Energy - Joint

They're by could had to their seats so we'll try to get started just minutes. Not. We're going to get thank. For sure to be on the line now. The Committee. The. Committee before we get started I just want to say that we we had a scheduling conflict with the Senate we. Represented asking you senator Ballenger myself and set this state inmate that came with the complex so they're not going to be here we're gonna go ahead just run this as a an introductory meeting SO discuter body kick off and started so with that long gaps in. I want to welcome everybody. To the joint energy meeting as I mentioned earlier typically we would have the same here with us but we had a scheduling conflict with that so we will catch up with that later on the purpose of this meeting is really just a little bit of an introductory meeting will all get introduced to each other it may be introduced to some of the people who will be working with over of the session over the next couple of years so with that I'm I'm gonna make a few comments. And try to explain this maybe some of the newer members here before we start introducing everyone really what we do with this committee and and what I see that we should do what we should be doing with this committee that I built this committee of cheese I think this is my fourth time I've been on this committee I'm not tired I think three times for three sessions the main thing that will be doing is what what we're gonna be working with typically we work with legislation that has to do with Maybe status allowing the a good example would be we allowed schools to participate in some of the energy saving projects that are out there will also be looking at some possibly seller activities and things like that you will be will be counted mediating between the public service commission maybe some of the providers like entered year or someone like that are of it in call options on so for some. With that we we that's kind of the role that we. I see this committee serving of we definitely will be jealous that you would typically traveled the we're not be traveling first to help you discover thing will be over at some point you will be travel Typically will travel to locations to sort of look at some of the energy things that are going on here in Arkansas might be a seller or maybe something with color are and maybe even if they want to represent clouds of by the sub there's. We. From there anyone we when we might be able to do that so so with that what we'll do is almost let everyone do start under a brief introduction I thank god represented cloud if you push your button. I can turn your microphone and then if you ever refer back I start pushing the buttons all time to Michael on this as we go on what we'll start here and kind of snake our way back to it so with that I'll. Red cloud you're ready thank you Mr chairman the Representative Joe clad District seventy one proud to be serving on joint Committee on Energy Arkansas nuclear one is crow flies is about four miles from my house so I have the vested interest here thank you. Representatives appeal pusher Mike I'll turn you on. You gotta push the there's a. A Boise on that and then I'll activate Representative Clint Penzo District eighty eight I represent Springdale and Johnson I've got a lot of interest in this committee of get the background and side so geology and was one of my studies in college so looking for to serve on the committee again. Thank you Mr chairman Fred Allen district thirty central Little Rock. AT Allen Crawford and Washington counties this is my second term on the energy committee. Ron McNair district ninety eight serving parts of them in Carroll County been Carroll County this second time for me on the committee proud to be here. Represented Jack Ladyman district fifty nine this is my fourth term on this committee worked in energy for many many years very interested in that and moving Arkansas Energy for. Ninety one I'm an alternate on the committee that very interested in the issues this committee will be working on. Eddie District nine actually in Drew County economic development and very interested in the the work of this committee. It ran on this committee is very interesting work and I'm proud to be here. Are we on Danny Watson district three. This is my second or third time on the committee my goodness I'm not sure which of really interested. As far as I have I know the last coal fired power plant is in my house districts. And did I fail to say clean burning coal I think it did some say that now actually had the privilege you guys with your bill our committee members spent about three years ago now to to go visit what feeds that power plant out in Wyoming that was really neat looking for to be known here again thank you chair. Hollowell district forty nine covers crossing Francis in Monroe County this is my third term on Energy Commission glad to be here. Sonia Barker represent districts seven parts of Calhoun Ouachita and union counties this is my third term my first time on this committee but I requested this committee implied to be here because I've seen a lot of good solar things going on in parts of my district. Okay we have everybody over there I will unless the staff introduce themselves out but I want to personally allay a mall the new members and it's good to have new members on this committee I think you'll find this the topics that we cover will be interesting to you and and I think you'll you'll learn a lot on this committee it's it's so I'd in hopefully will we get this travel thing done we can we can get some sites to. In the state thank you. Emily Morales of on the Committee analyst first time on the Committee excited to work with you. And you are destructive system correct. Thank. All right. You guys