[Senate Hearing 110-637]
[From the U.S. Government Publishing Office]
S. Hrg. 110-637
THE IMPACT OF HIGH ENERGY COSTS IN
RURAL ALASKA NATIVE COMMUNITIES AND OPPORTUNITIES FOR ALTERNATIVE AND
CONVENTIONAL ENERGY DEVELOPMENT
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FIELD HEARING
before the
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
AUGUST 28, 2008
__________
Printed for the use of the Committee on Indian Affairs
U.S. GOVERNMENT PRINTING OFFICE
45-586 PDF WASHINGTON : 2008
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COMMITTEE ON INDIAN AFFAIRS
BYRON L. DORGAN, North Dakota, Chairman
LISA MURKOWSKI, Alaska, Vice Chairman
DANIEL K. INOUYE, Hawaii JOHN McCAIN, Arizona
KENT CONRAD, North Dakota TOM COBURN, M.D., Oklahoma
DANIEL K. AKAKA, Hawaii JOHN BARRASSO, Wyoming
TIM JOHNSON, South Dakota PETE V. DOMENICI, New Mexico
MARIA CANTWELL, Washington GORDON H. SMITH, Oregon
CLAIRE McCASKILL, Missouri RICHARD BURR, North Carolina
JON TESTER, Montana
Allison C. Binney, Majority Staff Director and Chief Counsel
David A. Mullon Jr., Minority Staff Director and Chief Counsel
C O N T E N T S
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Page
Hearing held on August 28, 2008.................................. 1
Statement of Senator Murkowski................................... 1
Witnesses
Andersen, Ralph, CEO, Bristol Bay Native Association; Chairman,
Alaska Federation of Natives' Energy Working Group............. 6
Prepared statement........................................... 8
Hoffman, Ron, President/CEO, AVCP Regional Housing Authority;
President, Association of Alaska Housing Authorities........... 56
Prepared statement........................................... 58
Leask, Janie, President/CEO, First Alaskans Institute............ 13
Prepared statement........................................... 15
Mello, Chris, Program Manager, Alaska Energy Authority........... 21
Prepared statement........................................... 22
Middleton, Dr. Robert W., Director, Office of Indian Energy and
Economic Development, Department of the Interior............... 84
Prepared statement........................................... 85
Morello, Steven J., Director, Office of Indian Energy Policy and
Programs, Department of Energy................................. 77
Prepared statement........................................... 80
Naneng, Myron, President, Association of Village Council
Presidents..................................................... 30
Prepared statement........................................... 34
Nicholai, Matthew, President/CEO, Calista Corporation............ 40
Prepared statement........................................... 44
Peltola, Gene, President/CEO, Yukon-Kuskokwim Health Corporation. 49
Prepared statement........................................... 53
Williams, Mike, Chairman, Alaska Inter-Tribal Council............ 18
Prepared statement........................................... 20
Appendix
AVCP, Calista Regional Energy Plan Draft......................... 106
Berger, Carl, Executive Director, Lower Kuskokwim Economic
Development Council, prepared statement........................ 99
Bullard, Loretta, President, Kawerak, Inc., prepared statement... 102
Rural Energy Action Council--Findings and Action Recommendations
for Governor Frank Murkowski................................... 147
Wallace, John, Resident, Bethel, Alaska, prepared statement...... 99
THE IMPACT OF HIGH ENERGY COSTS IN RURAL ALASKA NATIVE COMMUNITIES AND
OPPORTUNITIES FOR ALTERNATIVE AND CONVENTIONAL ENERGY DEVELOPMENT
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THURSDAY, AUGUST 28, 2008
U.S. Senate,
Committee on Indian Affairs,
Bethel, AK.
The Committee met, pursuant to notice, at 9:30 a.m. on the
University of Alaska--Fairbanks Kuskokwim Campus, Hon. Lisa
Murkowski, Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. LISA MURKOWSKI,
U.S. SENATOR FROM ALASKA
Senator Murkowski. Good morning. We're calling to order
this meeting of the United States Senate Committee on Indian
Affairs, a field hearing to be held here in Bethel, Alaska.
Welcome to you all. I think it is incredibly significant
that we are gathered here together in Bethel to listen to some
individuals that will present various perspectives on what the
impact of high energy costs are having on, not only our
communities, but our families, and individuals here in Bethel,
in the surrounding areas. I do believe that this is the first
time that a field hearing of a Senate Committee, certainly the
Senate Indian Affairs Committee, has ever been held out here.
So for those of you from the Bethel boarding school here,
you're witnessing history for the first time, so pay attention.
[Laughter.]
Senator Murkowski. I would like to convey a special welcome
to a couple of our out of town guests. We are privileged this
morning to be joined by Representative Nancy Dahlstrom.
Representative Dahlstrom has been in the Legislature now, I
think, six years, and represents my old district and has done a
good job for us there in Juneau. She's joined by Representative
Bob Roses. Bob is also from the Anchorage area and you're
working on your fourth year.
Representative Roses. Well, hopefully, up until the next
election.
Senator Murkowski. All right.
[Laughter.]
Senator Murkowski. A little advertisement there for you.
But I think it is very important, I think quite significant
that we have other policy-makers from the state here to just
listen, to hear what is going on in this region. We recognize
that as State legislators we represent our own constituency but
it is broader than that, and so your willingness to observe and
to hear the testimony today is greatly appreciated and we thank
you.
I also want to acknowledge Senator Lyman Hoffman. Senator,
I don't know how long you've been serving this district out
here but it's been so long and so good that we all forget the
number of years.
Senator Hoffman. I'm starting my 23rd year.
Senator Murkowski. 23rd year, all right.
[Applause.]
Senator Murkowski. Well, we truly appreciate that. And we
also know that it is a challenge for you in a Legislature that
is predominately urban legislators. It's a challenge to explain
some of what happens in your very extensive district. We're
going to be joined by Bob Herron, who we congratulate on your
successful election Tuesday. We know that you've got a job
going down there, but you'll be teaming up with Lyman. We were
hoping that Mary Nelson would be here with us. I ran into her
in the airport, she has done a fine job representing you in the
Legislature for years and years and we wish her well as she
moves on.
We do have a very distinguished panel this morning. I will
introduce each of them at the conclusion of my opening remarks
and give you a little bit of their brief background.
The hearing here this morning has a very multi-faceted
purpose. And we recognize that with the high energy prices that
we face throughout this state and certainly throughout rural
Alaska, you don't need me to tell you that we are at all time
record highs. We know that the prices are so high that it's
making it difficult for people to truly survive. Now, I know
that we're going to be receiving very instrumental and helpful
testimony this morning. But yesterday when I flew in, I had the
opportunity to visit several of the grocery stores, to go by
the gas station, to talk to people in the grocery stores, to go
over to the VFW hall to meet with some of our veterans and
active Guard folks, and then to meet with some of the community
leaders at a dinner last night; and I have to tell you, when
you go to bed thinking about the young woman who's moved in
from one of the small villages because she couldn't live out
there and she comes into town and she's excited because she has
a job and that's good but she has no place to live, and when
you talk to the Veteran who's been here for 44 years and has
made the decision that he now has to leave, or when you run
into the guy in the grocery store who says he's had a
successful business here for 15 years, but he's going to have
to close; and when you hear the stories about people who deny
themselves health care because they live in an outlying village
and they can't afford the price of an airplane ticket to come
to town and so they wait and they wait and they wait until it
then becomes an emergency and they're able to be medivac'd in,
and YKHC will then pay for that ticket, but they put their life
at risk because they can't afford the price of that airplane
ticket because of the energy prices. This is a reality that you
all are living with, that those of us who are not living here
day to day can't fully appreciate the extent of. So what I'm
hoping that we get this morning is a clarification, an
explanation of what it is so that this becomes part of the
United States Senate Indian Affairs Committee record, so that
my colleagues, they that might not be able to see it for
themselves, but they can read it and perhaps better appreciate
the challenges that you face on a daily basis.
We've got incredible potential here in Alaska when it comes
to energy resources. It's kind of the blessing and the curse,
you almost have so much of it you don't even know where to
begin.
Now, we're limited in our time here this morning. We are
scheduled to receive testimony from three panels of witnesses.
I've been asked already if others may be allowed time to speak.
Under the procedures of the Senate and how we operate field
hearings, it's invited testimony, so those people who have been
invited to speak today as part of these three panels will be
the individuals that you will hear publicly. But I invite you
all, the hearing record will remain open through September
12th, and any one of you is free to email or to write, to
provide your statements, your comments, and those will be made
part of the permanent record. The email address is
[email protected] and my staff will give you the
mailing address after the hearing if you prefer to mail, you
know, a hard copy. In addition, I will be available after the
hearing for a little bit, I don't have to get on the jet until
2 o'clock, so I think I've got to be out of here by about 1
o'clock, I'll be available, my staff will be available and we
will welcome your thoughts.
I want to recognize my staff that are with me from
Washington, D.C. To my left I have Chuck Kleeschulte. Mr.
Kleeschulte handles my energy issues back in Washington. To my
right I have Megan Alvanna-Stimple. Some of you may recognize
her and know her, her family is from Nome. Megan is working on
the Indian Affairs Committee. We have Eamon Walsh to Megan's
right. He is on Senator Dorgan's committee staff and we welcome
him; this is his first visit to Alaska, so this is an eye
opener for him, and he's going to have an opportunity to tour a
little bit this afternoon. I also have Nathan Bergerbest, who
is back in the corner. Many of you know Nathan. He handles my
Indian Affairs matters and we greatly appreciate his assistance
as well. We have a couple others that were supposed to be here
but I guess they missed the plane; welcome to Alaska, right.
[Laughter.]
Senator Murkowski. Now, I've mentioned a little bit about
my experience yesterday going through the stores and just kind
of appreciating what it is that you're paying here as families.
I want to put some statistics in the record, again, so that not
only--not so much for your benefit, but for the benefit of
those who will be reading the record of this Senate proceeding.
