projection on the price of what that gas would be like? What are we going to do when those contracts expire? Yeah, through the chair, Representative Allard. So I'll get to that later in the presentation. We pay currently today, or we just filed this with the commission.

$10.80 Per MCF. That is a combination of that Hilcorp contract. That is a vast majority of our gas that we procure from the Cook Inlet and then all of the other discretionary gas sales that we purchase from Fury and then also that $16 price that I was talking about from Hill Corp. I'll wait till the side comes. Thank you.

I wanted to touch on again Hex, the second largest producer in Cook Inlet. This was a presentation that they gave to ADA on May 13. The reason why I show this is there's a lot of discussion about other producers being able to replace the Hilcorp volumes. And so I mentioned that NSTAR needs 320 million day. 320 Million a day in the wintertime and that peak demand, the second largest producer in the Cook Inlet doubled its production from 10 to 25 million.

So we need 10 to 15 times more what they can do on a daily basis to meet our customers needs, Not a realistic scenario. And that's one of the reasons why losing that Hilcorp contract in 2033 is a major challenge for NStar and for our customers. Representative Ballard, just leaving me with a lot of questions. So. Well, I guess that goes on your next slide.

I'll just wait. That's Hex. Here we are. Never mind, Mr. Sims. Okay, so one of the things that we've heard a lot about this legislative session is royalty relief.

Is that something that will save the Cook Inlet. And STAR is a, you know, has supported royalty relief in the past as long as we still allow the Department of Natural Resources to manage the resources there. But this was directly from the Commissioner's final findings of the determination for kitchen lights unit royalty modification. And one of the things that it stated was if we provide this royalty relief, and if you look at the center columns where it says cumulative production from September 2025 million, you know, MMSCF, that is the cumulative product production coming from those fields from 2024. And this in the normal price high case scenario.

So the most optimistic case of getting gas out of that, out of that unit by December 2036, they will produce 68, 369 or the equivalent of 68bcf total from that facility. So if you divide that by the 12 years that it takes to get that cumulative production, you're looking at right around 6 BCF a year. Again, N Star needs up to 38, and that's just NStar. That does not include the electric utilities. So again, second largest producer in Cook Inlet.

They're not going to be able to supply gas to all the electric utilities.

Last slide here before I get to Representatives Allard's questions. So how do we again meet the demand for our customers? This slide kind of summarizes it here. This shows the kind of ebbs and flows of demand on an annual basis for our customers. The dark black line represents customer demand.

And all of the colors that are underneath that represent the contracts that go to make up for that customer demand. So anywhere you see green, whether it's dark light or kind of regular green, that represents a HILCORP contract. The other colors of the red there, that is fury. And then the blue represents all of the gas that we are pulling out of storage. So it's been produced, it's been injected into our storage facility.

And then during that time of peak demand, we pull it out. So it's all of the green that we are losing again starting in 2033 that we have to find a replacement for.

So the long term plan represent validation. This time I'm actually going to ask a question. So what's the wholesale price of HECS even with the energy relief in 2033? Representative Allard, through the Chair. We are purchasing gas right now.

We buy about 15 million a day from Fury. Some of that gas is on the 1230 per MCF price. The rest of it is at 1350 per MCF. And we have that price, the 1350 until the first part of 2027 where we'll more than likely see an increase. We need them absolutely.

We need every last molecule we can get out of Cook Inlet until we have a long term solution in place. Okay, thank you, Representative Ballard. Sorry, Representative Galvin. Thank you, Co Chair Foster through the Chair. This slide here made me mindful of the storage conversation.

I had heard comments kind of in the background that storage had not been working out as smoothly as the different companies had were hoping in Cook Inlet. Can you give me any more on that? Any if there's context that I should have around understanding if that's an efficient facility and way for us to be managing our. To make sure our load is there for us? Representative Galvin through the chair.

Storage is critical and there are two entities right now that provide third party storage. You have Cook Inlet Natural Gas Storage, Alaska, which is owned and operated by nstar. And you have Hilcorp Storage, both of which are operating. There are different price mechanisms for those. Singha has had some challenges because of the heavy draw that we had to pull out of storage.

It put a lot of pressure and a lot of strain on the wells. We've since corrected that, but it's an ongoing battle to make sure that those wells are operating. But they've been doing the job that they've kind of been asked to do. Thank you. Please proceed.

Thank you. So the long term plan for nstar additional storage is critical. Whether it's additional Cook Inlet supplies, LNG imports or the pipeline coming down from the North Slope, we have to have additional storage. We filed in January with the RCA to build an additional storage facility in the Kenai. We're still waiting to hear back from them.

We're expecting an order sometime in the next couple months that will allow us to move forward with a storage project that will allow us to execute some contracts for the purposes of LNG import and for the Aklng project. The Glenfarn Agreements. We've been in negotiations with them for probably the last 10 months. What we have today are three sort of connected agreements. It is a gas supply agreement that's governed by a framework agreement.

So within that framework agreement there's key definitions and also it articulates the plan of switching from LNG import over to the Aklng pipeline, Phase one.

Underneath that framework agreement are the details behind the LNG import project and the Phase one pipeline. So that is our plan. We've, like I said, been negotiating for some time. We are very close. There are a couple just, I would say, relatively minor pieces that we need to agree upon.

But this is a 30 year agreement. So we need to make sure that every word is correct and appropriate for our customers so that we can move forward with that and file that with the rca. Nstar is not providing any equity on either the LNG import or the Phase one pipeline. Originally we had considered and contemplated providing some equity into that project. But then in 2024, HB 307, there was a floor amendment, Amendment 14, that strictly prohibited utilities from recovering LNG import facilities and rates that passed the floor, I think with just one objection.

And that obviously made us rethink that decision, which cost us about a year as far as our development goes. And so we are no longer going to be providing any equity to that project. Once we have executed the contract with Glenfarn, we will be filing it as a gas supply agreement with the rca. And the RCA will have jurisdiction over that contract where they can either approve it or they can deny it or they can make recommended tweaks to that contract. So a utility is not allowed to charge customers any charges on their bill without RCA approval.

So we will not be doing so without that approval. This is a condition prior to development for Glenn Farn and for NStar to move forward with that project.

Representative Galvin, thank you. Co Chair Foster. I think your last sentence probably answers this and I just want to make sure I heard it properly that RCA must approve any lease. Can you repeat that last sentence again? I want to make sure I've heard it.

Representative Galvin, through the chair. So a utility is not allowed to charge customers any rate or charge without having approval by the Regulatory Commission of Alaska. So they have jurisdiction over utilities. So once we have a contract that has been executed, it will be filed with the commission for that purpose. And it is a condition precedent on the agreement where the RCA has to approve this contract prior to that development happening.

Follow up, follow up. Okay, so this gets at, really, to me, the heart of what I think a lot of legislators are Trying to navigate. And I see you shaking your head yes, you must be familiar with this conversation. Probably a million people have asked you directly. But I'm going to ask it to you in another way that perhaps then you can answer it.

Same question in another way. And so one of my biggest concerns is that risk that the Alaska ratepayers will be left holding the bag for the entire cost of Phase one if phase two does not come to pass. And so particularly if phase one ends up with cost overruns, for example, or low throughput rates, maybe lower than what we have been quoted, that would change up the whole mix. And so again, the question which I think you've already answered, but I'm going to ask again, what assurance can you give us that any purchase contract that NStar enters into with eight stars will leave those risks with the pipeline owners and not have them as a pass through to nstar? And of course that means to ratepayers.

Representative Galvin, through the Chair, that's a great question. It seems to be kind of the question of the session. NStar's agreement has a fixed price. NStar does not care if the project goes over cost. It does not impact in any way, shape or form the price that we will be charging customers.

It is a fixed price. It has a annual inflator just like all of our contracts do. But it is not dictated or determined by cost overruns whatsoever. Follow up, follow up. Thank you.

And then the next question is a lot of us are very excited to say, yes, I 1000% support this because I want to keep low prices to our own constituents paying, having a hard time paying their bills. So when you say the words fixed price, can you elaborate or give us more context to give us any certainty around our being able to afford that fixed price? Representative Galvin, through the chair, if you wait just a couple slides, we'll get to what the price is. Can't wait to start diving into that. Okay, thank you.

Yeah, thank you, Co Chair. Thank you.

So starting off, just wanted to give some kind of high level concepts on LNG deliveries as it's articulated in the contract today. So the concept has been since inception with Glenfarn that Glenfarn will build a small section of LNG import facilities at the export site. And the concept there is that once the AKLNG export project is up and running completely and is exporting gas, it can buy up the portion that we have developed for the import facility. And the reason why that's important is these projects, the import project and the pipeline project are two separate and distinct projects. So in order for the customers to get to a solution or a place where we're not paying for both projects, one has to acquire the other.

And so that's the purpose of the framework agreement so that the AKLNG export project can procure or buy the facilities of the import project so that the customers are no longer on the hook for those costs. That's one of the sort of commercial eloquences that we have struck here with Glenfarn is that ability.

You know, looking at these projects, especially two years ago when we were considering, you know, any major infrastructure project requires long term contracts. And so I was terrified of executing a contract with an entity to import LNG on a 30 year basis and then having a pipeline come down and missing out on the opportunity for that low cost gas. So this really does exactly what we're hoping. If the pipeline gets built and the exports are happening, that import project goes away. We're able to take advantage of those low cost options that will be provided from North Slope Gas and our customers are the better off for it.

So this just shows kind of an example of when the cargoes would be coming in. Again, talking about the storage requirements, everything you see there in orange is additional storage that we need and sort of the uncontracted storage that we have for this facility. Now diving into Representative Galvin's question and Representative Allard's question on price. So the LNG import price, it is based off of jkm. JKM is Japan Korea Marker.

It is the hub for LNG import pricing or export pricing. If you were to look at that today, right now it's about $18.30. When we looked at this project a couple years ago, it was $8. The point there is, there is volatility in the LNG market. It fluctuates, it goes up and down.

The lowest I've seen it in a long time was a couple years ago at that $8 price. What a lot of people forget is there is infrastructure that's required to bring in LNG imports. We can't just buy a tanker and then offload it somehow into our system. The cost for that LNG terminal infrastructure is between 3 to 5 dollars per mcf depending on participating volumes during that time. So right off the get go you have nearly $20 gas, potentially even more for that LNG solution.