you can tell I'm getting used to this new. With. Trying to that like local Sir all right so with that one thing that I asked since we will be working with and I don't really have these guys any particular but it if you want to come up on top but I thought I'd start out with Ted Tom Tom is not in all of him or do some self until health tells what role he plays at the public service commission force. Thank you Mr remembers me causing take this thing off without the. Violating the federal policy right At Thomas and the chairman of the Arkansas Public Service Commission I the main role of the public service commission is to regulate monopoly providers of electricity through a process we call cost of service rate making which is an arcane not economics in the counting process we also do inspection of interstate pipelines are intrastate within the state we have inspectors in the field we also do tax assessment of utilities in common carriers like buses trains planes we do the tax assessment we don't handle the money we assess it and then it goes up to the counties into your normal life tax assessment process the one thing I'd like to talk some about is the whole issue of solar that could be quite a contentious issue this session and I'd like to give you an overview of what has happened since we passed the sewer access act last session We established a policy that allowed third parties at scale to do solar I think the policy is working we have folks out there that are selling. to interested buyers Roby Brock as the do you not talk business thing he listed the five tops stories and Economic Development in Arkansas in the last year on his list of the top five was solar development in Arkansas we have something good going on whenever you have a policy what you need to do is you need to understand what the detriments might be need to measure them and you need to educate them and in this case is menu familiar with a cost shift issue you need to measure that and mitigate that so when we did the rules that were approved by the legislature the Legislative Council in December includes agreed fee that allows the utilities to file what they think the right charge should be in others to to contest that and then will impose agreed fee to mitigate the cost shift So we have the ball in front of us at the baseball term keep the ball in front of you on we keeping the ball in front of us on cost shift. There's one thing that we will fix that I think we need to fix that even that will be contested the the structure of the bill gave the PSC the authority to approve or disapprove of a project. It didn't expressly give us authority to set a rate so we chose to do was condition approval on acceptance of a rate but the way the bill was structured the PSC didn't approve projects from one megawatt and below so then we couldn't adjust the rate on that nor cost shift rule allows the utilities to consider the cost shift below one megawatt and imposing agreed for the. But it will only impose that the. On the larger projects to get you to the right place with the distribution of the burden across the solar projects needs to be adjusted one thing about the cost shift in my view it should be viewed as an early adopter risk. We took a chance and in the committee presentations in the last session part of the pitch was if we open this thing up to markets will get innovation and in this case I think we've gotten the innovation there's one project is still pending approval that's a large scale project and incorporate storage and there's no cost shift in view of the utility so what we've done is we've you scale and storage to mitigate cost shift where you don't need the agreed fee for that and that's a valuable thing because we have a problem that this committee's gonna spend some time on when we see with the federal policy turns out to be we may propose the clean power plan a few years back or cooperatives estimated a forty percent rate increase now that didn't materialize largely because of fracking but they're going to come back with something like that the core design element in my view of our program is to deal with the contingency of the EPA coming back with a second clean power plan and when you have a business they can build a scaled solar facility with no cost shift if that can be replicated that will get it be a get out of jail free card. On clean power plan to. How that one thing about solar in Arkansas we have a natural advantage in solar in Arkansas and I said that if the committee last time it's easy to talk that's big talk that's like me saying you know thank the Razorbacks again when the SEC west next year you can get home or is amended talk but what's happened since then there's a trade press article in September were General Motors. Entered into a contract with first solar to build a solar facility in Arkansas to serve their load in Detroit Michigan and St Louis you can do that through the mice so market which encompasses all that area why did they pick Arkansas. Because it is the cheapest. The cheapest because we have a lot of sunlight. We have flat land we low land prices. That's the natural advantage to lower land prices or course Due to years and years and years decades of difficult economic times in south and East Arkansas. So with this investment opportunity does is it directs the investment to the place we need it the most where the land prices are lower we turned south. And East Arkansas. How this works with with with the EPA compliance when the EPA regulated something they define as pollution. Thank you to things they give you a reduction target. And they give you time. And then they give you milestones they might give you twenty years to reduce pollutant by X. percent in the give you five year ten year fifteen and a twenty