According to the Alaska Municipal League, Atka holds the record
for the highest fuel price in Alaska, $8.95 for diesel, $8.65 a
gallon for gasoline. When I went down to the gas station here,
it was $5.99 or 98 cents, right about in there. But we
recognize that all of Alaska is wobbling under record energy
prices. Statewide average gasoline price is about $4.55 a
gallon. For those of you here in Bethel you're probably
thinking that that's a heck of a deal.
What I'm hoping that we gain from this hearing this morning
is solid data on how these price increases, the startling price
increases, how they're affecting average Alaskans and Alaskan
communities. We hear about these energy refugees, those who
flee the rural communities for the urban centers where the
prices are lower because they're, quite honestly, fearful that
they're not going to be able to make it through the winter,
they can't pay for the electricity, they can't afford the fuel
for their vehicles or for their ATVs, they can't get to work,
they can't do their subsistence hunting. The stories out there
about what is happening are more than just stories, I mean they
are real. I had a conversation with a gentlemen with the EPA, a
sanitation engineer, who's been working on projects all around
rural Alaska, and his observation that we have several
communities where the individuals aren't able to pay for their
water and sewer because they're having to pay more for their
fuel and so their utility service is cut off and all the
efforts that we have been attempting to make when it comes to
putting the honey bucket in the museum, the old saying, we're
going backwards on it, we're having communities that are
recognizing that they're not able to pay for the systems that
we have provided for them. Just last evening I heard that in
the community of Tuntutuliak, the community well, the water
service, has been shut down. Essentially you're told, well, you
can buy your bottled water or you can get water from the river.
This should concern us all in terms of how we are going
backwards, instead of advancing insofar as providing, not only
services, but for the health and sanitation needs of the people
in the regional areas.
I want this hearing to produce, perhaps a true picture of
how difficult things have become in rural Alaska, and better
yet what the witnesses might suggest that we, at the federal
level, might be able to do to help ease the energy costs.
I'd like to hear, not only from those from the individual
perspective, but what is the impact on the businesses, on the
health care systems, on the institutions themselves. We all
know that energy is a key ingredient in the cost of health care
in rural Alaska, keeping the village clinics and the hospital
heated, the cost of medivacs from the villages, we are just
hearing terrible horror stories about those costs. And while
we're working in Washington to increase the funding for IHS,
I'm very concerned that what we may be seeing are increases
that are intended for health services will, of necessity, be
diverted to energy costs. We know that rising energy costs are
making it far more expensive for the entities from the local
school districts, we heard some of that last night, to the YKHC
to provide services to the clients, making it a huge challenge
to provide existing services to those who need it.
I am hopeful that at this hearing we'll be able to provide
information about what we, in Congress, should be doing to
encourage the development of reliable, affordable domestic
energy over the short-term and over the long-term. We know that
we are extremely rich in renewable energy resources. We've got
more than any other state out there. You look at the wind, you
look at the potential through the ocean energy, the hydro-
kinetic energy from our rivers. Look at what we have in the
Southeast in terms of our hydro power and what is available
there. We have incredible resources when it comes to geothermal
and our ability to tap the potential from under the earth here.
We've got the potential to do so much more when it comes to
renewable energy resources, but what we need, what we lack is
that necessary capital infrastructure to advance these
projects.
Renewables offer us that, hopefully, lower cost
alternative. And we recognize that when it comes to the
sustainable energy out in rural Alaska, this is where the
future is.
I do hope that we will hear this morning about the draft
AVCP, Calista Regional Energy Plan * that emphasizes natural
gas, wind, hydro, and biomass. All over the state we've been
seeing efforts at the regional level to develop regional energy
plans. I know in Northwest Alaska, in the NANA region, they
recently have developed a plan. The Seward Peninsula has one.
Southeast. The Aleutians, they're in the process of crafting
one. And the Interior, Fairbanks, has just finished one. The
Kenai Peninsula, along with the Mat-Su and Anchorage produced
one last year that state administration, of course, is in the
process of producing a new statewide plan that is likely to be
finished this fall. So there's a lot going on, good and
interesting concepts.
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* The information referred to is printed in the Appendix.
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And, then, finally, I hope that we'll hear testimony on
what Congress should be doing to help rural residents and
Alaska Natives tap these energy sources that are located on
their own lands, both to cut the power costs, but also as an
income source for Native corporations and their subsidiaries.
We'll have an opportunity to hear from the representatives
from both the Department of the Interior and the Department of
Energy in what we can do to get on with funding the policy
initiatives that were contained in the Energy Act that we
passed several years ago to help fund the development of Indian
Native Energy Projects on reservation lands and the Native-
owned lands, little of which, quite honestly, we have funded,
so I look forward to the updates from the two federal
witnesses.
There are some initiatives out there. People have said,
well, what is it that you can do to help, what is out there? We
succeeded in winning approval for an Alaska Renewable Energy
Deployment Grant Program for renewable energy projects for the
state of Alaska in last year's Energy Independence and Security
Act. Now, the problem is you get the authorization for it but
we have not yet got the appropriation. We've got to fund it in
order for this authorization to do anybody any good.
So I'm looking forward to the testimony of the individuals
this morning for the establishment of a record as to what we're
facing out here in terms of the economic, the social conditions
that rural Alaska is facing caused by these high energy prices,
and what the Federal Government can do to help alleviate the
problems, both in the short-term and in the long-term.
I think we recognize there are no silver bullets. There are
no quick and easy fixes. The Legislature wrestled with this in
their special session not more than a month ago, so it's an
initiative that we all must be engaged in together.
With that, and I apologize for taking more than my share of
time here, but I would like to move to our witnesses and give
you a brief overview of all of the panels and then we will move
to the first panel.
We're joined this morning by Ralph Andersen. Ralph is the
CEO of the Bristol Bay Native Association. He's the Chair of
the Alaska Federation of Natives Energy Committee. Ms. Janie
Leask, the President and CEO of the First Alaskans Institute on
the Board of Trustees there. Mr. Mike Williams, appreciate you
joining us here this morning, Mike, and your testimony as well.
Mr. Chris Mello with the Alaska Energy Authority.
On our second panel this morning, we will hear from Myron
Naneng who's President of the Association of Village Council
Presidents. Matthew Nicolai, the President and CEO of Calista.
Gene Peltola, President and CEO of Yukon-Kuskokwim Health
Corporation. Ron Hoffman, CEO of AVCP Housing Authority and
president of the Association of Alaska Housing Authorities.
And then on our third panel we have our federal witnesses,
Mr. Steve Morello, whose Director of the Office of Indian
Energy Policy and Programs out of the Department of Energy in
Washington, D.C. And joining him is Mr. Bob Middleton who is
the Director of the Office of Indian Energy and Economic
Development in the Department of Interior.
Unfortunately, as you know, Senate protocol says we ask
that you try to limit your testimony to five minutes. Your full
statement will be included as part of the record so if you
would like to supplement that through your oral testimony here
this morning that's always most welcome.
And with that, Ralph, if we can start the first panel off
with your comments and, again, thank you for joining us this
morning.
STATEMENT OF RALPH ANDERSEN, CEO, BRISTOL BAY
NATIVE ASSOCIATION; CHAIRMAN, ALASKA FEDERATION OF NATIVES'
ENERGY WORKING GROUP
Mr. Andersen. Good morning. Thank you Madam Chairman. I was
sitting here, while listening to your remarks, that being the
lead off speaker, I'm kind of the warm up for this
distinguished group of panelists and for the whole other panels
that will follow me. As you said my name is Ralph Andersen, I'm
the CEO of the Bristol Bay Native Association. I'm here as the
Chairman of AFN's Energy Working Group.
Thank you for holding this hearing today on the extremely
important issue of high energy costs in rural Alaska. Alaskans,
especially in our rural communities are experiencing an energy
crisis unlike anything that we've seen in the past and it's not
likely to improve in the short-term. While all Americans suffer
from the rising costs of gas and home heating fuel, the impact
is unbelievable in our rural communities, threatening the very
survival of many of our villages. Most of our rural communities
are not on any power grid, and are dependent on petroleum for
three major uses; space heat, transportation and electricity.
Heating fuel prices in some villages have gone as high as $11
per gallon. In the winter months a home can use between 220 or
275 gallons each month. This equals to about $2,400 to $3,000
per month per home. We simply can't afford to meet these prices
now or over the long-term without help. Our regional village
economies and everything else are affected by the high cost of
fuel. Groceries, fresh milk, a dozen eggs, airline tickets,
toothpaste, medicine, diapers, clothing, lumber and building
material, car and truck parts, everything have gone up in
price.
The State of Alaska Department of Commerce and Community
and Economic Development expects the price of heating oil to
rise from 30 to 50 percent this winter. It is entirely possible
that thousands of our fellow citizens will not be able to pay
their heating and electric bills this winter and still buy food
and the other necessities of life without additional emergency
relief. Making the situation worse is, for most families, is
the price of gas is limiting their ability to gather food for
the winter, to gather subsistence food. Now, with the high cost
of gas fewer families can afford to hunt, fish, and gather
subsistence food and pay their heating and electric bills at
the same time. For some families it's become a choice between
putting food on the table or heat and electricity in the home.
We encourage the state of Alaska to adopt a long-term
energy plan, one that covers every region of the state which
has an overall goal of equalizing energy costs for all
Alaskans. We are hopeful that such a plan will be adopted
before the end of the year.
While working to transition to alternative or renewable
energy, that future is a long ways away. Until then coal and
oil and natural gas will remain indispensable to meeting the
total projected energy demand and Alaska is rich in those
resources. We're going to need help during the period of
transition.
Over the summer AFN's Energy Working Group met four times
and had very productive meetings. We developed a matrix of
short-term and long-term actions that could be taken by the
state and Federal Governments by individuals and by private
industry. A copy of that matrix is attached to my written
testimony which I've submitted. I'd like to list, briefly, the
top five recommendations that we came up with.
One, strengthening the Power Cost Equalization Program by
fine-tuning its mission, adding more resources and expanding
the eligibility requirements.
Two, buy down debt of rural utilities in order to reduce
costs passed on to consumers, and include a price cap on fuel
stock purchased prospectively, with a mechanism for
reimbursement from the state for costs in excess of the cap.