So that's challenging, especially when compared to the $10.80 and you hear discussion up in Fairbanks going on. Fairbanks just filed for a 60% increase on their cost of power adjustment, again, because they haven't had the opportunity to take advantage of Cook Inlet gas. They've had to use the high cost of diesel. That 60% possibility for South Central Alaska is real and is very possible and will happen with either of these scenarios, whether it's staying in cookinglet or importing lng, what that means for the local community. If you look at the rates that were charged to the Anchorage school district in 2025, add a 30% increase onto that, it equates to about 1.5 million additional dollars per year that the school has to pay for.

Make that 60%. We're now looking at $3 million for the Anchorage School District. So this has a real and immediate impact on all of our economies in South Central Alaska. Representative Galvin,. Thank you.

This is more information than I think we've had since looking at this bill. So I appreciate it very much and I have a few questions and I'll have more down the road. Are these additive?

Representative Galvin, thank you. In other words, if it's still. Sorry, let me spell it out for the rest of the folks who are listening. So in other words, if it's $18 Japan market and then at $1 shipping plus $3 to $5 for LNG facilities, then are we talking 22 to $24? So Representative Galvin, through the chair, the total all in cost is between that 16 to 22.

If you use a JKM price that's 8 to 10, then you're going to be in the $16 ballpark. If you're looking at prices today, it's going to be closer to the 23, 22 or above that. So yes, those are additive. The LNG terminal infrastructure, the 3 to $5 per MCF that will be on top of the JKM price. You also have to factor in the fact that NStar for our distribution charges is an additional $3.

This is just what the weighted average cost of gas would be. Then you have the utility charges on top of that.

Okay, so we're missing a few things on this slide. So the NStar pieces and the other $3, that would be. So there's N Star and then utility. Is that what I heard? Representative Galvin, through the chair.

So by Utilities, simply NStar. So yeah, the N STAR charges distribution charge would have to go on top of the weighted average cost of gas, just like it does today. The point is the $10.80 per MCF is going up to something significantly higher depending upon what the JKM prices are going to Be that's sort of your volatility piece. The known are going to be the terminal infrastructure components of that which is about $3 to $5 per MCF depending on the volume that's participating in that project. Okay.

And I follow up if I may. Representative Galvan, thank you so much. So I think that Fairbanks and I wish that Representative he's online so he may have a way of approaching this that I don't. But I know they have signed a 20 or 30 year contract already. I don't know how that compares to what we're hearing right now and I would love to know that.

Representative gave through the chair they're paying about $23 per MCF for trucked LNG off of the North Slope with harvest. So it's comparable. Unfortunately. Yes.

Well that's not going to be great news for the whole state of Alaska at this point. But I appreciate what you're saying that the JKM prices may change significantly in which case it would change for our market. Representative Gallivan to the chair. So we are in the middle of a couple conflicts going on which have driven up the price. Okay.

When you go back and look at historical JKM prices during times over the last 10 years it has been higher than the $18 and during times it has been lower. The point is we we will be subject to those fluctuations and to that volatility. Follow up Representative Galvin. Thank you. So that's this deal is done.

Is that correct in terms of your signing and your agreements? So as I mentioned Representative Gavin through the chair there are a couple things that we're still tweaking but the bulk of it yes is done. Follow up Representative. So I know that there was some discussion around high volume users having a break or a different price. I think.

The new agrium and perhaps other high volume users were going to have perhaps a break in price. Is that something that isn't possible because of the way that international. I guess because of the international nature of this deal. Is that the problem? Is that why we can't get a great in state deal?

Representative Galvin through the chair I wouldn't so important point. This is just the LNG import. Yes. Okay. Yeah.

I would not expect a nutrient to be participating at these prices at these levels. It would make business sense. It wouldn't help. This is just for the that import time period. Thank you.

Very good context. Thank you Representative Allard. Thank you. Through the co chair Mr. Sims. I wrote a note down here and I was I know we have Hill Core in The room.

But why would we use, why would, why wouldn't we refurbish the old Marathon plant instead of building?

Representative Owen through the chair. So that is an option. Going back to my statement on not wanting to enter into a 30 year agreement and being able to take advantage of North Slope Gas when it came, that's one of the first challenges. The second challenge is that facility as it sits today cannot meet the needs of NStar customers. When you look at the permitting that it's going through right now, I believe it's about 20 bcf that it's considering importing again.

We need 38. So there's a problem right there just on its face. And the total Cook Inlet demand is about 70. So from my perspective, if I'm looking at doing projects that are probably similar cost for the expansion of the harvest facility plus a greenfield LNG import facility on the AKLNG site, and I have the commercial eloquence of being able to transfer over to the AKLNG project when it comes down. That optionality for my customers makes a lot more sense than signing into a long term agreement for imported LNG where there's zero revenue coming to the state and I'm subject to JKM volatility for a 30 year period.

Okay. May I represent Valerie? I think it's important the public know that they have to have that. So I'm going to ask you another question, please. I want you to tell me and the public the worst case scenario if we don't get this built.

How is this, how is this going to be detrimental or positive if it doesn't get built? What does that mean for the municipality of Anchorage? And if it does get built, what does that mean for the municipality of Anchorage or what nstar actually covers? Right, Because I want a reality check to everybody. Representative Ballard, through the chair.

So the AKLNG full project is the only project after $5 million of analysis, demand studies worldwide RFPs to try and find solutions. It is the only project that has the potential to reduce the price of energy to the state of Alaska. Everything else has increased pricing. And we already talked about the impacts earlier in my presentation. You know, a 60% increase similar to what they're going through up in Fairbanks today equates to a $3 million additional annual expense for the school district.

Think of what that means for local governments, for homes, for businesses. It is an economy killer. That is one of the reasons why I'm here today speaking publicly about this, the reason why it hasn't been done earlier. I have been under confidentiality. So I haven't been able to disclose a lot of things I'd like to be able to disclose.

But it's time. It's time to move forward with a project again. That is the only one from my perspective and from our company's perspective, after millions of dollars worth of stuff study and RFPs is the only project that has the potential to reduce the price of energy in the state of Alaska. Thank you. May I represent Ballard?

Thank you, Co Chair. So I want to make you break it down even more because I think what people really need to know is how it's going to affect the individual resident. I don't know, a single mom with two jobs, a young family of four, an older senior citizen that is trying to make ends meet when you didn't. Instar prices go up 20% already this year? Is that what we're looking at doing?

And this isn't a cut on you? I want folks to understand what's going on. So did it go up 20% already? Representative Auer to the chair. You could use that as an estimate, I think.

What's, you know, I want it to hit home. I want folks to understand you're going to struggle and it's going to hurt. If you see a utility bill that's 500 bucks a month. Well, we're already struggling. So this past winter, one of the coldest winters we've had in five decades, which resulted in increased consumption.

When you look at our arrears or the folks that haven't been able to pay their bills, compared to prior years, we have a $7 million balance compared to what used to be a $1 million balance. So they're already struggling, and that's without the price of gas going up. And so I'm going to interject. So you're telling me that you used to kind of waive people's fees and kind of say, okay, we'll work with you. You're going to be on a payment plan from a million and you're telling me now it's at 7 million?

I've had phone calls from constituents saying I can't pay my utility bill. I'm trying to work with NStar, but I owe a lot. Is that what you just said on. The record, Representative Allard? That is what I said on the record.

With the one exception. We work with all of our customers, regardless of what the balance is. No, they're working with them. They're struggling. No, absolutely.

And our fantastic folks in customer service and credit, they work with them on a daily basis and we'll work with them to get through the summer months when unfortunately they're likely not going to have hot water for showering. But the bottom line is we'll work with them so that when we get to the wintertime they'll be back on so that they can have heat during the winter. But it is a massive challenge that not a lot of people see and that will only get worse as we look at these increased prices. Thank you co chair. Thank you for letting me kind of go back and forth and then I want to reiterate to folks.

So NStar normally has about a million bucks that they work with people and say we can help you. We'll make payment plans. They're at 7 million and I can't imagine what it's going to go to if this doesn't be, this isn't built. So I hope everybody gets on board. Thank you.

Thank you. I think our next question will be slide 17. So we'll go ahead and proceed. Thank you.

Hopping into the pipeline, which is probably where most of you are interested. So again this is the sort of that third sub agreement which is the phase one pipeline. And STAR has been working long hours to try and get this done. It is a 30 year agreement. And hopping into the pricing, specifically it starts at a fixed price at $16 per MCF.

That is not subject to cost overruns. One of the biggest differences between, you know, a lot of people say, well why, why wouldn't you just pay $16 for Cook Inlet, Cook Inlet gas? Well, the biggest difference is this is firm. We know this is going to come as opposed to an interruptible agreement where if they are able to develop it, they will send it to us. That is not a way for us to plan as a utility to ensure that we have gas for our customers.

It is subject to an annual inflation factor as I mentioned. But this really does bring stability. The second bullet. As the volume on the pipeline increases, the price decreases. That's an important point.

So there are, there are sections in the contract where it starts at 16 and then as volumes increase it will drop eventually down to 10 and then with the full project in place drops down to five. We haven't had $5 gas as an NStar utility since 2006. So being able to kind of go back in time 20 years for energy prices gets us pretty excited.

Again, the LNG terminal infrastructure, per the terms of the framework agreement, this infrastructure is acquired by the Aklng project which means our customers are no longer on the Hook for those costs. They're assumed by the AKLNG export facility. There are provisions in there that state that, you know, any sort of Cook Inlet royalties or any sort of change in law or tax that can increase or decrease the price. We have similar concepts in our contracts today. For example, the royalty relief bill that was passed then Star customers benefited from that, going from 1369 down to 1230.

Similar concepts exist in the pipeline. That's really when you think of the fact that this is a 30 year term. Who knows what the state is going to be interested doing in 20 years. So to provide some sort of stability that is, that is something that we had to provide in the contract.

I'll pause there, Representative galvin. Thank you, Mr. Sims. This is helping to paint a bit more of a clean and clear picture to me. So we have a couple of options. One of them is one choice is the uncertainty of LNG import, which looks like based on your numbers, mid-20s cost.

And then the other certainty that I see here is that $16 MCF is a straight up number. Again, this is the first time I've seen this cost. So I really want to thank you for coming right in and sharing this with us. It's not the best news because of course I was hoping $5 from the get go. So I do want to ask you about two things.

One is inflation, if you could share with us, is that cpi? What were you thinking about with that in terms of what we'll be seeing as rate payers? And then the second thing if you could touch on is well, let's just start with that and then volume is next.

Representative Galvin, through the chair. So on the inflation factor, it is based on a combination, as we said today, of 50% U.S. and 50% Alaska CPI. An important component of that for us is that it's capped so it cannot go over a certain level. I'm not going to disclose what that is today, but that is already articulated in the contract. It's just a matter of what that number is going to be.