year. To meet the. To meet their emission. Targets. What the solar access bill does it is allows your early targets. To be met by volunteers who want to build solar. Rather than by the commitment of the PSC in the utilities to a long term plan and what this does is gives you flexibility so you can see to. And litigate without betting the farm that you're going to win because you meet the early compliance periods with involuntary people that are doing it and doing it because they wanted to do it and that way if the policy gets thrown out because it cost too much and there's a political shift you're still good. If you litigate and the thing gets shot down in court you're still good in either of those cases have you committed through the normal regulatory process ratepayer dollars on a long term investment that you don't need if the thing gets thrown out in court or the political winds chains and gets thrown out by the next administration this but the sewer access act gives us the flexibility to deal with the EPA the second thing it does with the EPA is the EPA will give a cost estimate that they will lowball. That's what they did last time and they'll do that again they will make rosy scenario projections. About the cost of solar or the cost of alternatives and the adoption rate of alternatives. What this policy allows us to do is get back to their rosy scenario back to them. By making an estimate you can project. If the only actor or the regulated utilities and the PSC. You don't project you have to do it since third parties are doing it we can projected we can use the E. P. A. rosy scenario merit back to them and they won't be able to contest it because recording it back to him and project these things that will happen and then if they happen as they happen you get compliance and if the thing gets thrown out. You're you're still good the central design characteristic of our program is preparing for clean power plan to that is upon us and we're prepared. Half the football coaches in the world have made the quote no luck happens when preparation meets hard work we got some luck on this one to perhaps we'll see how the federal program develops there's some talk that the feds want to spend money directly on shovel ready projects. In the renewable area well guess what we have. We have shovel ready projects. A pipeline of development. From governmental entities school districts cities counties or if they don't want to give money to a private entity will give it to a governmental entity we're good we have an established regulatory process we might get depending on the contents of the federal plan is some money down to pay for these things when we have this homes grown solar industry to build them because we prepared for E. PA we might get lucky in that respect now if I was a member of Congress I have a problem with that. Because what we're doing is we're mortgaging our children's future but if they're going to mortgage our children's future we're going to get the bill we should look for some benefit. Two. How did we get here on this policy. Normally what happens is it's a political football and you have all of this negotiation in this instance. In my view what happened is the legislature trusted me with respect to the public interest. It wasn't a contest to accommodate all the big dogs politically. That's why we've had the success that we have and I deeply appreciate the trust that you shown in me. But that trust also imposes an obligation on me I have to be right. I have to study I have to know and I have to be right in every morning I wake up thinking about this stuff every morning because I have to be right because you folks have trusted me and I appreciated. But since the first meeting that we had after this act that the PSC okay what do we do now this act has been met with defiance and fierce opposition and combat litigation tactics. Constant litigation opposing it every bit of it unfortunately I expect that spirit to come to the legislature. Because the folks against this thing if they can round up the votes to kill it the Bill kill it if they can't go round up the votes the killer bill trying to round up the votes to management and if they can't roam up the votes to kill or maim it. To try to exempt themselves out of it this is going to be a contentious issue but keep in mind never go to the horse races armor one time I went to the horse races and it was toward the end of the day and they have that big room where all the blues are. And the whole four was covered with tickets all the losing tickets. We prepared for with the EPA is gonna do to us and I'm standing there with a winning ticket. The people that oppose this plan want to take that ticket rip it up and thrown on the floor with the losers. I look forward to working with you these are gonna be contentious issues or gonna works room and we're gonna try to do what's best for the state of Arkansas so this time instead of being a laggard we can be leaders I'd be glad to answer any questions there's one question that would be the hardest and you won't ask at this time. Read your Laschet perhaps in two years the hardest thing about economic development is getting started. We have rules on the books on lignite we have rules on the books on biomass rules on the book on all of these different kinds of things and we don't get action. This time we passed a law and we have action. The question I won't be able to answer two years if we kill it how do we get it started again and I'm gonna say. Don't have a clue. And it'll be too late that's why we shouldn't chart with that I'd be glad to answer any of your questions not just about this but there's a lot of I heard a lot of background in energy and I also appreciate the fact that we got multiple folks you know the