Three, expand and support bulk fuel purchasing,
transportation and cooperative purchase agreements and
contribute to the Denali Commission's bulk fuel storage program
in order to eliminate the storage backlog and to complete rural
upgrades.
Four, provide a family fuel subsidy to help meet the
immediate crisis.
Five, make a sizeable investment in projects that promote
renewable or alternative energy and conservation efforts.
The Legislature also, at the special session, suspended the
state's motor fuels tax for a year and increased the bulk fuel
revolving loan fund and bridge loan program funding. All of the
steps will help with the immediate crisis, but fall far short
of what is needed for the long-term.
Turning to viable sustainable energy solutions. AFN and its
member organizations are strong supporters of the development
of alternative energy resources as an important addition to our
country's fossil energy resources. Many villages in rural
Alaska are actively working to develop a wide array of
alternative and renewable energy projects.
Alaska is so large and diverse that one village's
alternative resources may not be available elsewhere. There's
no one size fits all solution for rural Alaska. There's no
cookie-cutter approach. Making local solutions more specific
and more expensive. Because of the vastness of Alaska and its
virtually unlimited potential Alaska can be a model for the
rest of the country. Our communities could be part of a
national demonstration project on alternative energy
technologies. We could serve as a proving ground to show our
rural Alaska Native people and our institutions have the
experience, capital and partnership to effectively implement
workable solutions to the energy crisis. Investing now in
renewable energy development will bring down energy costs and
create jobs.
In terms of what Congress can do to address the energy
crisis we have the following suggestions, and there are nine.
One, provide significant increases in the needs-based Low
Income Home Energy Assistance program, the LIHEA program and
urge the state to add its own additional appropriations for
this program.
Two, increase funding for the Denali Commission.
Three, enact a comprehensive energy bill to decrease energy
demand over the long-term and increase energy efficiency.
Four, fully fund and implement the Energy Independent and
Security Act of 2007, which was authorized in 2006.
Five, provide incentives and funding for the creation of
regional energy authorities in Alaska.
Six, increase the supply of energy by encouraging
exploration and development of private, state and federal lands
both on shore and off shore.
Seven, work closely with the state of Alaska to ensure that
in the development of a natural gas pipeline our communities
have access to the natural gas that will pass through the
pipeline.
Eight, provide consumers with energy rebates and economic
incentives to conserve energy.
Nine, enact and fund Senate Bill 2232, the Native American
Challenge Demonstration Project to help us meet our energy
needs. We request that the committee mark up this bill when it
returns as part of the strategies to address the energy crisis
in rural Alaska.
Thank you for the opportunity to testify today Madam
Chairman.
Again, the high cost of energy is an enormous issue for us.
We want to be part of the solution. We look forward to working
with both Congress and the state to address the issue.
[The prepared statement of Mr. Andersen follows:]
Prepared Statement of Ralph Andersen, CEO, Bristol Bay Native
Association; Chairman, Alaska Federation of Natives' Energy Working
Group
Good Morning. My name is Ralph Andersen. I am the Chief Executive
Officer of the Bristol Bay Native Association (BBNA), and Chairman of
the Alaska Federation of Natives' Energy Workgroup. I also serve as Co-
Chair of AFN's Human Resources Committee composed of the Chief
Executives of the 12 regional non-profits. BBNA is a non-profit tribal
consortium that provides vital services to over 30 rural villages in
southwestern Alaska. Today, I am testifying on behalf of AFN, as
Chairman of the Energy Working Group. AFN is a statewide Native
organization whose membership includes over 200 villages and tribes, 13
regional Native corporations and 12 non-profit tribal consortia,
including BBNA, that contract and run federal and state programs.
I know many of AFN's member organizations would like an opportunity
to provide testimony on how the high fuel prices is impacting them, so
I request that the record be kept open for a period of time to allow
our tribes and corporations and interested individuals to provide
additional written comments.
Alaska Natives are committed to working with the State and the
federal governments, as well as private sector partners, to help meet
the energy needs of Alaska and the nation. As major landowners, we have
resources that can be developed. As owners of major corporations, we
have the management capacity and organizational reach to work with the
state and federal governments and private sector investors to create
new sources of energy. Our federally recognized tribes, our regional
housing authorities, our regional tribal consortia all have a strong
interest in being part of the solution of obtaining affordable energy--
to maintain our unique way of life and to help meet our national energy
needs.
The rising cost of energy has reached unprecedented proportions in
rural Alaska. While all Americans suffer from the rising cost of
gasoline, the impact is unbelievable in our rural communities,
threatening the very survival of many remote villages. Rural Alaska has
the highest per capita power and fuel costs in the U.S.
Most of our rural communities are not on any power grid and are
dependent on petroleum for three major uses--space heat (homes, public
buildings and businesses); transportation (aircraft, snow machines,
outboard motors, four-wheelers); and electricity (lighting and
appliances). Fuel oil prices in some villages have gone as high as $11
per gallon; and in the winter months, a village home can use four or
five 55-gallon drums of oil for heating each month. This equals $2,000
per home/per month in Arctic Village, $1,650 in Hughes, and $1,375 in
Illiamna. These prices cannot be met--now or over the long term. Just
as significantly, everything in our villages is affected by the high
cost of fuel, even more so than in our cities because of the economies
of scale of serving remote locations. Groceries, toothpaste, medicine,
diapers, clothes, lumber, automobile and truck parts--everything--has
gone up in price. This is devastating to individuals and small
businesses; especially when wages have not gone up in decades. As an
example, air cargo prices in one area jumped another 32 percent in June
after previous increases.
According to a recent study by UAA's Institute of Social and
Economic Research (ISER), people living in remote, rural communities
are paying about 41 percent of their annual incomes on home energy use,
compared to about 4 percent paid by people living in Anchorage. The
State of Alaska's Department of Commerce, Community and Economic
Development expects the price of heating oil in remote villages to rise
from 30-50 percent this winter. It is entirely possible that thousands
of our fellow citizens will not be able to pay their energy bills this
winter and still buy food and the other necessities of life without
additional emergency relief. Making the situation worse is the fact
that for some families, the price of gasoline is actually limiting
their ability to gather food for the winter. Rural families depend on
subsistence, and under normal circumstances they are able to put away
fish, berries, moose, caribou and other resources to meet their food
needs throughout the winter.
We have encouraged the State of Alaska to adopt a long-term energy
plan--one that covers every region of the State and which has an
overall goal of equalizing energy costs for all Alaskans. We are
hopeful that such a plan will be adopted before the end of the year.
In its recent Special Session, AFN also encouraged the Alaska
Legislature to take steps to stabilize energy costs and provide
immediate relief to individuals, families and communities who are the
hardest hit by high energy costs. We believe a multi-faceted approach
must be taken--one that provides reliable, sustainable and affordable
energy to all Alaskans; encourages conservation; and promotes economic
development opportunities in the process. We also need to continue to
invest in conventional oil and gas while working to transition to a low
carbon future. That future is many years away--until then, coal, oil
and natural gas will remain indispensable to meeting the total
projected energy demand. And, Alaska is rich in those resources.
Over the summer, AFN's Energy Workgroup met to identify various
options for addressing the energy crisis in Alaska. We developed a
matrix of short-term and long-term actions that could be taken by the
state and federal governments, by individuals and by private industry.
A copy of that matrix of ideas is attached.
Today, I would like to briefly cover the recommendations that
emerged as our top five recommendations for the State's Special Session
and then focus on what we believe Congress can do to address the energy
crisis.
1. Strengthen the Power Cost Equalization Program by fine-tuning
its mission, adding more resources and expanding the eligibility
requirements. Additional funding is critically needed to cover the
short-fall expected this year. While the Alaska legislature increased
the ceiling for entitlement for the program from 52.5 cents to $1.00
per kWh, it did so for only one year. It also failed to make schools,
health clinics and businesses eligible, as the PCE program was
originally designed, and it did not address the need for increased
funding for PCE. Making schools, health clinics and businesses eligible
is important because it will focus energy help where it is needed, help
keep down inflation, and ensure that health and education funding goes
to those purposes. According the Alaska Native Tribal Health
Consortium, as much as 33 percent of village health clinic funding is
going to pay for electricity and increased fuel costs. Our hospitals
and schools are places of refuge for people in the villages. We need to
ensure that the infrastructure we've invested in (our schools, clinics,
hospitals) is maintained. Costs for everything from rubber gloves to
patient travel, to medivacs have increased. These increases threaten
the ability of our health care providers to deliver much needed
services. As people move in together to save costs, there will be huge
public health ramifications.
2. Buy down debt of rural utilities in order to reduce costs passed
on to consumers--and include a price cap on fuel stock purchased
prospectively, with a mechanism for reimbursement from the State for
costs in excess of the cap. Most rural utilities generate their power
with diesel fuel. According to the Alaska Energy Authority, the cost of
diesel fuel for most of these, even at 2007 prices, amounted to close
to 50 percent or more of the cost of providing power. With the increase
in fuel prices in 2008, rural utilities will find it difficult to
operate and maintain power plants, tank farms and distribution lines--
not to mention their insurance, interest on long-term debt, taxes and
general administrative costs. The Alaska Village Electric Cooperative
(AVEC), for example, serves 53 villages in rural Alaska, communities
that have the lowest per capita cash incomes in the State. Because of
the historically high cost of power, residents and businesses in these
communities have been conserving power for many years, resulting in
extremely low electricity consumption. AVEC purchased fuel for its
power plants at an average cost of $1.29 per gallon in 2002. In 2007,
it paid $2.93. Its 2008 deliveries will be at least $4.60 per gallon
(based on the L.A. Platt's Fuel Price Index as of May 13, 2008,
reporting crude oil prices at $132.57).
Because of these considerations, we advocated for a program that
would give relief directly to utility companies. We also proposed
capping the price of fuel purchased prospectively by electric utilities
(AVEC has suggested a cap of $10.00 per million BTU, which would
translate to a price of about $1.30-$1.45 a gallon for various fuels,
depending on their BTU content.) The fuel supplier would charge the
utility the mandated price and bill the State for the balance.