So very comfortable about that and that was important from my perspective because I want to be able to communicate to customers what is the worst case scenario from an inflation factor. And we have that again, going back to cost overruns don't matter to us. We need to be able to clearly articulate what the price of the commodity is going to be that we're providing in any year in the contract. And so we have that at least what the cap would be. Thank you.

If I may a follow up through the chair. Representative Galvin. Thank you, co Chair. So the next obvious question is we've been seeing modeling with 500 VCF throughout without really any clear understanding. From my point of view, if you look at your charts, the maximum is going to be what, 260 or something.

So anyway, I'm trying to get at when are we going to start seeing the $10 and the $5. If you can give us any context around that. Repsev Gavin through the chair. So 500 is a key number for the contract. Once we get to 500, then we start seeing the price of gas drop on a sliding scale.

I believe it was Senator Giesel who had some information on that 500 number. If you look at that's a daily number. The 500 million cubic feet a day is a daily number. So if you look at how that calculates into an annual basis, it's right around 182, 183bcf. That's right.

So when you look at the state demand, it's well over that and potentially up to 210. If you think about what the Federal Administration has been working on with the military bases, it can be even more than that. So for example, there was an RFI that was sent out in February that described and detailed businesses, developers with interest in providing data farms on military bases. So they sent out one for J Bear, for Clear and for Eilson. Because of the interest that they got on those projects, they turned it into an RFP and they were here in April.

And I believe the RFPs, the priority proposals were due on May 30th. So it'll be really interesting to see what, what came from those. But, but that is load growth that helps us get to that sliding scale that reduces the price of gas for our customers. Thank you. And through the chair did they offer, I mean, that's one project on the side.

We also, I know we have Donlen mine. I think that was at around 11. So I'm thinking about how we're piecing, mailing all of these pieces in plus agrium and that would add to the load. But what I don't know about, maybe you do with this military base project is the timing because it needs to be flowing. The throughput has to be there right before you know you're going to lower the price.

Representative Gavin to the chair. I don't recall off the top of my head what the timing was. All I remember from the proposal was that the responses were due by the 30th of May. So hopefully we can glean some more information from those once they're submitted and released to the public. May I follow up?

Thank you, Co Chair Foster. So just for ratepayers who are watching, or certainly they're not watching, but they will be hearing about this. And what I think I heard you say is 2033, you are going to be in deep need. And we're at the end of our contracts with Hilcorp and others, so there's a sense that that's the timing when we really want to have something rolling. But there may not be a pipeline yet.

So there may be LNG coming in at a higher price and then it's going to de escalate at a higher price, meaning in the mid-20s, de escalate maybe to 16. And then until we get an international flow going, likely to where we're at over 500, we will not see a decrease below 16. Is that, am I hearing that properly? Representative Galvin, through the chair. Let me unpack a little bit of that because there are a couple key points there.

So NStar's Hill Corp. Contract expires in 2033. We have needs for gas that start in 2031. So we need gas from someplace during that time. The electric utilities, their needs are before nstars. So the utilities have been working collaboratively to try and make sure that we have a solution that can meet those needs in time and in place.

Best case scenario, the LNG import facility doesn't need to happen and a pipeline is built and they just use those assets and that infrastructure for export. But we have to make sure that we have a reliable firm plan in place to be able to meet our customers needs. So if you were to look at the kind of the project and the plan that we, you know, we've been discussing for the last year with Glen Farr and it's LNG import first, then the pipeline as it's built and as they have the customer base. Thank you, Representative Ballard. Thank you.

And through the chair, Mr. Sims, are you working with other utility companies? Microphone Representative Ballard, through the chair yes, we are. Okay, so there would be to increase use during phase one to drop the price. Representative Aller, through the chair. So the, sorry, the total volume on a daily basis for the utilities is right around 175 to 200 million a day.

Okay. So that makes up a large component of that 500 million a day. Donlen Mine, the Nutrien facility, that kind of brings us up to higher volumes. You know, the data farm potential depending on the size There, I mean you could have the equivalent of a data farm that represents NStar's load in entirety. So that could be a quick change.

We'll have to see what details, you know, are provided there publicly. But there's a lot of positive potential for demand in the state of Alaska. Okay. So I'm not too concerned about what we can do in the state once we have access to firm, independent, reliable gas. All right, thank you.

Thank you, Co Chair. Okay. Representative Bynum Ventura. Yes, thank you. Co Chair Foster.

Thank you for being here. So I was hoping that we could get a little bit into contract structures. You've been talking quite a bit about that. Just for the committee and the public to have a better understanding of what we doing for contracts. From what I'm hearing you tell us today is that you have anticipated contracts in place with Glenfarn specifically for the, for the phase one.

And that sounds like it's a formulaic based contract, prices based on throughput and when we hit a certain daily average then those prices will start to come down. I'm not exactly sure. I just wanted to be clear on some. We're talking a little bit about import. You're not involved with the import facility other than being a contract buyer.

Again, can you clarify? You said you didn't want long term contracts with the import facility. Can you really talk again about how that contract would be structured for imported gas? Representative Byron, through the chair. Great question.

Happy to. So as I mentioned earlier, we have three agreements that are kind of wrapped up into one gas supply agreement. The first is a framework agreement that structures and articulates the transition from import to the pipeline. So that is a 30 year term. We are relying on that opportunity.

If the pipeline doesn't come, hopefully the pipeline comes, we expect it to and then we will transition over to the pipeline in that scenario. So we are entering into a 30 year term for both and the pipeline will procure the infrastructure from the import facility once it is ready to move forward with the exports. Because you know it's very similar where or very standard where import facilities are controlled, constructed and then the market flips and all of a sudden they're turned into exports. That's happened in many areas, especially in the Gulf of Mexico. So through the chair, for clarity on the, on the cost structure for that gas, when you're buying that gas from import, it's going to is that market based pricing that sets that and then you have your adders on.

Representative Byner, through the chair. So we're still working through that and it's largely going to be driven by market prices at the time. You can buy longer term contracts, say two to three year term, but because of the volatility that you have on the world market, there's usually an escalator that's associated with that. So we have some time before we have to make those decisions and we'll evaluate it based on the market at the time. Sure.

Another follow up. One of the things you talked about, Bynum. Thank you. Thank you. Co Chair Josephson.

I didn't realize that the other co chair would step up for a moment.

So the, when we're talking about basically dealing with imported gas, there is this transition that you're talking about, you know, when we go to a phase one, phase two, and I'll get to that in a few moments. One of the things you'd said earlier is that you're not an equity investor in the import phase facility specifically that was driven by the decision that rates that you wouldn't be able to pass along cost overruns or cost issues with the import facility to ratepayers under this current structure that you have in place now. You're no longer involved with the gas or the import facility, but you are a contractual buyer of that gas. And so is that or cost overruns or additional costs that are associated with the import facility facility just basically passed on to you because you are going to have to now be a purchaser of that at basically where it's coming to you. Representative Biden.

Representative Biden through the chair. That's correct. So it's a part of that gas supply agreement. If the RCA approves that agreement, then it would be a pass through from Glen Foreign or whichever the entity, you know they decide to name it would be procured by us. Yes.

And just for clarity, if I remember correctly, where we stand right now, your involvement with RCA on whether or not when you set your pricing for the utility rate payer, that's going to be based on your overall cost, operational cost, all the things that go into you delivering gas to the customer, including the price of fuel from the supplier. Representative Bynum, through the chair. So we, similar to all utilities, we have a, a cost of power or a cost of gas mechanism that this would all fall under in our concept. And then you also have the utility distribution charges. So yes, those all have to be totaled together to determine or understand what the total cost is going to be to the meter where that home or business is.

Sure. Follow up, follow up. Thank you so much. The when we look a Little bit about. I think you've answered the questions about kind of anticipated costs, how that's going to be translated through to the ratepayer.

I mean obviously they're going to have to be able to pay for this import facility. If everything goes well in this project, phase one, phase two, the life expectancy of that import facility I would expect to be relatively short. So I guess one of the things I'm trying to just get a better understanding of is we build phase one gas line, the import facility basically becomes non. It's not really a needed item unless if all of a sudden import gas is very, very cheap. But we still have this now obligation to the line.

So I'm just trying to understand how we're going to build the cost in for the import facility and be able to without negatively impacting the ratepayer, be able to build that in for such a short period of time. And an import facility to me would be a long term investment, not a five year investment or shorter. Can you talk a little bit about that? Mr. Sims represented by him through the chair. So that is one of the concerns and the concept that we have is that the import infrastructure can still be utilized for export.

So to your example where say we're not exporting and all we have is an in state pipeline, it is possible that that could be sort of charged both ways. Okay, and follow up. Yes, thank you. Through the chair. Yeah, I understand that.

I mean economy is a scale matter here. So when we're talking about we're looking at wanting to build a line, I mean that's a priority. That's why we have a bill in front of us. That's really what we're talking about. And when I hear about conversion from import to export, the economies of scale that we're talking about to import are very different than economies of scale that we are needing to export.

So I'm just not exactly sure that I understand the interchangeability of that. I mean those two facilities in my mind are very different. And so can you talk a little bit about what your understanding of those that transition from being an import to an export facility and what that might look like from an infrastructure perspective and. Potential cost Representative Bynum through the chair, you're absolutely correct. They are.

You know, the scale of the two projects are significantly different. When you look at the import facility. It's important to understand we're not talking about building out the full export export infrastructure. Right. We're taking a small portion of that and doing a, you know, single train, single dock out there.

So minimize cost compared to what the total export project would be. Why that's important is because NStar on its own with our utility load can control or dictate whether or not that project goes forward. We cannot control the pipeline. And so going back to what's, what's the best long term strategy for us as utility to ensure that we have reliable natural gas for our customers, make sure we have something in place that we can control the LNG import facility on a smaller scale than what the total export facility would be. And then if the pipeline comes along we can also benefit from that as well.

And so that's the planning and sort of the order of which we see these infrastructure projects being built and being developed. And if it pleases the chair, I just have just a couple more questions. Representative Bynum, thank you. Through the chair in the last slide that we have up 17 we talk about the fixed price 16 per MCF. This is for the pipeline pricing.

So as soon as we is this triggered off of off of flow throughput in the, in the, in the line once it's actually built that we then go to this fixed pricing model that then has a formula based on throughput. Represent by the chair. So the $16 price is for 0 volume to 500 regardless of price of the project. And then with that being talked about one of the concepts in this project, I mean obviously we've talked about phase one only. And what does that look like?