learning curves on all these issues and when you can be here for more than one session session after session that's where you grow that knowledge and I know represented Ladyman has a history of another person said they had a history so there's any questions about any of this stuff. Even I didn't address it thanks for trying to do is come up with the policy whatever the winner is whether it's carbon capture. Natural gas storage hydrogen solar wind we want to think about everything and put the buyer first so when we often talk that we have low rates the strategic objective is to still have low rates after the new administration's clean power plan so with that I'd be glad to answer any questions. Thank you would have a couple questions I want to. Yes the committee with this and tell you that one thing that you may not know is that Arkansas enjoys one of the lower rates of electricity and and is in the country as compared to our our fellow states and that's because I think that we we have worked together here and know someone asking on your policy asked is what is it is it windows sellers and nuclear to call one of those things when I'm asked that question always say it's a blend of all and that's how Arkansas really has gone through this transition we've we've looked at the future and and and. The the public service commission has certainly guided us in the right directions and we benefit from that of it's probably. In terms of economic development is probably one of the things that it brought a lot of economic development this came Arkansas's came because of the energy reliable energy and I will get Parker to the public service commission but we also have some providers out there that I have also done it with that a Representative Lynch. A yes. So Mister Thomas the the main. Complaint I hear from many countries over here okay there you are thanks Sir from the energy providers around Solar is the fact that they're able to use their distribution networks essentially free of charge. They feel left that's unfair and. Use of their site costs in those may the dollars they spend on their distribution networks or. Person and and even in my district there's a large solar farm. A station close to the city of loan of the prior this dish is course producer and then put own energies Transportation network. But the use of the prior is fifteen miles away on a farm running dryers and that sort of thing and and so the the question here the but I feel like is is that needs to be answered is actually unfair to the people who spend all those dollars on power lines and poles is had to be fairly compensate. The of people who don't agree at. For the par they're transporting or the the solar farms are been stationed in different places around the state. How we do that is to the grid feed it's already. Posed this question really. Presents a question of degree. What is that total cumulative cost that your constituent feels when they pay their bill. We need to measure that what if it's two cents. What if it's eighty three cents. Look at the upside which is the solar development. Look at the downside we have the greed fee in place to mitigate the downside where they have to pay in the cover this but the precise costs that you referenced. And and what we have is we've had the rule since December in final form approved by legislative counsel. It was out there in public in final form in June. File your greed fee if you have a problem file your greed fee because of the solution is already sitting there all you have to do is are your greed fear when they file it we'll see what those costs are. Hey and then we will see the purpose is the purpose of this to say you're hurting them by a penny I want to kill the project work can you just give me my money let project go forward. This is the cost shifting as a political football and it's easy to either minimize that are exaggerated but one bit of math I want to give you if you take one cent per month so times twelve. Times twenty for twenty year life of the project times eight hundred thousand customers you get one point six four million dollars. Which if you said to one point six four million dollar cost shift we are concerned that's one penny a month so we want a common set of data. So we can keep the thing going without being unfair. With the cost that you referenced the agreed fee does that okay so so what you're saying is the energy providers currently lack energy and first electric and the other call ups made the following great they with public service commission or the seller parts being produced and distributed on their networks. Yes. Now that we once had been grandfathered where they won't have it. But will impose that on the new one so what will act as a braking mechanism depending on the quantity to being on how much costs if there is in that utility service territory so this policy didn't come presenting a free lunch for solar this policy came with the braking mechanism so that if you get too much deployment because the deal is too sweet you put on the brakes. And your subject to agreed fee to pay for the distribution assets no we grandfathered in that's with the early adoption risk is. Every technology starts out as not being costs competitive the first electric house in this country was in JPMorgan's House every technology starts as a Tory for the rich and if you say on day one you have to compete with the scale of enterprise you never innovate because the the incumbents wishes them every time so a little bit of cost shift on the front end with the braking mechanism is the policy that's how we got it started now that it started. With the braking mechanism is in place and we can hit the brakes. If we need to be a cost shift is excessive or want one last question Mr chairman okay and so