3. Expand and support bulk fuel purchasing, transportation and
cooperative purchase agreements--and contribute to the Denali
Commission's bulk fuel storage program, in an effort to eliminate the
storage backlog and to complete rural upgrades. Communities across
Alaska are faced with the costs of storing fuel, once it arrives. Fuel
tanks are expensive to buy and to maintain--and have to meet stringent
government environmental regulations. Many fuel tanks in Alaska are not
large enough or are in need of upgrades. Federal funds available for
the Denali Commission's energy programs totaled about $23 million for
FY 2008, a significant decline from previous years. We encouraged the
State to step up as a true partner with the federal government in
funding for the Denali Commission's bulk fuel storage program. Being
able to store more fuel should help stabilize consumer fuel prices. In
addition, we recommended that the State provide grant funding to create
bulk-fuel co-ops that combine purchases for utilities, schools, the
state (for state facilities) and private businesses, so that individual
communities, clusters of communities and/or regions can create
economies of scale. A total of $211 million are needed to complete the
backlog of bulk fuel storage tanks, which are old and unsafe; while
$198 million are needed to complete small electrical generation
upgrades.
4. Provide a family fuel subsidy to help meet the immediate crisis.
The State Legislature voted to provide a ``resource rebate'' of $1,200
per person to be added to the 2008 permanent fund dividend payment. The
rebate will provide much-needed relief to families and individuals, but
as a recent ISER study points out, for about half of the remote rural
households, increased home-energy costs since 2006 will far outweigh
the energy rebate ($3,300 for the average-size household).
5. Make a sizable investment in projects that promote renewable/
alternative energy and conservation efforts. The Legislature created a
Renewable Energy Fund last year to be housed in the Alaska Energy
Authority and provided $50 million in funding. During its recent
Special Session, the Legislature added another $50 million to the fund
bringing the total available for spending on energy projects this year
to $100 million.
The State Legislature also suspended the state's motor fuels tax
for one year, and increased the bulk fuel revolving loan fund and
bridge loan program funding. All of these steps will help with the
immediate crisis, but fall far short of what is needed for the long
term.
Turning to viable sustainable energy solutions, AFN and its member
organizations are strong supporters of the development of alternative
energy resources as an important addition to our country's fossil
energy resources. Many villages in rural Alaska are actively working to
develop a wide array of alternative and renewable energy projects. They
see not only the potential for reducing the cost of energy, but also
the tremendous manufacturing, sales and service components (e.g., the
fact that wind and solar energy will need tailored products, services
and alternative building materials; and the fact that plans and
supplies for hybrid homes and facilities that are now being developed
and manufactured abroad could be developed and manufactured in Alaska.
Our larger cities are doing the same.
Alaska is so large and diverse that one Village's alternative
resources may not be available elsewhere. Some areas have strong wind
for electrical generation; others can look to geothermal resources.
There is no ``one-size-fits-all'' solution for rural Alaska, making
local solutions more specific and expensive. Because of the vastness of
Alaska and its virtually unlimited potential, Alaska can be a model for
the rest of the country. Our communities could be part of a national
demonstration project on alternative energy technologies. We could
serve as a proving ground to show how Alaska Native people and their
institutions have the experience, the capital and the community
relationships that will be necessary to effectively implement workable
solutions to the energy crisis. Investing now in renewable energy
development will bring down energy costs and create jobs.
The undeveloped energy sources most often discussed for rural
Alaska are small hydro power (using rivers to provide power to small
communities), solar energy, sea wave action, biomass, coal, methane and
geothermal:
Wind: Alaska has world-class wind energy resources, especially
along the coastal and western regions of our state. There are 31 rural
Alaska communities that already have good opportunities for wind
generation--and 17 more that are ``potentially attractive.'' There are
at least seven projects currently operational and another eight in the
planning stages. Congress needs to look at ways to provide incentives
to wind developers and to train our citizens to maintain the windmills.
Hydro: Existing hydro generation produces nearly 25 percent of the
state's electricity. But Alaska also has almost 45 billion watts of
large and small hydro potential, more than any other state.
Solar: Summer in Alaska produces a huge amount of sunlight, but
winter darkness is the time of greatest energy demand. Small-scale
solar projects have great potential, especially if combined with other
sources of energy to lower the overall cost. Because the homeowner or
community must make up-front capital investments, the federal or state
governments should provide incentives.
Ocean Wave Action: Alaska has over 34,000 miles of coastline, and
some of the highest tides in the nation making it one of the best ocean
energy resources in the world.
Geothermal: A recent study points out four potential geothermal
areas in Alaska: interior hot springs, southeast hot springs, the
Wrangell Mountains, and a combination of the Alaska Peninsula and the
Aleutian Chair. The value of geothermal power is magnified by the fact
that it can produce both heat and electricity. Large-scale geothermal
electric power generation projects have been proposed that would
provide power to Unalaska, and Akutan. Naknek Electric Association is
actively investigating geothermal potential and the development of a
regional electrical transmission system.
Biomass: Alaska has a great amount of wood, wood waste and sawdust
for potential use in space heating and electrical generation. A few
villages have begun to talk about making wood pellets from plentiful
willow brush. Alaska's fish processing plants produce about 8 million
gallons of fish oil each year. With some chemical changes, this oil can
be mixed 50-50 percent with diesel for generation. Community waste
disposal produces 650,000 tons of garbage in Alaska each year that
could be used to generate electricity. But, again, design and capital
costs are expensive and need public incentives.
Coal: Coal is abundant in Alaska, but has higher CO2
emissions than other energy sources. However, coal can be used to
produce synthetic ``natural'' gas with and without carbon capture. The
problem is that these gasification technologies are expensive and still
under development.
In terms of what Congress can do to address the energy crisis, we
have the following suggestions:
1. Provide significant increases in the needs-based Low Income Home
Energy Assistance (LIHEAP) program and urge the State to add its own
additional appropriations for this program. Currently, the only energy
aid program Congress has established is LIHEAP. It provides aid to
residents whose income is at or below 150 percent of the federally
defined poverty level. That program provides approximately 13,880
qualified Alaskan households with about $730 a year to buy fuel. That,
at best, only covers about one winter month's supply of fuel for a
typical home at current prices. In many of our villages, it does not
even cover one-month's cost.
2. Increase funding for the Denali Commission. The congressionally
created Denali Commission and the Alaska Energy Authority recently
awarded $5 million for alternative/renewable energy projects ($4
million from the Denali Commission and $1 million from AEA. While this
was a good start, it only provided funding for 33 projects out of a
total of some 96 proposals. Congress should increase funding to the
Denali Commission for its energy projects and make a sizeable
investment in developing alternative/renewable energy projects.
3. Enact a comprehensive energy bill to decrease energy demand over
the long term and increase energy efficiency. As a part of that bill,
Congress needs to extend the investment tax credit for installing solar
energy, the production tax credit for producing wind power as well as
the credits for geothermal, wave energy and other forms of renewable
energy. These critical renewable energy tax credits are set to expire
at the end of this fiscal year and, if they do, it will mean thousands
of jobs lost and billions of dollars of investments not made.
4. Fully fund and implement the Energy Independence and Security
Act of 2007, which was authorized in 2006. That bill includes a host of
provisions to further renewable energy development, including a
renewable energy deployment grant program that would provide federal
grants for up to 50 percent of the cost of building a wide variety of
renewable electricity projects, including wind, geothermal, ocean,
biomass, solar, landfill gas and hydroelectric projects in Alaska. It
provides for a federal grant program specifically to help with
construction of geothermal energy projects in areas of high electricity
costs like rural Alaska.
5. Provide incentives and funding for the creation of regional
energy authorities in rural Alaska.
6. Increase the supply of energy by encouraging exploration and
development of private, state and federal lands, both onshore and off-
shore. This can be done by providing incentives, such as OCS revenue
sharing for Alaska's coastal communities, as has been done for Florida,
Louisiana and Texas. AFN supports the right of self-determination for
our Native communities and urges that leases which have generated a
lack of widespread community support be revisited, and discussions
opened up with affected communities to address their concerns.
7. Work closely with the State of Alaska to ensure that in the
development of a Natural Gas Pipeline in Alaska, our communities have
access to the natural gas that will pass through that pipeline through
spur connections; and that ownership, partnership and contracting
opportunities for Alaska Native tribes and corporations are part of the
development plans. Serious training funds should be appropriated for
workforce development to ensure broad Native participation in the
projects.
8. Provide consumers with energy rebates and other economic
incentives to conserve energy. Congress should provide homeowners with
incentives to shift to supplemental alternative energy, including
rebates, tax credits, low interest loans, and grants to weatherize
homes and install energy saving changes.
9. Enact and fund S. 2232, the Native American Challenge
Demonstration Project Act. This bill would create a total of five pilot
projects in remote, predominately Native American areas modeled after
lessons learned from the U.S. experience in providing foreign aid to
the developing world. The project would use a compacting model to
channel significant development funds to implement locally designed
economic development strategies, including energy strategies. The
objective would be to enhance the long-term job creation and revenue
generation potential of Native economies by creating investment-
favorable climates and increasing Native productivity.
We thank you for the opportunity to testify today. This is an
enormous issue for us. We want to be part of the solution and look
forward to working with both the Congress and the State of Alaska to
address this issue.
Senator Murkowski. Thank you, Mr. Andersen, I appreciate,
not only your testimony but your leadership. AFN, in their
efforts to truly shine the spotlight in all corners of Alaska
on this issue, I think has been very helpful, and the matrix
that you've provided shows the level of detail that you're
going to, which we greatly appreciate.
Just for the interest of not only the witnesses, but those
participants, typically what we do in a Senate hearing is each
of the panelists will give their five minute presentation and
at the conclusion of the presentations I will then ask
questions of all of the witnesses at that time.
So with that, Janie, we will go to you, welcome to the
Committee.