I'm getting a better picture that right now it looks like that if we are phase one only in this long term contract, 16 is kind of the cap of where we would be at with an inflation accelerator in that and again cost overruns on the project itself. Phase one of the project itself wouldn't be passed along to the ratepayer because of this model that you're putting in place. But has there been any discussion about when we talk about going phase one, phase two, that we wouldn't be held to this 16, this capped 16 price with phase two actually going under construction. Because my understanding would be the concept initially was is that we would have phase one, we would go to construction, we begin to deliver gas. But as that's happening we're moving into phase two.

You're developing and building your export facilities and we're looking for this rapid ramp up to this basically this high throughput which would bring down pricing. My understanding would have been that we would be able to leverage or have those lower prices as soon as we knew we were going to phase two construction and that project was actually going to move forward. But what I'm hearing from you today is it sounds like that we're going to be locked in to this 16 cap until we actually see throughput that goes above the 500 on the daily average. I don't know what period of time that's over a year or four. If it's just based on your month, it could change, right?

I mean, I'm not sure what the metric of the contract is saying that we're going to be doing that, that you have to see that daily average before we get the lower cost. So can you talk a little bit more, clarify how this price structure is in place and if we do get an advantage of lower cost, deliverable price of gas, if phase two actually is. FID and actually going forward, Representative Bynum, through the chair, it is determined by volumes and that'll be a great day when the full volumes are going through the pipeline for the state of Alaska. And can you say through the chair, can you say what that you said the average of 500 but under what kind of a time frame is that being calculated under?

Representative Byron through the chair. That's a great question. I don't know if the top of my head how that's articulated in the contract. Okay. And the reason why I'm asking is because if it was based on a year, we have to basically hit a yearly average and you have to wait that full year before you actually get to that point.

I mean that's of course $16 gas for a year longer once we have a project under development, moving forward, gas flowing. So it'd be kind of a nice thing for us to know just so we can share that with the, with our constituents and also those that are paying attention to this project. Representative Byron to the chair, that would be articulated when we file with the commission.

I like to put CFO as my title, but I'm far from a finance person, so I don't know the details of that, but others that I would bring along with me would normally have that answer. And one final, I'm sorry, just one final question. Do we, I know we're looking at market indexes for how we're going to be developing the cost of that imported gas.

Where I think where we get our gas matters. You know, when we're talking about this conversation of being able to have Alaskan LNG for Alaskans, that's an important thing. And self sustaining, self reliance, there is some level of a, in my opinion, some margin that we could put on that that we'd say it's worth paying a little bit more to have long term stability and not have this fluctuation of the import markets. But also where that gas comes from in the import markets matters to me. I think it matters to Alaskans, matters to the country as a whole.

You have an idea based on our contracts on where that gas actually is going to come from or is it just coming from the lowest cost source? Representative Byron, through the chair. First off, I couldn't agree with your statement anymore. There's, there's one thing that just sickens me is to, you know, our largest customer is J. Bear.

And the thought of having Jay Bear reliant on foreign fuel is not something that makes me proud as an Alaskan or as an American citizen. As far as where that gas is actually sourced from, it's tough to tell. You know, we would more than likely for the first couple years be working with a supplier to sort of, you know, determine best price. So it's really tough to say bc, British Columbia. There are a number of export projects that, that this project is currently competing with to try and sell to customers.

Those are all potential suppliers. You've got Australia, that's a major player. It's hard to tell at this point. Yeah. The reason I ask, I was just looking at Hawaii and some of their big utility contracts and import fuel.

I know a lot of people talk about renewables in Hawaii, but a big portion of Hawaii's power grid systems are being operated off of fuel oil, diesel. You think they'd be on lng? We'd love to send Alaskan LNG to Hawaii, but they don't. And most of their fuel is coming from Libya. And so when we look at the global, you know, global spectrum of how are we getting our fuel and where is it coming from and how stable is it?

I think that's an important conversation that we should be having. So Representative Biden to the chair. I couldn't agree more. There were, there were phone calls that were placed to us from countries that we didn't return their phone calls. Thank you.

We got Representative Shrogy and then Josephson. Representative Shrogy, I'll pass. Okay. Representative Josephson, thank you. Good to see you.

Mr. Sims. On this first line on slide 17, fixed price at $16 per MCF, not subject to cost overruns. So I think the general sentiment, because as we've seen, the worser, if that's a word, case scenario, is that $16 pending phase two is probably in the range of acceptable for constituents. Maybe not ideal. It's a cost increase as I see it.

But when efforts were made on the floor to, as I understand it, the House floor, to reflect that, that the constituents would not bear the burden of cost overruns, that was met with defiant no by, frankly, Glenn Farn,.

You know,. This often happens and it can cut both ways where there's a piece of legislation and opponents say, look, if this, if this circumstance is highly unlikely, you shouldn't mind this caveat on your bill. And of course the sponsor says, well, I agree it's unlikely, but therefore we don't need it. Right. And this, you know, everyone shares in this sort of phenomenon.

I want that line in my bill and I can't seem to get it. And there are two main concerns, concerns for I think Alaskans who have some anxiety, and I know it's wildly popular. The gas line is, and it should be, but it's very complicated. One, of course, is tax abatement because someone is going to have to pick up these needs. And cities are called creatures of the state.

Therefore we birth them and we're supposed to nurture them in some ways. We're not always very good at them at that. The other one is this cost overruns issue. How do I get that language in my bill? Because a lot of what I hear is this is great, but we don't want to be plagued indefinitely with just phase one.

And we want something that reflects that and we want the developer to sort of own it and say, if this is so great, don't you worry your. Little head about it. We're going to pick up the cost overruns. Am I missing something about this? Co Chair Josephson So it's a great question.

It's a challenging question for me to answer. I can't speak for Glenn Farn on why they wanted or didn't want certain legislation or certain language and legislation. What's important for me, and this was very early on, we're very familiar with the potential for cost overruns on every project, whether it's a billion dollar project or whether it's a couple hundred thousand dollars. They happen. They happen routinely.

And I think I articulated this earlier. One of the most important things for me was to be able to show a contract to the commission that specifically laid out and defined what the price would be in a certain year. That was very important because I don't think that the commission would have approved anything otherwise. So I can't speak to why there was or was not certain legislation that was acceptable to Glenfarn. But what I can speak to is in the contract we have a fixed price that is not determined by the price of the overall project.

And up until you see it in front of the commission and see that complete contract filed, that's, that's the best I can do. But I would be personally very comfortable stating this as I am today down in Juneau in front of hearings that, you know, from my perspective, from mStar's perspective, we are not subject to cost overruns. And so your view, if I can, is you're not paying more than $16 per MCF in February, Phase 1, and therefore you couldn't possibly charge your customers more than that. Is that Representative Josephson? Chair Josephson.

Co Chair Josephson I am not allowed to charge anything on customer bills without the commission approval, without the RCA approval. And I would not think to do otherwise. So that's the best I can tell you is we will file this contract with the Commission. It will either be approved or rejected by the Commission. And that will determine our next steps on whether or not these charges go to the consumers of South Central Alaska.

Okay, thank you. Okay. Do we have any other further questions? Representative Galvin?

Thank you. I'm trying to think of how to phrase this.

How.

Do we need to put anything in the bill that looks at the volume, who is the moderator of that, that is saying, okay, we've now met the 500 mark or whatever mark is written within your agreement. How is that done? If you could share that with us and perhaps it's something that we already do with the oil pipeline, but I'm not familiar with which agency handles that. Representative Galvin, through the chair, are you referring to on the abatement specifically? No, I'm sorry, I'm just referring to at one point when the pipeline is in full volume or at least in full volume per year contract, then we will see rates dropped.

And I'm just wanting to know how, what is, how does that work?

Representative Gavin through the Chair So that's a collective effort from all the utilities from the state of Alaska. Demand matters. And so it's, you know, we are constantly trying to draw business here, you know, constantly trying to show that our economy works for businesses. And so that's how we grow that demand. Glenfarn has a self interest in ensuring that there's as much flow as possible through that pipeline.

So as far as the foreign markets that they're communicating with Glenfar and Eight Star agdc, you know, they're working on ensuring that that pipeline is at the highest capacity that they can get and there will be a benefit from our perspective on that as well. Follow up. Thank you. So, Mr. Sims, who's monitoring the total amount that is the throughput of the pipeline? Maybe that's the way I want to say it.

I'm trying to understand how do we know that we've reached that threshold. Is that something that you have written into your contract that you always will keep track of what's going on or do they report out to the public just because that's the way it's written? Do I need to put anything in the bill to make sure that we don't lose out on our discount when it's time? Representative Gavin to the chair. I apologize.

I think I understand your question now. So there's metering that watches daily hourly flows on pipelines. You know, from whether it's the producers field into that pipeline, there will absolutely be an accounting of the flows that are going through that pipeline. So I don't think any additional legislation on that would be necessary. Representative Josephson Yes, Mr. Sims.

It strikes me that as to this, the $16 per MCF, so we're told that at the current in the current property tax regime, it makes development of phase one unaffordable. We get that. I'm just wondering if your contract, which I applaud, also makes it unaffordable because if they're cost overruns, it's not clear they can move forward. Can you comment on that? Co CHAIR JOSEPHSON I can't speak to their internal numbers or what their modeling shows as far as if there were a certain percentage of cost overruns, whether that would make it unaffordable or they wouldn't be able to go forward with the project.

It's an interesting concept because you don't really the largest cost to this project, just speaking from experience in a smaller pipeline world, is the cost of labor and the challenges that you have with labor. And so you don't really start to understand those costs until you're going through, you've already reached FID and you're starting to put pipe in the ground. And so that's that is the risk of this project is what happens during the development of the project, during construction of the project. What kind of roadblocks are you going to see while you're paying for that labor? So I think it's hard for them to say, well we know we're going to have a cost overrun of X before they've even started.

So I think those are one of those things that they're going to find along the way. And that is the risk that those equity owners are going to be moving forward with is the risk of those cost overruns. If you look at the examples that have happened in the Canadian markets with long pipeline projects, that risk was borne by the equity owner.

How was your $16 derived? Was it what you thought was tolerable for your customer base or how was that derived? It was, Representative Josephson. It was derived through negotiations. And so, you know, we have been doing a lot of analytics, as I mentioned, on what the alternative solutions would bring to the market.

So there were a lot of discussions about different pricing mechanisms and how that would work. And ultimately that was a number that we felt based on the other alternative sources of firm reliable gas. It was in the ballpark.