is the public service commission asking the energy providers to supply that that yes okay I wanted to have that data before the session so that we could sit right on the table and instead of having a big nasty fight about who had the real numbers we know the real numbers but it got so contentious that we didn't want to be accused of bias by sending the rules over too early we've already decided you're not going to change them so the world more approved until later but but there isn't a process that's been defined in the rules rules approved by the legislature to apply agreed fee. Thank you thanks Sir. Represented by the. Thank you thank you Mr and I'll try to be brief we had to move on a little bit German Thomas maybe you can answer this but a you know a lot of these third party projects that were done. you know they're based on certain output in and the savings would pay back that investment costs there's a lot of things involved there but I don't want them the first one the first one that I heard about was the at that industrial site south of Little Rock which was a fairly large when it industrial park there but do you know where the y'all tracking or do you know if the output you know the output is estimated days of sunshine and all that and then the savings is estimated do you know do you have any data that shows that these things are producing at the rate that was predicted some of mental line for while the you know that. I don't have any specific David I know I think they're probably too few to make a conclusion with the promises that they make note that's between them and their customers if they don't come through that doesn't fall back on the rate here there's a and there's also a thing called Peavey whites which is kind of Google maps plus sun that's in that accepted widely accepted in the industry as a method of projecting the sun there irradiance now the other factor is quality of the panel's angling the panels all of those kinds of things that is an unknown that is a very important question during how this will work out. New not a lot of data as we get day that we're going to know a lot more. Thank you. I'll say no other questions with respect to come and talk with us and we will be depending upon you and your guidance as we get we go through some to make sure that you keep this on a community where I have a question. Call me direct will meet will meet with your folks. We want to work to solve these problems thank you. Okay next I'm will recognize the John Bethel. Now let him introduce himself. Although I think most people probably recognize. A low good afternoon Mr chairman members of the committee thank you for the opportunity to be here I'm John Bethel I'm the director of public affairs for into the Arkansas. And of. We have the customers and facilities in the number of your districts I know some some we don't but I know I've had the pleasure of meeting and working with most of you for the number of years. energy is the largest electric utility in Arkansas a we we serve. In sixty three counties and serve over seven hundred thousand customers we have in Arkansas several generating facilities nuclear coal natural gas hydroelectric and solar and we have the the distinction and the honor to be the the largest solar provider in Arkansas and and we're growing we've got to to facilities that are up and running we have another one that is under construction and we have two more that are been from the public service commission seeking approval so you know we're we're continuing to explore and find the opportunity to build solar facilities in addition to our other resources it's a part of of finding ways to continue to economically serve our customers is represented back indicated Arkansas has relatively low electric rates and we want to maintain that and continue to improve our system and continue to serve Arkansas because the the low electric rates are an economic advantage that Arkansas has and we do the expend a lot of time and energy and effort in economic development and I know we work with the the economic developers in your in your districts to help make the state economically healthy keep it growing up. As a German Thomas mentioned an issue that I think you can expect to see come before you during the session will be net metering and I think we enter G. certainly has some concerns about the the current state of affairs from a cost shifting standpoint and I think that we believe that customers that don't have panels are are the the costs from customers with panel shift to those customers and it's because of the rate structure that exist currently for net metering and we think that but it needs attention from the General Assembly to correct that to make it fair so that the customers that have panels will pay their fair share of the utilities cost to serve them currently they don't and when they don't pay that those cost shift to other customers that cause rates to go up and that begins to erode Arkansas's economic advantage from low rates we don't intend to or want to kill anything that's existing we want to make it better and an important part of making it better is to get the rates right and get those fair so that all customers are paying their fair share in Arkansas can grow we don't want to frustrate customers ability to be implement their own solar facilities if they want to do that we just want to make sure that they do it in a way that they are paying their fair share of the costs and that's not currently happening and of so we we look forward to the opportunity to work with you and others to develop a a workable solution to the to the problem in that that space that we find and We are in addition to being the largest solar provider we have the largest number of net metering customers on