STATEMENT OF JANIE LEASK, PRESIDENT/CEO, FIRST ALASKANS
INSTITUTE
Ms. Leask. Thank you. For the record I'm Janie Leask. I'm
President and CEO of First Alaskans Institute. It's a statewide
Native non-profit which houses the Alaska Native Policy Center.
I testified in Juneau on the $1,200 rebate and the energy
issues there, and one of the things that I will cover today is
a little bit of research that the staff has done in the Policy
Center really taking a look at seven villages and comparing
them to the cost of Anchorage on a number of different levels.
We really used Anchorage as a baseline.
But first, I would like to thank the Anchorage legislators
who are here today and thank you for inviting them. As we know,
rural Alaska does not see legislators out in the rural areas
very often, and I think that it's something, especially since
the state does have a little bit more money, that it would be
nice to have rural legislators go to more villages to really
see first-hand what's happening, so I really appreciate your
invitation to them and for them coming today.
Our Alaska Native Policy Center collected information and
we researched the cost of fuel/gas/energy consumption and cost
of goods in the villages of Emmonak, Elim, Grayling, Kiana, Old
Harbor, Stebbins and Togiak and these were just randomly
selected from around the state. We looked at the consumption
overall of energy in rural Alaska. Rural Alaska consumes less
energy, while paying more for that energy. I think those of us
who have been around and on top of that topic, it's kind of a
no-brainer. But over the three year period that we tracked
these communities, we were able to get some data on them from
2005 to 2007, on an average monthly usage, the seven villages
surveyed consumed less energy than Anchorage. Anchorage
households used more than 500 kilowatts of electricity while
rural households range from 280 to 430 during that same time
period. Rural residents, as I said, also pay more per kilowatt
hour than Anchorage residents do, even with the current rate of
PCE (power cost equalization), rural households in these seven
communities paid anywhere from 19 to 30 cents per kilowatt
hour, well above the 9 to 10 cents that Anchorage residents--
Anchorage households pay. In some cases the average monthly
bill for electricity in rural Alaska is twice that of
Anchorage. And without power cost equalization, the villages
that we sampled would pay in the range of 50 cents per kilowatt
hour, which is absolutely incredible.
According to the Division of Community and Regional
Affairs, the Director's report, the average statewide price for
heating fuel #1, the heating fuel used to heat homes, in June
of this year was about $5.51 per gallon with prices for heating
oil ranging from $1.30 to over $9 per gallon.
The seven communities are paying more than the average
price, the average price for a gallon of gas was $5.35 at the
time that we did this study, and, again, the seven communities
are above that average with prices ranging up to $8.35 per
gallon for gas. I'm sure that has probably come down some with
the decrease in gas prices.
We then took a look at what the USDA and the University put
together, a marketbasket of goods, and we sent a list out,
faxed a list out to the villages and asked them, could you
please go to the grocery store and take a look at these goods
and we compared them with Anchorage, and we were able to get a
majority of the villages returning our faxed list. Then we
compared the cost of food and non-food items to the same ones
in Anchorage. We found that it cost between $69 and $120 more
to buy the same basket of goods in the communities that did
respond over Anchorage. Results published by the Department of
Labor and the University of Alaska--Fairbanks also paralleled
these findings.
Just as an aside, I met with a group of outside funders
that traveled to Alaska at the invitation of the Rasmuson
Foundation. They flew from Seattle out to Bethel and then out
to--traveled to some of the communities and were just shocked
at the prices that were in the stores. I'm always really glad
that outside funders and outside public policy makers and
people who contribute to our state are able to do that and
really see what the real prices are.
We also took a look at travel. The average airfare prices,
beginning in July 2008, we found the average roundtrips between
Anchorage and the seven communities ranged between $709 from
Stebbins to $1,220 from Elim.
Senator Murkowski. From Elim to Anchorage?
Ms. Leask. From Elim to Anchorage, roundtrip. One of our
staff members is a recent--came into Anchorage, moved his
family last fall, about a year ago and he's from Mekoryuk, and
he was saying that a roundtrip for him to go into Anchorage
from Mekoryuk was well over a thousand dollars, for one person,
not the entire family, just one person. He cut back his
subsistence, he was going to go out, his mother asked him to
come out to the village to help her with gathering fish for her
fortunately he had an older brother living in the village. He
just couldn't pay the price for an airline ticket to go out to
help his mother gather food for the wintertime. So the
increasing cost of flying in and out of rural Alaska really
hinders rural residents ability to come in, as you had
mentioned for services, and also for shopping, for a lot of
other trips and for health. It makes the cost of doing business
in rural Alaska even more expensive.
I had the, I don't know if it was privilege, but when I was
on the board of Commonwealth North we did an urban/rural study,
and one of the things that we came out with was the inter-
dependency of rural Alaska and urban Alaska in our state. One
of the things that the report stated is that, and it's a quote,
``a basic element of the envisioned social and economic
partnership between urban and rural Alaska is the recognition
of people's right to support their families in the manner they
choose and in the location of their choice.'' It further said,
``likewise, an equally important goal is to foster
understanding of the economic, political and social inter-
dependence of rural and urban Alaska, so that all Alaskans
truly understand that Alaska's future depends on cooperation
between urban and rural Alaska.'' I think that this just points
out that Anchorage is Alaska's largest port, it's the gateway
to shipping goods to rural Alaska, a healthy economy of rural
Alaska bodes well for urban Alaska and I think that we know
that. The cost of subsistence gathering and people are making
choices of whether or not that they can afford to go out and go
fishing or whether or not they can afford to fuel up their ATV
to go out subsistence hunting and collecting berries. As store
bought food becomes more unaffordable and subsistence becomes
more expensive and out of reach for the local people, you have
to ask the question, okay, what's left? It's a really tough
question. I hear around in conversations and I read in the
Anchorage paper people saying that rural people have a choice,
you know, what if they just pack up their bags and move if it's
too expensive. The response that I say is, yes, we do have a
choice, but, yes, we choose to live in our homelands and where
our grandparents grew up and this doesn't mean that we're not
interested in cost savings, in doing what we can in rural
villages to make life affordable. Out-migration is very real,
we're seeing it, I talked to people who serve Alaska Natives in
Anchorage and the infrastructure there is bulging at the seams
and, you know, quite frankly I think it's going to get even
worse once the Permanent Fund and the Energy Rebates come out
and hit. I think people may use that money to move, we've also
heard that, although that's not a statistic that we can prove
at this point in time. But in the long-term, I thought the
rebate was necessary in order to address what happens at the
first freeze, but at the same time is not a long-term solution
and I think that we, as Alaska Native people, state of Alaska
and certainly the Federal Government, we all need to work
together in collaborating and come up with some long-term
solutions. I've got some ideas that I jotted down and I'll wait
until the rest of the panel has spoken.
Thank you.
[The prepared statement of Ms. Leask follows:]
Prepared Statement of Janie Leask, President/CEO, First Alaskans
Institute
Thank you for the opportunity to testify at today's field hearing
regarding the effects of the energy crisis on Alaska people, especially
in rural Alaska.
My name is Janie Leask. I'm President/CEO of First Alaskans
Institute, a statewide Alaska Native 501(c)(3) non-profit organization
whose mission is to advance Alaska Natives through community
engagement, information and research, collaboration, and leadership
development. First Alaskans has three major focus areas-leadership
development, community investments and public policy research for, and
on behalf of, Alaska Native Peoples through the Alaska Native Policy
Center. I'm here today to provide testimony on the effects of high
energy costs on the Alaska Native village lifestyles and Native
institutions in light of the current energy crisis.
In light of the energy crisis in rural Alaska and its detrimental
effect on the well-being of rural residents, Native and Non-Native
alike, households, and key infrastructure, FAI is on record advocating
assistance--be it state or federal--by the ``First Frost'' (winter
freeze up).
When I refer to ``rural'' in this testimony, it's important to
recognize the term ``rural Alaska'' encompasses both Native and non-
Native people with non-Natives making up the majority (60 percent) of
the population.
It's imperative that we as a state make the investment in short-
term aid while looking for long-term solutions to our current situation
because our communities will be facing immediate problems once the
first frost occurs.
I'd like to take some time to speak to this crisis, and the
information First Alaskans has put together. We've collected and
analyzed data and information from seven villages across the state.
This data describes the state of economic conditions in rural Alaska
and provides a comparison to urban Alaska, using Anchorage as a
baseline.
Through our snapshot we have verified the obvious for those
familiar with rural Alaska--economic conditions in rural Alaska are
under-developed while the cost of living is high.
Economic Conditions in Rural Alaska Are Under-developed
Rural Alaska is largely remote, disconnected from the road system,
and faces extreme and changing environmental conditions. Villages in
rural Alaska have an underdeveloped cash economy and a high
unemployment rate--May 2008 Department of Labor data shows that 17 out
of 27 Boroughs and Census Areas have unemployment above the state
average of 6.7 percent, and with some like the Wade Hampton Census
Area, it's as high as 22.6 percent.
The Median Household Income for these seven communities surveyed is
well below that of Anchorage and the state average. Conditions are
compounded by the high cost of energy, transportation, and the high
cost of living.
The Cost of Living in Rural Alaska Is High
The staff of our Policy Center researched the cost of fuel, gas,
energy consumption, and cost of goods, in villages of Emmonak, Elim,
Grayling, Kiana, Old Harbor, Stebbins, and Togiak. These communities
were randomly selected and are located in various regions of the state.
Although each community is different in its traditions, culture, and
environment, they all share the same issue of the current energy
crisis, which is creating a real sense of uncertainty for the coming
winter.
According to the data we collected, rural Alaska consumes less
energy while paying more for that energy. Over a three-year period from
2005-2007 on an average monthly usage, the seven villages surveyed
consumed less energy than Anchorage. Anchorage households used more
than 500 kWh, while rural household usage ranged from about 280 to 430
kWh during that same time period.
Rural residents also pay more per kWh than Anchorage residents.
Even with the current rate of PCE, rural households in the sample
communities pay from 0.19 to 0.30 cents per kWh, well above the 0.09 to
0.10 cents that Anchorage households pay. In some cases the average
monthly bill for electricity in rural Alaska is twice that of
Anchorage. Without PCE, the villages sampled would pay in the range of
0.50 per kWh.