To the point that Representative Biden made. I was willing to place a little bit of a premium on independent reliable pipeline gas coming from the North Slope. Again, you know, we have to think about our customers, our hospitals, the military. So the potential for supply interruptions coming from anywhere in the world market, for whatever reason, is an important consideration for us as the liability holder and with the obligation to serve our customers. So we had to think about all those things.

So I felt like $16 with the potential for price reductions with a full pipeline in place was a very, very good option for the state of Alaska and for our customers. Thank you. We have someone on the line may want to mute their phone. We can hear some background noise. Thank you.

I think we're good. And next up, I have Representative Bynum. Thank you. Co Chair Foster. A few other questions kind of popped up as I was sitting here thinking about your rate slide.

We've got 17 up here talking a little bit about pipeline prices. And then we looked a little bit ago on slide 15, we talked a little bit about import prices. And, you know, I'm sitting here thinking about this from a utility perspective. Different utility up, it's part of electric utilities. But we think about our price to the customer in probably a very similar way where I break that pricing down.

Everything from my purchase of the fuel if I'm burning diesel, or my facility cost with my hydroelectric facility in the dam, that being my reservoir pool. And then I'm able to communicate to my customer a breakdown of all those costs. And I know when you go do your rates through the RCA that you're required to do that and it is publicly available and demonstration of that isn't here in front of us today. I think it would have been. Would be helpful if it's something you could provide to the committee a high level of the breakdown cost and so the all the costs we talked about with the import.

My question will be the same with in state is the breakdown of where we take the gas in from the import facility. There's going to be a price to that and then you're adding on all of your cost delivery cost to the customer. And I'm assuming you have industrial rates where the higher volume that your industrial customer is using, they're going to be paying lower rates. I'm not exactly sure. I've not looked at the RCA filings for you guys and being in Southeast we don't get the privilege of beautiful natural gas for your home heating.

So if you could provide something like that or explain it to the committee that would be helpful. And then specifically about the contract for the pipeline, it says $16 firm price. Is that the firm price for buying it from Glenfarn or the equity owners from the pipeline? And then we have stacked costs on top of that to get to the customer. Representative Byum through the chair I'll address your second question first.

So that $16 price that was cool quoted is an all in price that includes the price of the commodity so from the North Slope producers and the tariff rate coming down. And then in addition to that you will have the cost that nstar charges for distribution and for storage. To address your second question as far as a breakdown of sort of the different components, we can very easily provide that to the committee. And just a quick follow up about the top of your head for the first question or for the first one that you addressed. The pipeline cost, the $16, just an estimate.

What is that additional cost for storage and transportation to the customer generally Ron. So Representative Bynum through the chair NSTAR's distribution charge is about $3 per MCF and then the additional storage costs are anywhere from $150 to $3 depending on that new project I mentioned earlier whether or not that goes forward. So we're still waiting to hear back from the commission on that. As a follow up through the chair is that storage charge, is that automatic to all customers or is that just as used from that reservoir? Representative Im through the chair it'll be a component of the gas cost.

So for any gas sales customer they would be charged that rate. So $3 basically $3 to $4 and fees on top of the 16 would be the delivery cost. Representative Bynum to the chair if I can use the word ish,. Thank you very much. Okay, I don't see any further questions.

So Mr. Sims, very much appreciated. A lot of good information and I think. Do you have anything else before we. Move to the next co Chair Foster? Thank you for the opportunity.

Great. Thank you for being here. Oh, we do have a question represent Ballard. This just occurred. I. I just received an email.

This is interesting. So I did hear Mayor. Thank you. Through the co chair, Mr. Sims, I heard Mayor LaFrance say that she's going to build 10,000 new homes. I'm sorry, 10,000 new homes in the next 10 years.

How is that going to impact you? That's a real lofty goal. That means our population, like literally has to go up quite a bit. Representative Allard to the chair. So first off, that would be great.

I know a lot of those potential homes are probably in the Eklutna Powder Ridge area. I'm from Eagle river, so that would be fantastic. We grow. NStar grows about 1,600 customers a year, so right around 1%. And you would like to be able to equate that to the additional gas.

So we need 1% a year more. But actually what we're seeing is that need is anywhere from half a percent additional gas because of conservation and all those things. So how does that impact us? We need to find more gas for our customers and make sure that we've got it in place. We have had discussions and we have had customers that we've had to tell them that we cannot serve them.

For example, we had a large data farm that reached out and asked if we could serve them starting in 2027. And I had to tell them no because I didn't have gas supply for them. Wow, that's intense. Okay, thank you, Representative Shiraki. Yeah, thank you, Co Chair Foster.

I too received a message recently that gave me an additional question that I wanted to ask. So your contracts are set in terms of the pipeline and so in terms of tax relief that might be provided to Glenfarn to aid in making this project happen, from the ratepayers perspective, that won't have an impact on the ultimate price that ratepayers pay because your price is locked in at this point or very nearly locked in. Is that accurate, Representative Straghi? Co Chair, just clarify the prices. The contracts are not set, so I have not executed them.

So technically nothing's in stone until I've done so. But your latter statement, as far as is there some sort of benefit to the cost for consumers for that reduction? I don't believe so. Okay. And follow up, if I may, Representative Schrecker.

So, and I want to be clear with my remarks that I'm not against tax relief for the LNG project. I think that's needed to enable the project to some degree. I just, there's been, I think, messaging in the past that by providing tax relief it will lower the cost to ratepayers. But what we've heard here today is that it sounds like you're nearly ready to sign these contracts, wet these contracts, and that that price will be set regardless of what tax relief is provided to the project. That would be.

Representative SHRAGI that would probably be a better question for Glenn Farn on how they would approach that. But again, your price is set in terms of NStar's price. Representative Shoghi that is correct. Okay. And final question, just at what point do you, what is the timeline for you expect your expectations to actually sign those contracts, execute them?

Representative SHIRAGI so that's a great question, which I have declined to give a date for a number of reasons. We will execute when the contract is ready for execution. Can you give a rough ballpark in the next quarter, in the next six months? Sooner than that. I mean, can you give me just a scale of timeline?

Representative Shrogy through the Chair so we are, we, we work on behalf of a utility group with their needs in mind as well. They have needs starting in 2029. So there's development and a lot of work that needs to be done to get something in place by that time. So that's a long way of skirting around that question and just saying we need something in place by 2029, I guess. Sorry, Chair Foster, I'm doing that classic thing we do up here where we say last question or comment and then we keep going.

I almost got out of here. You were almost out. That's right. So you would not expect to execute. Those contracts prior to the end of the special session.

We would not actually have certainty around that price at any point during the special session. Representative Shragi through the Chair I don't have, again, unlikely it will happen when it happens. And so I would love to be able to give you more on that, but I don't want to set the expectation that it will be next week or that it will be by the end of the year. This is a 30 year contract. Every word matters.

There are some sections of that contract where words are changing and we need to make sure that those make the most sense for our customers. I'm not willing to sacrifice anything for our customers. So we need to make sure it is the best contract possible for our customers. So I appreciate you advocating on our behalf. Thank you.

Okay. Representative Bynum, thank you. Co Chair Foster, through the chair, I did have one final thing and I don't recall you mentioning it earlier. And if I did, if you did, I apologize. What is the, if I want to use the word market share of the gas that's being used right now, how much of that is it is under your control?

Perhaps if I am through the chair, which market are you referring to? Just saying of all the gas that we're utilizing right now in Alaska, how much of it's under your control? And I don't need it down to the 10th, but just kind of a general idea because I know we're going to be talking to some utilities and other potential users. And so I'm just curious on what your influence is going to be on this overall project currently. Yeah.

Representative Byron, through the chair. So NStar's volumes on an annual basis are between 33 and 40 bcf a year and the gas produced out of Cook inlet is about 70 BCF a year. So half is a good number to use. As far as our quote unquote influence used to be a lot smaller. Hopefully it grows rapidly when we get a gas line.

Thank you. Okay, and I've got Representative Stapp who has a question. Also I'd like to note that we do have in the room Representative Tomaszewski who I know was online earlier. Thanks for being here. And so repsent of step.

You have a question? Yeah, thank you. Chair Foster, can you guys hear me? Yes, we can. Yeah, thank you.

Coach Foster to the chair, to Mr. Sims. Appreciate you being here and all that you do at NStar. And I was just kind of hoping that, you know, you know, where I live in Fairbanks, I've just got a 61% increase in the fuel service price of charge for electricity. And I know you guys are working hard down there to be able to deliver gas through South Central. But in your estimate, and you've been around a long time, Mr. Sims, how critical is it that Alaska have a long term sustainable, reliable source source of gas, ideally source domestically in terms of imports?

Because when we talk about imports, we talk about a fixed price or contract price of 19 ish dollars, but that is not subject to be a stable price in perpetuity. Is that correct, Mr. Chair? Representative Stapp, through the chair. So I can't think of a more important issue than low price energy for an economy and for a region.

When you look across the world, there are governments and businesses that do whatever they can to get low price energy. And again, just kind of going back to some of the numbers and I know that Travis Million up in for Golden Valley Electric is dealing with that, you know, those 60% increases. It is the quickest way to have population decline high cost energy and we see it all over the state. So it's critical to the long term viability of our economy that we have not only, you know, reliable energy but it's at a low cost. And again, I want to reiterate this after years of research and analysis and worldwide RFPs, this is the only project that we have seen that has the potential to reduce the price of energy.

I'll say that till I'm blue in the face. This is critical for the state of Alaska. And follow up. Mr. Representative. Yeah, thank you Chair Foster.

Through the chair. Mr. Sims. Yeah, no, I agree with you completely. So before us we have a bill, the developer in this case Glenn Farm is asking for basically this guaranteed property tax abatement on the volumetric sense. And I've said the whole time repeatedly, I am not inclined not to want.

I mean I hear them but I'm inclined to want to support them because I think that's probably the best way of moving this project forward. I don't see any fiduciary risk to the state in not trying to model this legislation after the way that the developer would like it because I think that gives them the best chance to build the AKLNG project. And I'm curious if you would agree with that or not. Mr. Simster, the chair Representative Stat, through the chair. So I've tried really hard over the last two months to not opine on what the state should or shouldn't do from a legislative perspective.

I mean, the legislature has an enormous challenge in determining what makes the most sense for the state as far as what that relief looks like and your privy information that I don't have and your responsibility that I don't have. So it's really tough for me to opine on that. I will say there is no revenue generated from the state or to the state for imported lng. So that's an important consideration. But as far as what the correct pricing mechanism or relief should be, I hate to punt, but that is the responsibility of the state.

And I appreciate all the work that you folks do to to do what's right for Alaska.