our system so we are intimately familiar with the issues and I think we'll be prepared to to to to demonstrate the merits of of some of the things that we want to do and and hope we have the opportunity to work within answer quite your questions as we go forward on that I also want to offer opportunities for this committee I know were very represented back mention visiting entered the facilities and locations within the state and as I mentioned we have a variety of generating resources that we would be be happy to host the committee at any time and I know over the over the next several months will be able to work on that as it becomes safer to do that and we look forward to doing that as I mentioned we've got solar facilities that are are operating here and be we would be happy to have the committee to visit one of those if if if you're interested and then also or other generating facilities are are are available for your education as well and look forward to it always enjoy working with this this committee and providing education and support and I'll be happy to take any questions if you have any. You have a question. We did a great job you after all the questions very good thank you for we appreciate really what you do for Arkansas and I certainly. He's a great another great resource for committee thank you. Randy did you want to come up in. All right to introduce yourself to the committee. Thank you my name is Randy Thurman I'm with government solutions my partner Kourtney Shepherd and I. Represent a number of clients three of whom you have interest in your area no on this committee a personal represent Oklahoma gas and electric which is a utility that provides services interstate through your permit cross several states have a very small footprint in a very important part of Arkansas over in and around Fort Smith Arkansas. We also represent Exxon and it's subsidiary XTO energy whose primary interest or indifferent will shale natural gas play. And it probably represent a company in elder radio called lanxess may be more familiar with its previous name of Great Lakes chemical. Long standing old operator in the. Brian feels of self Arkansas may as you may know that pop into the old. Gulf beaches of south Arkansas what used to be the Rev redneck Riviera and prehistoric days anti polio salt water all the beaches. Running through their plant pluck out the bromine particle and then recharge the aquifer by. Pumping their wastewater back into the aquifer where they had just taken it the day before. A closed loop system. Little over two years ago they partnered with the Canadian company called them standard lithium. Standard lithium. just completed a pilot plant last year with a destructive this plant next to the licensed facility and just before lanxess pumps there. There the brominated of water back into the offer. standard lithium reaches in through the process of raven Bennett they reach into that way string and pull out the lifting part. And that the plan is open successfully running it is a publicly traded company. we represent the likes the side of the operation but on behalf of lanxess Mr chairman we would like to extend an all day invitation for this committee. When called allows for you to come to elder radio invisible to those facilities there side by side it's a great green project we all know the importance of lithium in battery storage for energy it also Corning I represent Exxon oil and gas represent lithium which we think is probably where a lot of the transportation is going in the future I'll be happy to answer any questions. Represented lighting thank you Mr and I'll try to be brief but rainy that's exciting talking about with the amount I'm definitely going on the trip if you can schedule that I'd love to go see that but you mentioned the fable shale what's the one is there activity going on there and tracking I mean with there's gonna be some changes in that area of energy probably run and I'm just wondering are we will that become more economical to do the you have any will well that business come back or you any ideas on I have no foresight into future gas prices with the they are extremely low now and they're they're not been any rigs drilling rigs operating the shale in quite some time. Anything else thank thank you both for what you do projection. Well folks that's. Although we have for today I do one is sort of piggy back on. Several comments that were made here in the. Energy is changing and if you have been. You you have the living underneath a rock and all that energy world's gonna change of there's gonna be some things that push down and pushed out to is from the federal level and they can make major differences to of energy and and where we stand here in Arkansas I think we've got a good team we got a good relationship with all the players on the team I think we can work our way through and that's that'll be the challenge to this committee to to facilitate that so so we work there we keep Arkansas number one we like so we have a lot of good players that are or want to work with this on that endeavor of these changes can make major differences to our state economically major differences are stacked so some of these because I remember early on when I was on this committee we were looking at a. Of. I forget that I'm I've several years ago we were talking about that that Arkansas the the plan that was proposed is going to be ourselves almost at this the spirit that thing is going to affect this incident anyway so will will be the bill out of activity related to those whatever comes out from from the The federal government at this point so there's and there's lots action out there so we'll see how that works and is there any other business a couple of the committee. Senator we are joined.