According to the Division of Community and Regional Affairs,
Director's report--the average statewide price for heating fuel (#1)--
the heating fuel that's used to heat homes--in June of this year is
$5.51 per gallon with prices for heating oil ranging from $1.30 to
$9.10 per gallon ($3.36 without the North Slope subsidy to residents).
According to our recent survey, all the seven communities are paying
more than the average price. The average statewide price for a gallon
of gas is $5.35, and again all seven communities are above the average
with prices ranging from $3.45 to $8.35 per gallon.
First Alaskans Institute looked at the USDA and UAF basket of goods
and compiled an abbreviated list using goods (food and non-food items)
that are commonly consumed in rural Alaska and asked the seven
communities to price the abbreviated basket of goods. Four of the seven
villages responded with prices and quantities for goods. We then
compared the cost of food and non-food items to the average cost of the
same items in Anchorage and adjusted the basket of goods for missing
items. We found that it cost between $69 and $120 dollars more to buy
the same basket of goods in the four responding communities than it
does in Anchorage. Results recently published by the Department of
Labor and the University of Alaska Fairbanks parallels these findings.
Having noted these price differentials, it's important to
acknowledge that the purchasing power of $1,200 in rural Alaska is not
the same as $1,200 in urban communities.
The Policy Center also looked at the cost of getting to and from
the seven villages surveyed. Staff looked at a ``snapshot'' of airfare
prices at the beginning of July 2008. We found that roundtrips from
Anchorage to the seven communities ranged between $709 (Stebbins) to
$1,220 (Elim).
The increasing cost of flying in and out of rural Alaska hinders
rural residents' ability to come to urban areas for services, makes the
cost of doing business in rural Alaska more expensive and could
potentially impact the long-term economy of urban Alaska.
The Human and Cultural Importance of Rural Alaska
Rural Alaskans add rich diversity to the fabric of the state of
Alaska. In 2000, the U.S. Census reported that the population of the
rural areas was comprised of about 60 percent White alone and in
combination with other races. The Census showed about 38 percent Alaska
Native alone and in combination with other races, and about two percent
was made up of other racial combinations.
We have learned that migration to and from rural areas is not a
one-time event. Rather, migration is a process in which people move at
different times and for different reasons, and it is often a
reoccurring event in the life of Alaskans. Alaska Natives living in
rural areas live on lands defined as theirs by their ancestors,
histories and deep cultural roots. In rural Alaska, residents use both
ancient traditions and the more modern ways of living in their daily
lives. This is true for Alaska Native and non-Native alike. Each
community has seasonal subsistence gathering, and for this, residents
use tools and motorized vehicles as well as traditional means of
hunting and gathering.
As the energy crisis continues to escalate, rural residents are
increasingly unable to sustain themselves by subsistence activities
alone. For some families, the price of gas is cost-prohibitive and
precludes the gathering of food. Rural families depend on subsistence.
Under normal circumstances, a family can store fish, birds, berries,
caribou, moose, reindeer, and much more for their livelihood. Every
seasonal activity and food gathering is tied to the fact that people
need to live and survive. As store-bought food becomes unaffordable and
subsistence becomes more expensive and out of the reach of local
people--what is left?
Items such as freezers, four wheelers, out-board motors, and store-
bought goods, purchased in urban areas for a fairly decent price, can
be shipped to rural Alaska. But these items are flown and barged in at
an extraordinarily high price because the cost of fuel it takes to ship
them.
We've heard over the years how rural and urban Alaska remain
dependent on each other. Commonwealth North--a statewide public policy
``think tank''--published the ``Urban Rural Unity Study'' in 2000. As
part of that study, they described an ``ideal'' Alaska and cited a
number of characteristics of that society which would honor and respect
the diversity of its people and recognize the many areas where urban
and rural interests coincide.
The report stated:
``A basic element of the envisioned social and economic
partnership between urban and rural Alaska is the recognition
of people's right to support their families in the manner they
choose and in the location of their choice. For this reason,
one of the goals is to encourage the economic viability of the
smaller `rural' locations in Alaska and to maintain the
diversity of cultures and lifestyles in the state. Likewise, an
equally important goal is to foster understanding of the
economic, political, and social inter-dependence of rural and
urban Alaska, so that all Alaskans truly understand that
Alaska's future depends on cooperation between urban and rural
Alaska.''
Anchorage is Alaska's largest port and is the gateway to shipping
goods to rural communities. Anchorage, Fairbanks and other major hub
communities are also the headquarters of a number of businesses and
corporations which provide goods and/or services to rural Alaska. The
healthy economies of urban and rural Alaska are inter-dependent.
I've heard such statements as ``why don't rural residents just
leave their villages . . . they have a choice of where they want to
live.'' Yes, we have a choice--we choose to remain in the lands of our
ancestors which doesn't mean we're not interested in living smarter
through alternative forms of fuel, winterizing and/or upgrading housing
which is better suited for the conditions found in our communities, and
making better use of the resources we have. But this will take time--
which is why we support a short-term ``fix'' while also supporting an
accelerated look for sound, practical and affordable energy
alternatives for all communities of our state.
In the short term, I don't think any rural hub--whether it's
Bethel, Anchorage, Fairbanks or the Valley--is prepared for a mass
influx of rural residents and the subsequent impact on their
community's infrastructure. And rural residents don't want to leave
their homelands. So we need to work together--across party lines and
with all Alaskans at the table.
First Alaskans Institute is among several Native organizations that
are in support of the recently passed ``Alaska Resource Rebate
Program.''
In addition to the testimony I've offered today, I also want to
voice our support of the Alaska Federation of Natives' top 5
priorities:
1. Strengthen the Power Cost Equalization Program by fine-
tuning its mission, adding more resources and expanding the
eligibility requirements;
2. Buy down debt of rural utilities in order to reduce costs
passed on to consumers and include a price cap on fuel stock
purchased prospectively.
3. Expand and support bulk fuel purchasing, transportation and
cooperative purchase agreements.
4. Provide a family fuel subsidy to help meet the immediate
crisis.
5. Make a sizeable investment in projects that promote
renewable/alternative energy and conservation. The high cost of
fossil fuel is not going to go away. We need to start investing
in alternative/renewable energy now.
Based on the evidence we found, we believe there is compelling
evidence that families in rural Alaska need the additional monetary
income to offset the increasingly high cost of energy and its
subsequent impact felt at the local level.
We also believe by working together to make this a better state, we
will improve our collective future. Again, I thank you for the
opportunity for this testimony and urge you, Senate Committee on Indian
Affairs, to provide energy assistance or a similar piece of action
which will provide a much-needed short-term solution to the energy
crisis facing our state.
Senator Murkowski. Okay, thank you, Janie. And next we will
turn to Mike Williams. Mike is currently the Chairman of the
Alaska Inter-Tribal Council, along with many other notable
distinctions, but we're pleased to have you with us this
morning, Mike.
STATEMENT OF MIKE WILLIAMS, CHAIRMAN, ALASKA INTER-TRIBAL
COUNCIL
Mr. Williams. Senator Murkowski, I'd like to welcome you to
our homelands here and the other staff, welcome home Megan, I
know I met you over there, and Chuck. And welcome, finally, to
you Mr. Walsh to our lands. I live 30 miles in a small village
with my family, my grandkids and my dogs as well----
Senator Murkowski. Your dogs.
Mr. Williams.--in the village of Akiak. I'd like to thank
Asa'carsarmiut Native Council for allowing us to do business
today in their land here in Bethel.
Again, my name is Mike Williams, I'm currently the Chairman
for Alaska Inter-Tribal Council, which is a consortium of
federally recognized tribes from throughout Alaska, and there's
229 federally recognized tribes. And I also am the area Vice
President for the National Congress of American Indians and
also president for our school district board of education. And
also vice chair of the Rural Community Action Program, which
provides a lot of services out in rural Alaska. And this area,
of course, is the poorest of the poor in the nation per capita.
And I agree with some of the comments that Janie and Ralph have
made.
You know I just have a few comments and I'll make my
comments short.
We have sustained ourselves here in rural Alaska for
thousands of years. I remember as a child growing up in a small
village, we had only two or four hours a day of electricity
with no other appliances that we have today. We did not have
electricity in the summer months. We utilized our ways of
preserving fish, game and what we gathered throughout the
summer. I remember we had a small windmill in Akiak to provide
electricity to our small hospital. Times have changed very
quickly. When we have all the appliances that we have in our
communities and our homes, our villages are providing
electricity and oil and gas for motors and snowmachines to
engage in subsistence activities. We have over 200 tribal
communities throughout Alaska that are experiencing problems of
providing sustainable power fuel to our members, or having that
access to conduct these activities in each community.
I wanted to make a few recommendations and these are not
all the recommendations, the resolutions that Inter-Tribal
Council had and the National Congress of American Indians in
our energy resolutions, I will have them forwarded before
September 12th to your office and they'll be on record and I
cannot cover those in five minutes.
One, we need immediate relief for our fuel, which the costs
have skyrocketed in the last year. We need to do assessments on
each of our community's needs and you need to consult with each
tribal government. We are fortunate here in our areas in
Alaska, in our villages, the tribal governments are the ones
who are providing all of the services that our tribal citizens
need for basic services at this time.
Two, the federal and state governments need to take
immediately action to subsidize transportation of all fuel to
rural Alaska. You know, how can we get around that? We need to,
you know, the transportation of goods coming into Akiak have
also skyrocketed and, you know, it's just really hard to get
the goods from Anchorage or Seattle or elsewhere.
Three, we need immediate capital to harness the wind,
solar, biomass, hydro, and have each tribal government develop
their alternative energy. This can be done right now with that
capacity and with the right kind of training for each
community. Because I agree each community has its own unique
needs and we need to do a thorough assessment and we can
develop these alternative energies right now for each
community. In my community hydro power is available right now
but we have no such capital to start right now. So I think
things that we can do to cut those costs can be done right now.