Oh no, I appreciate that a lot. Thank you, Jim. Thanks Victor. Okay. Mr. Sims, appreciate you being here.

Thank you. And we're gonna Take a three minute break, let folks stand up, stretch their legs, get some coffee and then we'll come back. And we have two more invited testifiers and that is from Chugach Electric association as well as Matt Nuska Electric Association. So with that we will be at ease at 3:43pm.

Okay, I'll go ahead and call House Finance back to order. The time is currently 3:57pm on Monday, January 1st. This is House Finance. And so we just had municipality of Anchorage and NSTAR up. And so the two remaining testifiers that we have are two GACH Electric and Matt Nusk Electric.

And if I could have Ms. Julie Esty, Chief Strategy Officer as well as Kim Hinkle, Chief Financial Officer, I'd like to invite you up. Thanks for being here today and I think yours sound like will go a little quicker. I think kind of the big.

Question. And answer was with NSTAR there. So appreciate you being here and if you could just put yourself on the record. Thank you Chair Foster and we'll hold you to that. So for the record, Chair Foster, co Chair Foster and the rest of the committee, my name is Julie Esty.

I'm the Chief Strategy Officer at Matanuska Electric association and with me I have Kim Henkel, who's our chief financial officer at mea. She has also been leading all of our fuel supply efforts. So all of the tough questions go to Kim. Thank you for the opportunity to provide testimony today. As we're all aware, the state of Alaska is facing a significant decision when it comes to legislation regarding the Alaska LNG project.

So today Kim and I are here prepared to talk to you a little bit about what MEA is considering as we look at our future and the steps we're taking to secure that path ahead. So with that, for those of you who don't know much about mea, we are the second largest and oldest electric cooperative here in the state of Alaska. We are located. Our service territory runs from Eagle river, so we serve part of the municipality of Anchorage and goes all the way to the South Denali park and over to Glacier View. Farthest east we go is the Alaskom Tower at Lion's Head as you're heading to Sheep Mountain and then Copper Valley picks up from there.

So we're also in a unique position in that we're seeing growing load, so about 1 to 2% load growth in our service territory, which again is rare. We are very appreciative of that load growth. The Mat Su Valley and Eagle river are growing and that means that we can spread our fixed costs over more kilowatt hours. So that's very helpful. However, it's not.

We are continuing to increase our capital expenses in order to catch up to that demand. Building new substations, transmission and increasing our distribution infrastructure as well.

So looking at fuel supplies, since that's what we're here to talk about, 84% of MEA's power is produced with Cook Inlet natural gas. Currently we have an all requirements gas contract with Hilcorp that we just extended to expire April 1st of 2029. So you heard Mr. Sims earlier talk about 2033. We're looking at 2029 and that was based on a one year extension that we'll hear a little bit more about. We're significantly smaller as far as our volume needs.

We're at 6 BCF. So you heard from NSTAR in the 33 to 38, we're at 6, looking to potentially grow, based on our existing load growth potential from 8 to potentially 13 BCF in the future. But at 6 BCF, that's only 10% of the total utility gas volumes in the Cook Inlet. So for us that's an important reality. We are not going to make or break any project.

We cannot lift any project solely on our own. We have been very much an advocate for collaboration among all of the utilities. And I just really want to give a large amount of credit to Mr. Sims and NStar for their leadership in bringing the utilities together around a solution. From the beginning of hearing from Hilcorp that our contracts would no longer look the same, they've been really proactive and bringing all of us together in a really transparent and thorough process. So we recognize that importance.

And while we wouldn't, we do not have the volumes to make a project go. We do have the volumes to make any project we're a part of more economic. So we are still in communication with all of the different options on the table right now and reviewing different terms with the different producers there.

We also, while we understand the importance of the utility partnerships in making this happen, those partnerships are not just limited to the utilities. We have a big opportunity and also a big challenge ahead of us with our natural gas circumstances. And that cannot just be solved by utilities alone. That will take partnerships with the producers, that will take partnerships with policymakers, that will take partnerships with local governments. All of us pulling together to secure Alaska's future and working together, we feel as though all of us have the ability to affect the competitiveness, the reliability and the affordability of energy throughout Alaska Going forward, it will take all of us to move that forward.

As MEA looks at our future generation, we are focused on short term certainty with long term flexibility. As an electrical electric provider, we have different options to produce power. Currently, again we are 84% from natural gas. But other options do exist out there, whether that's from renewable options, clean options like nuclear, there's renewable options like hydrogen, wind, geothermal, there's very many other options that we have to utilize. However, in order to have firm power and reliable power, those options are on more of a 10 year to longer horizon.

And so as we look at this short term certainty, MEA recognizes that we'll need a bridge to a bigger future. And so we've been working on what that bridge looks like, recognizing that 2029 is coming very soon and we will need to employ a few other options in order to get us to firm power. Now I'll toss it to Kim again as our CFO and the person handling our gas supply. She'll tell you a few more details about what we're seeing for cost impacts. Hi Kim Hinkle for the record.

Good afternoon. So this past year MEA was successful in negotiating a third amendment to our Hill Corp. Gas supply contract. What that entailed was extending a year past March 31, 2028. So our contract now expires March 31, 2029. It did come with some trade offs though.

One of the biggest trade offs is is the increase in gas supply cost. What you are seeing on your screen right now is we are looking at about a 15% increase year over year in our gas supply costs which started April 1, 2026. And that does equate to an overall bill increase of about 5% which is roughly about $8 a month that we will see increase in our overall members bills for three years. 2026, 27 And 28. Something to compare these costs to.

So at the peak of our contract it'll be 1175 per MCF. You heard Mr. Sims discuss some of the challenges they ran into over this winter where they are looking at or they did purchase $16 gas from Hilcorp. So I'm not saying $11.75 is a great price, but it is competitive based off of the market that we're seeing and the scarcity of the supply that is occurring in the Cook Inlet. The other items that this extension provided us is it allowed us a way to gradually increase our rates over time over three years so that we did not have rate shock in our membership base. A 5% increase year over year seemed reasonable and it definitely wasn't double digitized.

Google by budget rate shock. The other important aspect of this extension was the fact that it provided us an additional year of decision space. It allowed us to postpone potential investment in millions of dollars of expanded diesel infrastructure. So we've pushed off that decision and really allows us to make thoughtful decisions instead of ones based off of a emergency circumstances.

I appreciate you. Thank you.

So looking beyond 3-31-2029, MEA is still expected to see cost increases related to LNG imports based off of the pricing that we're seeing in the range of $16 to $18 in MCF. We're expecting expecting that to be a 21 to $31 increase in our overall members bills and that's roughly about 15 to 20%. And I would like to highlight that that is just the fuel component that does not include any impacts associated with rate increases with our base rates for our infrastructure cost. As Julie mentioned, MES consider or consider continues to experience strong load growth across our service territory. Growth can moderate rate increases by spreading fixed cost over more kilowatt hours.

However, that does come at a cost of requiring additional capital infrastructure. We'll be building out transmission distribution along with additional substations towards the end of this decade because of the strong growth that we have seen. So the question really becomes what is MEA doing to address the fuel uncertainty and to manage these cost pressures for our members? And I will kick it back to Julie. All right, so as we look towards the future, we're exploring all the options.

And that was very clear direction that our board gave us is all options are on the table, no stone unturned. They don't want to pick winners and losers. They want us to look at all of the options objectively and transparently. So first we've got gas supply. We know this will continue to be the backbone of our generation for at least the next decade or two.

So there are several options. One, what more can we wring at a Cook Inlet? We're in conversations with the different producers in the Cook Inlet to see what options are on the table. Some of the work that we did with Hilcorp was a result of those conversations. Of course we're always looking towards that North Slope gas line.

But recognizing that that is largely out of our control, we are looking also at LNG import. And as Kim mentioned, MEA is unique in that our entire power plant, 171 megawatts, can be run on diesel fuel. Nobody wants to run the entire power plant on diesel fuel. But it is the way to keep the lights on for not only our service territory, we're also in a power pool at Chugach Electric. So there are a lot of options there, but they come at tremendous cost.

But it is an option that we are comparing everything to. How does it compare to the cost of doing this with diesel? So that is what we're looking at from a fuel perspective. We're also looking at all of the different, other options that Alaska has to offer. Solar and wind can absolutely offset some of our existing gas needs, but they do not.

They're not always what we call firm or dispatchable. So we can't count on them to show up when some of our loads are the highest in those cold, quiet, dark days of winter. But they can play a role. And we're looking at the different options. We currently have a study going with the Alaska Energy Authority Renewable Energy Fund to look at different wind resources throughout the state.

We've also been talking with Chugach Electric about partnering on some of their hydro studies and also looking at some of those larger hydro projects around the area. And then geothermal, tidal and biomass are also projects that we've had different conversations with potential independent power producers. Producers. Our board is also very open to clean coal power, nuclear waste, to energy projects as well. Again, we are leaving no stone unturned and we currently have either NDAs or studies going on.

Everything that you see listed here, unfortunately, everything you see listed there also has trade offs. You can look at each one of those and say, well, here's the benefits of that one. But then here's the tradeoffs. Whether that's permitting trade offs, whether that's availability trade offs, whether that's cost or potentially even the technology isn't quite ready for prime time. And it's a hard choice for a utility to make to invest in something that isn't a sure bet.

So every option that we have has a trade off. And that is also something I think we see from Alaska. It's plagued us forever. Each voice has loud impact here. And so we will not find a project that everybody supports.

We are going to be lucky to find a project that half the people support. But the option of doing business as usual is no longer an option. We have to pick a new path forward. And that will take some big decisions and some courage and a lot of collaboration.

We believe that there will not be one single solution. And our concern is not moving forward with the wrong solution so much as it's not moving forward with a solution or running out of time to move forward with the right solution. MEA is going to be going to market in the next few months with competitive solicitations to try to understand what else is out there, both from a capacity, which means a firm power perspective. As we are looking at our load growth, we're looking at the need for that firm capacity. What else is out there that we may not be looking at?

Or do we need to invest in our own infrastructure? And then also just a general, what they call an energy. So we're looking at all different kinds of forms of energy. Solar, wind, tidal, geothermal, coal. Again, all options are on the table, but we'll be putting those out to market and those will I think be important data points not only for mea, but I think for policymakers and those at large to see what else is out there.

The last time any of these solicitations were done, our gas prices and the outlook for them looked a lot different. At the gas prices that Mr. Sims was referring to and that we're seeing there may be things that didn't use to pencil out that can. And so we want to take a fresh look at the different options on the table once we have those, now that we have those, those costs. So that will be an important data point for all of us, whether that comes from independent power producers or other utilities. As I mentioned, we are in a power pool with Chugach Electric association, which means that we are sharing generation.

