Senate committee advances debate on exempting small renewable projects from RCA cost review

The Senate Resources Committee on Monday heard Senate Bill 32, a measure sponsored in committee to change how electric cooperatives organized under AS 10.25 recover costs for small renewable energy and battery storage projects in the Rail Belt. Chair Senator Giesel placed a committee substitute before the panel that reduces the project-size threshold to 5 megawatts and limits qualifying exemptions to no more than three projects for a single applicant in a three-year period.

The bill aims to speed deployment of distributed renewable generation by exempting small projects from the RCA’s full prudency or cost-recovery review when utilities seek to include project costs in rates. Proponents told the committee the change would remove a lengthy, expensive regulatory step and let local cooperatives and their boards proceed more quickly on projects they deem locally appropriate.

Technical witnesses from the Alaska Center for Energy and Power framed the change as both technical and economic. Gwen Holdman, chief scientist at the Center, said the bill “is designed to remove barriers to small renewable energy and battery storage projects in the rail belt to the benefit of Alaskans.” Research professor Steve Colt described an “inflection point” between roughly 5 and 10 megawatts where projects are increasingly likely to connect to the transmission system rather than only to a local distribution network; once a project affects the transmission system, it can affect other utilities and the broader grid and typically merits broader review.

Committee members pressed on those trade-offs. Senator Dunbar said she preferred the original, larger threshold and worried that a 5-megawatt cap could rule out projects such as the Houston solar project in the valley, which witnesses described as sitting near that distribution/transmission boundary. Witnesses and senators discussed that project as an example of where technical details and local distribution capacity matter; the testimony described the Houston project as approximately 6 megawatts and Fire Island as about 17.6 megawatts.

Proponents emphasized economic considerations and noted the committee substitute also caps the number of exempted projects. Steve Colt testified that under current law a utility could include project costs in rates under the simplified rate-filing process and later face RCA review in a general rate case; the substitute would instead let costs for qualifying small projects be included in rates without the same RCA prudency review, leaving the cooperative board as the primary decision maker for rate recovery on those projects.

Opponents in public testimony urged more oversight. Wasilla resident Ken Huckabot testified he opposes the bill, calling utility-scale renewable projects unreliable and warning that local boards could be influenced by outside money. Cassie Andrews of Anchorage testified she “strongly oppose[d] this bill” and said removing RCA oversight would strip a consumer watchdog role and expose ratepayers to risk.

RCA Chair John Espindola was on the call but did not add substantive comments beyond being present. The committee did not take a final recorded vote; after testimony members said they would consider amendment options and set the bill aside for further consideration.

The committee substitute now before members lowers the kilowatt threshold from the original 15,000 kW figure in the original draft to 5,000 kW (5 MW) and imposes a limit of three qualifying projects per applicant within a three-year period. Staff clarified that the change affects cost-recovery review only; it does not prohibit a utility from constructing a project of any size. The committee indicated it may consider alternative thresholds (for example, higher megawatt limits or different limits for storage versus generation) in future amendments.

The committee did not adopt a final disposition on SB 32; members will return to the measure in a future meeting.