Four, we need immediate relief for operations of our
schools, community buildings, clinics and other public
facilities to include them in the power cost equalization model
that we currently receive. That is a good program but I think
we need to expand it more if we are going to be sustainable.
For example in Yupiit School District we have to cut $800,000
from our operations. Because of the cost of fuel this year, we
had to cut from the 30 percent of the budget to meet our
budgetary needs to provide education for our children. So
everybody's being hit by the cost, and especially our schools
and I wanted to lay that example. So cutting about a million
bucks from our education budget in a district is a huge hit
that I think it's going to have ripple effects throughout rural
Alaska, which we are trying to provide quality education and
the kids deserve that quality education.
Five, we need immediate capital to consolidate power
generation with several villages to connect them to cut costs
and make them sustainable into the future. Right now each
community is providing their own with the exception of the
Bethel to, for example, Bethel to Napaskiak, Bethel to Napakiak
or to the local immediate areas. But I think we have cluster of
the villages--that are in clusters that can provide in
cooperation with each other to provide one system to provide
power to each community; that will cut operation costs and
other costs.
So I think these things that we can do in the immediate
future.
And I really appreciate the opportunity to have field
hearings and consultation in Bethel right now, today. I really
appreciate that and we've been trying to suggest that these
ongoing consultations with the federally recognized tribes be
ongoing every year to find out where each of the communities
are before any more out-migration happens.
I really appreciate and thank you for listening to my
tribal concerns about the energy issues that have profound
effects on our lives every day in rural Alaska. And I just
suggest, again, to have ongoing dialogue with each community
and do things right now to have our villages sustain themselves
now and into the future. So we need short-term relief and we
need to do some long-term planning and I think those are on the
way.
I really appreciate the five minutes Honorable Senator
Murkowski.
Thank you.
[The prepared statement of Mr. Williams follows:]
Prepared Statement of Mike Williams, Chairman, Alaska Inter-Tribal
Council
Greetings! My name is Mike Williams, currently Chairman of the
Alaska Inter-Tribal Council, Area Vice President for the National
Congress of American Indians, President of Yupiit School District Board
of Education, Vice President of Rural Community Action Program, Akiak
Native Community Tribal Council.
We have sustained ourselves here in Rural Alaska for thousands of
years. I remember as a child growing up in a small village that we had
only 2-4 hours a day of electricity, with no other appliances that we
have today. We did not have electricity in the summer months. We
utilized our ways of preserving our fish, game and what we gathered
throughout the summer. I remember we had a small wind mill in Akiak to
provide electricity to our hospital. Times have changed very quickly
when we have all the appliances that we have in our communities and our
villages are providing electricity and oil and gas for our motors and
snowmachines to engage in subsistence activities. We have over two
hundred Tribal Communities throughout Alaska that are experiencing
problems of providing sustainable power, fuel to our members.
I want to make a few recommendations.
1. We need immediate relief for our fuel which the cost have
skyrocketed in the last year. We need to do assessments on each
of our communities needs and you need to consult with each
Tribal Government.
2. The Federal and State Governments need to take immediate
action to subsidize transportation of all fuel to rural Alaska.
3. We need immediate capital to harness the wind, solar,
biomass, hydro, and have each Tribal Government develop their
alternative energy. This can be done right now.
4. We need immediate relief for operations of our schools,
community buildings, clinics, and other public facilities to
include them in Power Cost Equalizations model that we
currently receive.
5. We need immediate capital to consolidate power generation
with several villages to connect them to cut costs and to make
them sustainable into the future.
I recommend that we have ongoing consultation with each of Alaska's
Federally Recognized tribes every year to review our status.
I really appreciate and thank you for listening to our Tribal
concerns about the energy issues that have profound affect on our daily
lives in Rural Alaska. Thank you.
Senator Murkowski. Thank you, Mike, appreciate it.
Appreciate your leadership on so many different levels.
And now with us this morning we have Chris Mello, who is
with the Alaska Energy Authority, we welcome you and look
forward to your comments.
STATEMENT OF CHRIS MELLO, PROGRAM MANAGER, ALASKA ENERGY
AUTHORITY
Mr. Mello. Well, thank you, Madam Chair. For the record I'm
Chris Mello. I'm Program Manager with the Alaska Energy
Authority. I oversee design and construction of energy projects
in rural communities throughout the state.
I wanted to talk about how the state is moving rapidly to
help reduce the dependence on fossil fuels. House Bill 152
establishes a renewable energy fund and initially there is $100
million available for the development of renewable energy
projects with continued funding over the next five years. The
request for application was originally scheduled to be issued
on the 29th but that schedule has slipped a little bit and it
will be out next week. The advisory board has been named and is
working on draft regulations right now. The advisory board will
review the applications and prepare recommendations for
consideration and award by the Legislative Budget and Audit
Committee, and we expect that this process will be completed in
the late fall. The selection criteria for these grants is based
upon economic and technical feasibility, energy cost per capita
and statewide balance and matching funds.
From the State's perspective, continued federal support is
critical to help us meet the challenge of high energy costs.
Federal funding of the Denali Commission has been in steady
decline over the last several years. The Alaska Energy
Authority has constructed about 60 bulk fuel storage facilities
and 32 powered generation facilities in Bush communities
throughout the state in partnership with the Denali Commission
using federal funds, and, however, these programs have not yet
been completed. We all know that it's important to reduce our
dependence upon diesel for heating and power generation in
rural communities, but it's not possible at this time and in
the foreseeable future to completely eliminate the need for
diesel fuel in Bush Alaska. Small communities that are off the
grid that have hydro and other alternative energy potential
must have a modern diesel powerplant with modern controls into
which those alternative energy resources can be integrated.
You just can't run a village on wind and you just can't run
it on hydro.
And the same thing can be said for tank farms. The best way
for a community to get full value out of every gallon of diesel
is not to lose any through leaks and spills. So energy
conservation for fuel starts with a tank farm that does not
leak. And energy efficiency in a community starts with a diesel
powerplant with a modern control system that shows about a 26
percent increase in efficiency over the previous powerplant. It
also helps to provide stack and jacket heat recovery systems
that can provide clean heat and continuous heat for schools,
health clinics and other public facilities.
Also from the State's perspective the Congress has approved
Renewable Energy Deployment Grant Program last year and it
authorized up to a 50/50 matching grant to pay for construction
of renewable energy projects in Alaska. This program needs to
be implemented by the Department of Energy and it needs to be
funded. Likewise with the Authorized Energy Policy Act of 2005.
There are potential renewable energy projects on Native lands
throughout the state, including very viable potential projects
right here in the Bethel region for wind and biomass.
Lastly, we'd like to see support for the Regional Biomass
Energy Partnership. The Department of Energy eliminated its
funding for this program in 2006. The Alaska Energy Authority
has continued development in this area on a lower level and
recent works include developing small cleaning burning wood
boilers to heat schools and community facilities, helping the
city of Craig do a sawmill waste fired heating system and
testing biodiesel and assisting fish processors in development
of portable fish oil rendering module.
And with that I want to thank you for the opportunity to
give testimony and my testimony is complete.
[The prepared statement of Mr. Mello follows:]
Prepared Statement of Chris Mello, Program Manager, Alaska Energy
Authority
Senator Murkowski. Thank you, I appreciate that. And let me
just start with my questions to you first and follow up with
some of the comments that you have made there.
We recognize that we have some funds available at the state
level through the Renewable Energy Grant Program and I think
that that's considerable opportunity for us and we look forward
to all that being set in place so that communities can begin to
get moving. What kind of response do you anticipate that you
will receive from the Native communities, from places like here
in the region in terms of requests for assistance for those
renewable energy grant funds?
Mr. Mello. Yes, overwhelming. We'll receive overwhelming
response.
Senator Murkowski. And I appreciate that you're still
putting in place kind of the procedures and the mechanisms, but
is this going to be a situation where you've got to evaluate,
you've got your pot of money, you've got your $100 million, and
you've got to evaluate from a cost benefit perspective where
we're going to get the most bang for the buck, if you will, is
that going to disadvantage smaller communities from being
successful applicants to those grant monies?
Mr. Mello. Well, at the risk of speaking for the advisory
committee, I think that is going to be one of the criteria, to
see to it that that does not happen.
The first part of your question is what sort of response
we're going to get. Earlier this year we had a $5 million
request for proposals from the Denali Commission for renewable
energy projects. We received applications in excess of $2
billion for that.
Senator Murkowski. Right.
Mr. Mello. So I would expect that this won't go unnoticed.
I would expect that we will receive grant applications.
Earlier this week I was traveling in Copper Center,
Gulkana, Gakona and communities in that region talking about
wood heating biomass projects, and they're very enthusiastic
and they're looking to put their grant applications together. I
think smaller communities that have potential are going to
receive a good review and a fair judgment on that. One of the
criteria that the advisory committee is looking at is a
statewide balance.
Senator Murkowski. Yes.
Mr. Mello. So it doesn't just go to--weighted to one region
or another, there are small communities throughout the state
that have great needs and also have good energy potential and I
don't think that that will be overlooked.
Senator Murkowski. What kind of technical assistance, you
know, can you offer? You look at a community like in Anchorage
or Fairbanks or some that have--they've got government systems
in place, they've got grant writers, they've got analysts,
they've got their projects ready to go yesterday and they've
got it fully mapped out and they'd be ready to submit an
application, but if you've got a--you know, let's take Mike's
community here, at Akiak, you know, you say you've got wind
potential and you had windmills in the past so you know you've
got an opportunity, you know you've got the resource there, but
you don't have the technical expertise to submit your grant
yet, is the State going to be helping to facilitate anything in
that vein to help these smaller communities?
Mr. Mello. The short answer is yes.
Senator Murkowski. Okay.
Mr. Mello. And how that assistance is going to be provided
is yet to be sorted out, we are a small agency. But a lot of
the information about what resources are available for all
sorts--all disciplines within the greater subject of renewable
energy, that information does exist within the Department of
Natural Resources and the Alaska Energy Authority.
Senator Murkowski. Right.