So the next most, the next increment of load is met with the next most efficient generator, no matter who owns that.

So just referring to my notes to make sure I don't miss anything here.

So again, we are looking at many different things and we are not expecting any of them to be easy. None of them happen in the time frame that we're looking for. Very few could be available by the end of 2029. So that was why that third amendment with Hilcorp was so critical. And we appreciate the RCA reviewing that and approving that as well.

So as we look at those near term gas supply options, again we had the third amendment. I think the other thing as Kim mentioned that I'll highlight is that third amendment also included gas storage. So we are in a position, especially during the summer when our loads are less, to put that gas into storage. And ideally we'll be starting this next year with a couple of bcf in storage. We could use that to swap gas for maybe some shortfalls with others or use it to bank for our future so the storage is critical.

And I think as we think about storage, even with a pipeline, storage will be critical because the pipeline will be delivering volumes at a kind of a set amount. And so while we're in the summer, we're going to need to put those into storage. When we're in the winter, we'll be using as much as we can and probably pulling from storage. So because of the way a pipeline works, the way LNG works, as they're delivering these volumes of gas, storage allows us to take a constant source amount of gas and use it when we need to. Because our gas use is so, so different from summer to winter.

And for lng, if we are in that situation, it will allow us to play the spot market instead of having the spot market play us. So we'll have a few more options with gas. The other thing that is very much a focus of ours is making sure we're maximizing the value of every molecule that we do have. And so we are securing additional supply. But another focus remains making the most efficient use of our existing generation suite and having a regional approach as we do that.

So Kim, do you want to give a little bit more detail on that? Yeah. So I do want to give More detail on MEA's power plant Ekglutina generation station or refer to it as EGS. So EGS is a dual fuel facility. We have 10 wartsilla units.

All of them could go from natural gas generation to diesel generation in a matter of moments. The facilities also. Man 24:7 so in the event of a gas supply disruption, we're able to support the pipeline system to help maintain pressures. We also maintain sufficient on site storage for about four days of emergency operations. Again, if timely decisions are not made, MEA still has an obligation to our members.

We have to serve them. That does not change. So in order to ensure reliable service regardless of the fuel availability, MEA is actively reviewing what it would take to build out diesel expansion in order to utilize that as the primary fuel source versus natural gas. Again, we look at this as a potential regret cost. If we are able to chart a path forward on firm long term gas supply, this infrastructure investment would not be needed.

And we are looking at the infrastructure costing tens of millions of dollars. And if we utilize diesel as a primary fuel source source, we are looking at potentially a 50% increase in our overall rates. It is staggering. Like Julie mentioned, we're leveraging all our partnerships, especially the power pool. It has provided significant value to MEA and Chugach's members combined including conserving fuel supply between 2021 and 2025, we've conserved about 2bcf of fuel, which is fantastic.

Beyond the pool, though, MEA does want to emphasize the fact that as we start seeing more of potential emergency operations, as deliverability starts decreasing in the Cook Inlet, we want to ensure that all the utilities are working in partnership with each other and that this is not an opportunity for a utility to make additional margin or make additional. An additional profit. MEA is committed to helping neighboring utilities in the not or in the cooperative spirit at cost. It's important to emphasize that because it is something that we want to ensure there. There's no reason to push additional cost onto ratepayers.

It's not necessary.

Again, I made copious notes for Julie and I, so apologies.

So with that, I would like to discuss something that is near and dear to my heart as cfo, which is cost control matters. Me's culture has built a culture of accountability, financial discipline and stewardship at every level of the organization. Every employee is empowered to look at how can we do things better so that we're keeping our members in mind in the first half of 2025, which it's hard to imagine, we had a warmer first half of 25, but we did. We had lower than expected kilowatt sales. And because the utilities costs really remain fixed, typically what happens is that will put upward pressure on rates.

Instead of passing a rate increase along to our members, MEA looks inward first. What can we do to reduce the overall cost? And based off of our culture of stewardship, of financial stewardship to our members, we were able to reduce cost or find savings of about $1.2 million. The outcome is not of a single action or a directive from management. It's really the result of the fantastic employees that we have at our organization.

There are continuing continuously looking for opportunities to improve efficiencies of operations. They challenge assumptions, always asking why we have to brag a little bit in front of you guys. Sorry, but at mea, no contribution is considered so small whether it's improving a process, negotiating a better contract. So it really is meaningful to our membership. As we're facing rising fuel costs and increasing infrastructure needs, we're going to be maintaining that culture of stewardship.

Because even more important is that while we're facing the challenges of energy today, we want to be able to control what's within our control.

And that's one of the reasons why we were able to limit our overall base rate increase in 2026 to just 2%. And as you can see on the slide, the numbers speak for themselves. Our overall rate base compared to the other rail belt utilities maintains the lowest. And it's really a testament to the cost efficiency of the employees at MEA along with the overall consumers per employee. We have the most consumers or meters per employee in the overall rail belt.

So very proud of that. And then Julie's got a couple of notes. Yeah, I think, you know, as we're looking at what we can do, this operational efficiency is key to us. And again, this is what we're using to make sure that we are being the most efficient we can with our members. The other measure that we use is our equity.

And when we built our power plant in 2015 and started operating that we were about 19%. And over the last decade we have grown to 31%. And for us, that's important. Not only. Well, a strong balance sheet does a lot of things for us.

One, it allows us to access money if we as we need to make investments. It also gives us flexibility and allows us to take advantage of opportunities. And so that strong balance sheet is going to be key as we need to make some big decisions. Whether that's investments by our members or partnerships with others. That strong balance sheet is a strategic asset and a strategic priority for us as well.

Again, we're looking at more of a, of those long term decisions. So again, we focus on collaboration. We can't reiterate enough how important collaboration is. It allows us to achieve economies of scale, it allows us to share risk, it presents a united front to the market, which saves us money. And those economies of scale decrease cost to everyone.

So as we look at what we're prioritizing, it really is how do we work with others for a brighter future for Alaska in looking at the other options, you know, we've been looking at scenarios. There's a wide, wide range of futures ahead of all of us here in Alaska. And utilities are no different. And so we look at, okay, if there's, what if there's a pipeline and cheap gas, then we'll see a boom. What does that look like for mea?

All right, what if there's no pipeline we're importing lng, energy prices are very high. What does that look like for mea? And in all of those different options, transmission and building out our infrastructure is essential. Whether we need to move power between different population centers from different resources, or whether we're trying to meet big load growth from resource development, the military, data centers, whatever else might come, our way, if we have reasonable power power, that transmission system, which will allow us to send power more reliably and larger amounts of power, is critical. And we appreciate the legislature's support on that as well.

We also understand, again, this isn't just about MEA making some of these decisions on almost all of the different options that I that I listed earlier, having larger plays with more economies of scale and matter that that can significantly reduce the cost of power. And it also provides a little bit more equity between areas so that resources in one area can travel to areas that may need it more as well. And so that's not just about mea. It's not just about the other utilities, but it's also state leaders and local leaders on charting a path forward. And also as we look at load growth, we're really prioritizing what can that look like so that it has benefit for our members without the detractions.

And I know that was a conversation in the legislature earlier as well. We look forward to continuing that conversation with folks and then also just rethinking rate structures. We've been doing rates the same for a long time, and it's really based on volumes. And as we look at how our members want to use our system and the realities of how the cost structure currently works, we do believe that there's some opportunity to look at alternate rate structures and a little bit more flexibility in the future.

So we look out, and despite all of this uncertainty, we believe the future is really bright. We're very bullish out in the Matsu Valley and Eagle River. What keeps me up at night is not how we're going to solve the gas or, you know, that's Kim's job. But what really keeps me up at night is that we're going to miss these opportunities for Alaska. The world is literally at our doorstep right now, and everyone we talk to is excited about Alaska.

And to Mr. Sim's point, when they ask us about the different opportunities here, we have no gas to provide them to provide power. So having a more certainty will, I think, only result in opportunity. And as Representative Allard said earlier, we have to do something. Business as usual is no longer an option. And each of those options will have trade offs.

Each of those options will be hard. And each of those options will require us to think as a state and think not only just regionally, but state statewide. They're going to require tough choices and tough conversations. They're going to require bold leadership and courage not only from the utilities, but also from our elected officials and we're looking for that from you all. If I think it's that time right, where we decide if we want a pipeline or not and if we do, we find a way to get to yes.

And if we don't, we understand that those choices have consequences and prepare for that future. So I think where we are right now is let's either do it or remove it from the table so we can move ahead with those other choices. And again, I think it's very important that we're doing this all together. There's not duplication of infrastructure costs and that we're making a smart decision as a team. So you guys have been very patient with us today, all day talking to the utilities here.

So I'll end that. We're happy to answer questions. Great. Thank you very much. We've got Representative Bynum.

Thank you. Thank you. Co Chair Foster through the chair. I always love seeing my utility friends here. I was a little disappointed I didn't see hydro on the top here, alternative alternatives list.

But that's okay. We hear a couple things as we go through this process. We're talking about LNG having natural gas available for Alaskans. And a couple things that always seem to crop up in those conversations is people want to talk a little bit about global carbon footprint and what does that mean? And a lot of times there's this negative ideology put behind the, the use of natural gas.

But from your presentation, which you guys are using for your fuel sources, it sounds like the alternative is primarily diesel for the bulk of the fuel that we're having to replace. Can you talk a little bit about what that would mean for additional carbon footprint output from your facilities? Representative Bynum through the chair I think the carbon footprint is an interesting question because you also have to think of how far are you looking back and I definitely understand that there are fuel free options. However, many of those, except for hydro. Good point.

Require fuel backups or battery storage, which also has its own environmental footprint. We also have options for, for mine mouth coal, which coal has emissions issues. But having a source that you're producing power right at the source, you're also losing all of the transport environmental components as well. So I think when we think about an environmental footprint, it's an important question and I think we need to look at the whole picture. But we do recognize that if we burn diesel that it will have significantly higher emissions.

And currently our plant is only permitted for two days of that. So we are working through the process of potentially extending that amount from an air quality permit standpoint for. But again it's not a free. We're not, we're not, we're not asking for a blank check there. We're looking at a smaller two month total time frame so that it would allow us to provide power from diesel at those peak times but, but not full time.

Kim, do you want to add anything to that? Yeah. Represented Bynum through the, the chair, the, the overall ability to operate in diesel. Diesel, it's about two weeks but realistically that's not the route we want to go. It's incredibly expensive for our members.

