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Testimony of Ralph Andersen President & Ceo, Bristol Bay

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Testimony of Ralph Andersen President & Ceo, Bristol Bay TESTIMONY OF RALPH ANDERSEN PRESIDENT & CEO, BRISTOL BAY NATIVE ASSOCIATION MONDAY, FEBRUARY 15, 2016 Field Hearing: Energy Technology Innovation and Deployment – Opportunities for Alaska’s Energy Future Before the SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES Good afternoon Senator Murkowski and members of the Committee. My name is Ralph Andersen. I’m the President & CEO at the Bristol Bay Native Association. Thank you for inviting me to testify at this important hearing today. I’d like to start with some background about BBNA and Bristol Bay. Background BBNA is a tribal consortium of 31 tribal villages. Our region covers 44,000 square miles and is about the size of the State of Ohio. Our region stretches from Perryville and Chignik on the southern end of the Alaska Peninsula, north to 6 villages around Lake Iliamna; and from Togiak and Twin Hills in the west to Naknek and King Salmon to the east. Dillingham is near the geographic center of our region and is our regional hub. We also have six sizeable communities that serve as sub-regional hubs. Many of our residents are seasonally employed in the commercial fishing industry or on construction projects during the summer months. It’s very hard to find jobs in the villages during the winter. Many of our residents rely on their commercial fishing pay and summer jobs to help make it through the winter. Big salmon returns and the resulting low salmon prices in recent years have caused financial problems for many families. State budget cuts and fewer construction projects have also impacted families and the State’s financial picture looks very grim. High costs of fuel and electricity are the biggest challenges in our region. The high costs impact every aspect of life and is one of the main obstacles to keeping villages in our region sustainable. While fuel prices in America dropped dramatically with the recent glut of crude oil, in Dillingham we’re paying $4.75 a gallon for gas – about double the price of gas in Anchorage. The price for home heating fuel is about $3.00 a gallon. Some 1 of our villages are still paying up to $8.00 a gallon for gas and $4 to $6 dollars a gallon for home heating fuel. Our fuel deliveries start in the spring. Heating fuel, diesel, and gas are shipped by barge from Seattle to Dillingham and sub-regional hubs and distributed to surrounding villages from there. Prices go up each time the fuel is handled. We’re stuck all winter with fuel prices of the last barge in the fall. Barging used to be the most economical way of delivering fuel. But fuel prices were so high in recent years that some villages paid less per gallon by having their fuel delivered by cargo plane from Anchorage. Some stopped barging fuel altogether because it cost too much and now have weekly fuel deliveries by air. Due to high costs, few jobs, and low family incomes, many village members are sometimes faced with either paying an electric or oil bill, or buying groceries or gas for subsistence hunting. Many rely on LIHEAP to heat their homes, which is critical during the winter months. The State’s Alaska Heating Assistance Program (AKHAP) also helped many families keep warm during the cold winter months, but Governor Walker recently announced cutting that program altogether. AKHAP was funded at $9 million. Bristol Bay received about $787,000. In many of our villages, electricity is generated by stand-alone diesel-power plants, many of them are more than 40 years old. Replacement parts are hard to come by. It’s common to hear about a village losing power for weeks at a time because their generators are outdated and replacement parts are hard to find. The vast majority of villages in our region are not on power grids, although some are just a few miles apart. So with high production costs and small consumer populations, the cost of electricity per household in all of our communities is very high. In Dillingham we pay close to 50 cents per kilowatt hour. My January electric bill was over $500.00. The disparity between costs in urban Alaska and rural Alaska was demonstrated in a study not long ago by the University of Alaska’s Institute of Social & Economic Research that found urban residents (Anchorage, Juneau and Fairbanks) pay 4% of their household budgets on energy (heat and lights) while rural Alaskans pay 40% of their total household budgets. Bristol Bay Regional Vision In 2010 residents of the Bristol Bay region engaged in a dialogue about the future. We held over 50 meetings in 26 villages in schools and community halls across the 2 region. We shared our values and hopes for our families and communities. The result is the Bristol Bay Vision and I would like to submit a copy of the final report on the project for the record. People throughout the region said the foundation of their lives is strong families connected to the land and waters. We want excellent schools, safe and healthy families, local jobs, access to subsistence resources, and a strong voice in determining the future of our region. Our people recognize that true economic development requires a regionally coordinated approach to reduce energy costs. The largest costs for any business in our region are the costs for heat and electricity. Our people said the high cost of energy prevents local business development, and that reducing energy costs should be the top strategy to create sustainable economies. The top recommendation regarding reducing the costs of energy is to explore and develop renewable energy resources to generate electricity including wind, solar, hydro, tidal, and geothermal resources. Bristol Bay Energy Projects In Bristol Bay, we realize we have very little control over the prices of fuel and petroleum products, but we can control our uses of snow machines, ATV’s, boats, outboards, and other equipment. We know we can help bring down our home heating costs by weatherizing our homes, and are trying hard to meet the high costs for weatherization, but many of our families simply can’t afford the costs. We also know we have some control over what we pay for electricity and power production. So throughout our region, we have small energy projects specifically designed to meet local village needs and household demands. Senator Murkowski is familiar with a project at Igiugig – a village at the mouth of the Kvichak River at Iliamna Lake. Thank you Senator for traveling there last July. Igiugig was the test ground for one of Alaska’s first river-powered electrical generators. The generator is powered by water current of the Kvichak River, taking the river’s current and producing renewable energy for the village of 70 people. The machine looks like a giant underwater wheat thresher. As I understand it, the company, Ocean Renewable Power, began discussing a small operation in rural Alaska, where expensive fuel oil drives up energy costs. 3 The idea of a river generator started to make sense in Igiugig because of its location. It was a desperate situation. Heating fuel costed about $7 a gallon at the time. Power in the community costed $1 per kilowatt hour. In Anchorage, it’s about 16 cents. There were significant up-front costs of about $4 million to $5 million to develop and build the first generator. The company invested about $2 million in the project, but much of the funding came from the U.S. Department of Energy and from the Alaska Energy Authority, which provided just under $1.5 million through its Emerging Technology Fund. I understand the next version of the generator will cost about $500,000 per unit. There are wind generator projects either completed or planned in many of our villages, such as an array of 15 at Perryville and single wind generators at other smaller communities. Families are also installing their own wind generators at their homes and fish camps throughout the region as they are becoming more affordable. Bristol Bay Energy Plan In keeping with the Bristol Bay Regional Vision, BBNA has been working with the Alaska Energy Authority, Information Insights, and the Southwest Alaska Municipal Conference on the Bristol Bay Regional Energy Plan to identify energy projects and priorities that will reduce the long-term cost of energy and dependence on fossil fuels. I would like to submit copies of the most recent project reports for the record. Phase I provided an inventory of energy-related issues and resources in the region. The report identified key issues in the region such as: • High and volatile fuel prices • High construction and maintenance costs for renewable energy projects due to remote location and distance between communities. • High space heating costs for homes, businesses, and public facilities due to cold climate; and • Heavy dependence on diesel fuel for electricity generation (96%); however, more renewable projects are under development or have recently come online. 4 The goal of Phase II was to engage community and regional leaders, residents, utilities, industry representatives, and other key stakeholders in a dialog about their priorities for addressing energy needs in the region. This phase also requires conducting a “benchmarking” project which is a complete building inventory of non-residential buildings in each community. The goal is to create an inventory of public facilities in up to 27 Bristol Bay communities for use in developing a regional energy efficiency and conversion (EEC) strategy. Data will include at a minimum, building type, age, square footage, fuel type, owner and EEC audit/renovation status and energy usage.
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