It's very inefficient at this point and there are also other supply chain logistical issues with going primarily to diesel. It really comes down to the timing of decision to avoid that becoming a choice MEA members have to make as a follow up. Representative Bynum, thank you for that. Yes, I was glad to hear that. We have definitely the environmental positive impact of being able to use LNG for generation of electricity.

But it then led to what you already answered and as my next question was going to be about the regulatory hurdles that we're going to have to overcome if low cost gas isn't available. And, and so I think you've talked a little bit about the permitting problems that we're going to have, the storage capacity problems that we're going to have. But something else that we've been talking a lot about and I think you briefly hit on it when we've been going through the committee. We had a lot of public testimony. A lot of folks were calling in, in big advocacy for solar and I know that solar can reduce the overall cost of high fuel costs like diesel.

But does it solve your problem in the wintertime when we need the heat the most and the electricity the most? I know the answer to that, but I was hoping that maybe you guys could put it on record from the utility perspective. Representative Bynum through the chair, thanks for the question. I think it's a great one because you know there's more, more and more people are being able to turn to solar. Hawaii is fortunate to have solar match their load where when the sun is peaking, that's also when the load is peaking.

To your point, for us, when our load is peaking, it's usually those cold, dark still moments in the winter. And so while it can help offset some of the gas that we use, it is not something that currently we can count on for power throughout the year without a significant investment in battery storage. And even with that that's pretty, it leaves us very vulnerable to periods of either of low solar energy. Kim, do you want to add to that at all? I think a good topic when it comes to solar is the fact that that and I think Julie hit on this is it helps reduce overall fuel consumption in the summertime.

We can reduce consumption and actually put some of the gas into storage to help beef up the reliability during that wintertime. So it does provide benefits. But overall it's. We still have to maintain everything's on the table. Yeah.

Because we can't count on it. We still need to have the full suite of our power generation. So it doesn't alleviate the need to plan for gas or to plan for full volumes of diesel because it can't be counted on. My final question is about cost. I know that when we do just some quick references and you mentioned the high cost of being able to just go directly to diesel when gas isn't available even at 30 MCF, that's about A$4 a gallon equivalent.

So I know we've been talking about numbers for gas contracts. That is half of that. So I don't see there's a long term viability of competing. But there's also been some conversations about imported gas and the volatility of imported gas pricing versus the gas line and the stability of pricing. Can you talk a little bit about the importance of a long term contract with state stable pricing versus instability of import.

Thank you Representative Bynum through the chair. The importance of that is being able to have predictable rates time and time again each quarter for our members. When it comes to the cost of power adjustment. What you're seeing up in Golden Valley where they're experiencing a 60% increase in their cost of power adjustment that is directly related to some of the volatility that they are experiencing in their diesel costs where it's going from about 250 to almost $6. You're seeing that in the LNG import market right now.

So you're not really able to plan your rates and you are more subjected to rate shock to your membership. Thank you very much for that. Appreciate your time here. And I know that that rate shock is happening at the same time the cost of shipping. Shipping and everything else has went up.

So I do appreciate everything you guys do and look forward to talking to you guys in the future. I've got Representative Tomaszewski. Thank you Co Chair Foster through the chair. Thank you all for being here. Appreciate it.

In the beginning of your presentation you stated that you use about 6 billion cubic feet of gas per year. But you anticipated 8 to 13, almost doubling it in a certain. You didn't mention that time frame. Do you have kind of an estimate on that? Yeah, thank you for the question.

Representative Tomachovsky through the chair. It's about. I'm sorry, it's a mouthful. I hope I pronounced it right.

It's about a 20 year time frame. So it's very far out. But again, when we're looking at a long term firm fuel supply, we have to plan that far out. Absolutely. And follow up.

Follow up. So yeah, and so you mentioned also the diesel generation and the crushing effects it has on consumers. And we are feeling that full effect in Fairbanks now with the diesel generation. You mentioned that your power production, you can actually do your entire power production off of diesel. What kind of a supply do you have?

How many days are you able to do that and do you have enough supply to refill that? Or you can just go indefinitely. Are there refineries enough to keep up with that? Because that must be an incredible amount of diesel burn per day. I don't even want to guess how many gallons per day that is.

Thank you. Representative Tom Tomachevsky through the chair. Again, I apologize. So if we were to go to diesel as a primary fuel source, it's almost 30 million gallons annually. It's massive.

But we have started those conversations with fuel suppliers. MEA utilizes ULSD number two in order support our generation EGS generation. There is capacity in the state to be able to supply that. However, we run into issues when it comes to trucking. When we go to diesel as a primary fuel source in an emergency situation we have to have a truck an hour filling up at EGS and they come from Seward and Valdez.

So logistically it is a challenge, something that we're looking into. The other item that becomes the challenge is we utilize ammonia in order to control NOX levels. And that is also comes from out of state. It can have an eight week turnaround. I believe it comes from California.

So we're looking at other options to mitigate that challenge. But again that's where these large infrastructure investments come into play. If diesel is used as a primary fuel source. Okay, thank you. Thank you.

And just a follow up. Representativeski so you're talking about your cost controls and you stated that you have about 316 consumers per employee. And I see that Golden Valley has almost twice that number per employees per consumers. And I am curious is there's probably variables that make that that number of employees like the service size area. I'm sure maybe Golden Valley service size area is so large that they need more employees per consumers.

Is that kind of. Or am I supposed to go to Golden Valley and say why do you have so many employees? Thank you, representative. Through the chair. There's a lot of things that go into that.

They have different power generation. They have multiple power plants that they operate, whereas MEA only has one. So that's going to be a factor. And you're absolutely correct. The service size or service territory size goes into effect on that rate as well.

Okay. And I appreciate your advocacy for a stable and secure gas supply in the state. I share those same concerns with you and hope that we can make that happen. So thank you for being here. I appreciate it.

Great. Well, thank you so very much for your presentation. Appreciate it. And we'll see you, I think at the Juneau again, I'm sure. I think lastly, we have here Ms. Tricia Baker with Church Chugach Electric Association.

And let's see, I believe. I thought she was. Let's take a brief. Oh, online. Okay.

Ms. Baker, if you could put yourself on the record, just your name and your position over there. Looks like you're. Oh, it looks like you're in Washington D.C.

I am indeed. Yes. For the record, this is Trish Baker, senior manager of government Affairs, Chugach Electric.

Okay. And I don't actually have a presentation or slides or anything. It's actually I have just very brief remarks and happy to answer what questions I can given that I'm not actually in Alaska. Oh no, that's perfect. Yes.

Fire away, please. Okay. Well, for starters, I just want to say that too that does support Alaska gas pipeline. Our number one priority is for a gas, our gas requirement to be met when our timeline requires it. Our contract that expires.

Expires? Our contract with Hilcorp expires first quarter of 2028. We source 40% of our gas from that contract. We're a little bit different because we source 60% of our gas requirement from our two thirds interest ownership in the Beluga river unit gas field. Because of our aggressive development of that field and a couple of banking agreements which I'm happy to explain, we have been able to extend extend our existing gas requirements into 2029.

So our time frame for a new gas resource is 2029.

That said, we have to make a decision third quarter this year of which way to go if there's going to be a gas pipeline, we don't need to import, but we need to know that because we're running out of Runway to have enough time time for an import facility to be built in time to meet our gas requirement. So that's our situation. The banking agreements I was referring to, we have what's called an under list agreement with hilcorp, meaning gas produced today that we it's reserve gas beyond our immediate requirement they have access to now and they will return that to us after this contract expiration in 2028. And we have a what's called an exchange agreement with Marathon. It works the same way.

We give them a limited amount and they give us back that gas after over a series of months after March 31, 2028. So that's what my plan was, was just to explain our situation and take whatever questions you have. Great. Thank you very much. I believe we don't have any questions at this point.

So I'm just doing a double check here. Appreciate Ms. Baker, you're calling in. And so I think that's everything before us and maybe if I could make some announcements. We are tentatively looking I think the official announcement was going to be tomorrow. But just to try to give folks as much time as possible, we're looking at maybe setting the amendment deadline for Sunday because we're hoping to jump into amendments on Monday.

But the reason I say that throw that out is kind of a soft proposal is I just wanted to kind of get a sense from the committee in terms of, you know, how that might work. I realize Sundays over the holiday number, I mean over the weekend for one thing. But the reason we were thinking Sunday is we're hoping maybe Monday we could maybe jump into the amendments down in Juneau. Folks can also vote over the phones on amendments. So that's an option.

But if we were to start Monday and if we went Monday and Tuesday, then potentially kicking the bill out on a Wednesday and then that would give a little bit of time, time to go to the floor and push that out and then also work with the Senate and trying to come up with something whether that's through a conference committee or otherwise. So doesn't leave us a lot of time if we take up amendments next Monday because the last day of special session is June 19th. But I did want to throw that out as possible. And so with that any questions, seeing none, we can talk off offline as well. And just to get your input from Finance Committee members to see whether or not that was going to work for folks Represent Ballard.

Thank you, co chair. So I know that so we're going to be headed back down there and I know that North Slope has Some their team here, I think Fidel and Mr. Rice. And I'm wondering, is there going to be an opportunity? I have five questions. Sure, yeah.

Just based off them coming in. And then I have certain kind of led me into some questions and I wasn't sure if you were going to be able to bring them back in. Yes, we are actually attempting to get them back in, hopefully tomorrow. We do have, I believe, Glen Farn, Department of Revenue, and then we're going to add North Slope tomorrow. But if we can't bring them in tomorrow, I think I'm probably heading down to Juneau.

Wednesday or Thursday can also have another Finance Committee meeting and then have them available. So we'll try to make that work. Okay, just clarification, when you say Wednesday or Thursday, are you saying that you're going to call Finance Committee this Wednesday and Thursday or next week? The intent is not to call it unless if, if the North Slope can come in tomorrow, which is Tuesday, then there's no need for a Wednesday or Thursday meeting here. Correct here.

But I might be in Juneau just to kind of be available to see what's happening in the Senate. And if I am in Juneau and we can't get North Slope tomorrow, then we could always get them on the phones Thursday and Friday and I can call the Finance Committee meeting from Juneau. Okay, thank you, co chair. Any other questions? Okay, Seeing none, I think I've got everything covered.

So with that, we will have a meeting tomorrow, June 2nd at 1:30pm and at that meeting, we'll have Department of Revenue in Glenfarn, possibly in North Slope. And if there's nothing else to come forward, the committee will be adjourned at 4:47pm.