Mr. Mello. So there's a pretty good sense of what the wind
resources are----
Senator Murkowski. Right.
Mr. Mello.--the hydro resources are, geothermal resources
are, and so I think that that assistance is going to be
provided. It just doesn't make sense to overlook a community
because they didn't have the wherewithal----
Senator Murkowski. Right.
Mr. Mello.--to get their application filled out right.
Senator Murkowski. And perhaps we'll hear from our federal
witnesses whether there is opportunities for this kind of
technical assistance, if you will, to help facilitate these
communities, get to that level where they're able to compete
with some of the bigger dogs that are seeking those same
sources of funding. But it's important as we move forward that
these processes are in place----
Mr. Mello. Yes.
Senator Murkowski.--and that they work equitably, urban
versus rural, big community versus smaller community. I wanted
to ask the question because each of you in one way or another
spoke to the issue of conservation, whether it's making sure
that you have fuel storage tanks that don't leak or what you
can do within respective communities. I was out in Dillingham
earlier this year and I was there the week after the spring
barge had arrived and the sticker shock for the people in
Dillingham was just, you know, phenomenal because the price had
literally had gone up well over a dollar just literally
overnight. And I was talking to a couple there living on a
fixed income and I said, well, you know, conservation, this is
really going to be the most immediate thing that we can do and
the response to me was, Lisa, you don't think that every
morning we don't think about how to conserve energy and you
don't think we haven't been doing this for years. So the
question to you is, you have been conserving, you have been
thinking smart, we're now to a point where, talking to the
folks here in Bethel, what you saw from just last month's
utility bill, seeing, you know, an increase that is almost
double what you paid last month for your utility, how can we
provide all these people in this room here some further tips on
what more can you do as a family, as a community, as an agency,
from AFN's perspective, from the Native Corporation's
perspective, what can you provide in terms of additional
suggestions that, you know, maybe don't cost a lot of money,
but that you can implement today?
Anybody have any suggestions?
Ralph.
Mr. Andersen. Thank you, Madam Chair.
I think in a lot of cases it's not so much additional
information but getting basic information out.
Senator Murkowski. Does AFN do anything like that
currently?
Mr. Andersen. AFN hasn't yet started anything like that but
we're planning to have, as part of our convention, a whole
section focused on energy, including booths and information----
Senator Murkowski. Well, isn't Alaska Marketplace looking
at specifically giving grants to renewable energy ideas
throughout Alaska?
Mr. Andersen. Yes.
Ms. Leask. Yes.
Senator Murkowski. Can you speak to that?
Mr. Andersen. Janie can probably speak to it better than I
because, you know, I'm with the energy working group.
Senator Murkowski. Right.
Mr. Andersen. But I did receive information on the recent
call issued by the Marketplace with the real strong preference
for those that--for the proposals that do encourage either
conservation and development of alternatives or some other
energy or some other energy related project that helps us reach
our solution.
And I guess it really depends, Senator, on what level.
Senator Murkowski. Yes.
Mr. Andersen. At the family level, I think, it's like the
couple told you in Dillingham, my home town, that we have been
practicing energy conservation for a long time. I think that
tips can be provided in brochures. Those are things that we're,
in our region, are beginning to look at.
I think the bottom line, though, is that--and as you
mentioned in your opening remarks, there are a number of
regions and areas that have developed energy plans and
strategies and policies and those activities such as outreach
and such as providing information are an essential part of
those. I mean Bristol Bay, we have a plan, I've submitted a
copy to your staff earlier. But I think the real problem is in
the implementation.
Senator Murkowski. Yes.
Mr. Andersen. Is with funding, especially. Mike and others
may have mentioned, you know, that we do have these policies
and plans but really it's how do we take the next step, okay,
with the BIA/TPA funding, for example, being absolutely flat
for the past 20 years, that causes problems in being able to
develop new programs. I met, or just spoke briefly with Bob
Middleton a minute ago because at BBNA we're trying to--and
other regions as well, are trying to develop tribal energy
programs but that we don't have funding to implement them. We
can develop the plans and strategies and policies and mission
statements and goals and outcomes but kicking them into gear
takes money which we don't have.
Senator Murkowski. Yes.
Mr. Andersen. And I think the solutions to getting more
information out can be done at different levels and I think we
all need to, you know, become more aware of the need for that.
Senator Murkowski. Well, and I think that is something that
we can do whether it's AFN or First Alaskans or, I know, AEA,
the tribal councils, we've got our own communication networks.
I know that on my website we've got a conservation tip of the
week, and we just solicit ideas from people around the state
and we post them. I mean it's nothing earth-shaking. But I
think part of the frustration is, is that everyone thinks that
we have to have a big energy plan in place before we can start
implementing things, and the reality is is that each one of us
can be doing small things within our own home, within our own
businesses that cumulatively can make a difference. And I think
it helps when we share those ideas, and help to facilitate kind
of that community action from a volunteer perspective first,
and then we can work on that bigger--can you speak to the
Alaska Marketplace and what they are doing with urging
innovation in renewable energy areas?
Ms. Leask. I got the same email that Ralph got.
Senator Murkowski. Okay. I saw the advertisement in the ADN
so----
Ms. Leask. But I know that energy is one of the four
categories that they're looking for for innovative projects for
the rural Alaska Marketplace, which will be announced during
the AFN Convention. I know it's a relatively short timeframe
but I know that that's one of them.
Speaking to what people can do, I think RurAL CAP has done
a really good job through its weatherization program in trying
to be proactive and getting tips out to people on ways people
can save money by weatherstripping or by programmable
thermostats or maybe even going to what Juneau had to do, which
brought a smile to my face, when, I mean nobody likes to see
anybody suffer or go without, but at the same time they
unplugged everything in their house and then they started
plugging things in to see what took juice and then what they
really needed to have plugged in, so I think that that is one
area, you know, that people can do.
You know, but I think we need--the Interior Regional
Housing Authority is doing a terrific job in trying to build a
house for rural Alaska. Many of the HUD houses that we have in
the villages, the design came from out of state and didn't take
any consideration in of our winters, of our climate, or where
the house was going, it was just a cookie-cutter, here's a
design so I think that the Interior Regional Housing Authority
is doing a prototype that I think can be used and I think we
can put some more money into retro-fitting houses and glass or
putting what--another thing that people can do is to, during
the wintertime, is to put either foam or something, curtains,
at a minimum, over windows, which are the source of big energy
leaks in housing.
But I think in any of this, we do need to have
weatherization, we do need to have collaborization but we also
need to have jobs in rural Alaska and whether those are
seasonal jobs or whether those are related to the pipeline or
the CDQs on fisheries, but we really do need to have rural
Alaska in order to stem the tide because you do get the young
people going back to their villages very idealistic and really
wanting to go to work there but there's really not the jobs
that's available so we can talk weatherization and we can talk
about providing and saving money and fuel to make villages more
affordable but we also have to talk about the jobs, too.
And, finally, I think that whatever we do, we need to bring
state dollars to the table, we need to bring federal dollars to
the table, we need to bring non-profit dollars to the table,
regional corporations. One of the things that we've decided
that we're going to do at First Alaskans is try to be a
clearing house for what everybody is doing with respect to
affordable energy and renewable energy. I didn't know, for
instance, that in the Bering Straits region, Bering Straits
Native Corporation put $6 million into windmills in their area,
you know, and to try to share information among different
Native organizations and groups.
Senator Murkowski. I think that we can gain so much from
the work that has been done in other parts of the state where
maybe different challenges----
Ms. Leask. Yes.
Senator Murkowski.--but still challenges nonetheless, and
to hear that First Alaskans will assume that role as a clearing
house, I think, is good, it's very important because I think we
need to recognize that through the sharing of the information
we're probably going to be a step ahead when we start in some
other areas, perhaps from the mistakes or the successes.
Mike, I wanted to ask you, you made the comment about the
need, and I don't want to misinterpret your words, but to
subsidize fuel to rural Alaska was what I wrote in my notes.
One of the things that kept coming about repeatedly yesterday
in my conversations with people, whether it was in the grocery
store or talking at dinner, was the fact that, here, in the
region, everything comes to you by either air, very expensive,
or your goods come up via barge, and the prices that you have
to pay are now even higher because in order for that barge to
get there they got to fuel the barge and that's expensive and
so the cost that is added on to the goods is just that more.
You think about the rest of the state and the infrastructure
that is provided to them, through federal or state dollars,
whether, you know, you've got the railbelt, you got a railroad,
you got roads that connect from Seward up to the Interior area;
in Southeast you've got the Alaska Marine Highway System that
in a lesser extent is kind of their highway, but here, you
really don't have your transportation infrastructure that is
your state or your federal infrastructure. You've got your
barge company that's bringing the goods up, whether it's the
materials to build your home or the food supplies that you feed
your family with. Anybody have any suggestions as to how we
can, you know, you say subsidize fuel costs, I guess I'm
looking at the situation of how you move things to the region
as being a major impediment and a cost multiplier.
Mr. Williams. Yes, first of all before I answer that
question, as vice chair for Rural Community Action Program and
I've been on that board for the past 15 years working on
weatherization projects and also working on the portable homes
for rural Alaskans. And I commend RurAL CAP for providing tips
and information how we can conserve fuel in each community, and
to cut down on or do some assessments on green house gases and
et cetera, on how much carbon you produce in each household. I
think more weatherization programs in each community must be
implemented and if we're going to do an impact on cost
reduction or saving energy in rural Alaska we need to do that
and we need to provide funding to each community because we're
doing several projects here and there.
And I would also recommend that each housing authority,
that they build these energy--five star energy efficient homes
right now. It can be done. For example there is Tim Meyers from
Bethel that has been doing some stuff to do minimum fuel
consumption to each house and he's done quite a few things
right now and I think it can be implemented with all of these
housing projects that are going on each day in our areas and I
think Janie alluded to these designs are being built or being
copied from, for instance, from New Mexico.
Senator Murkowski. Yes.
Mr. Williams. So I just wanted to put in that many rural
community action programs here in Alaska, our Native
communities are doing the same. So I think in terms of the
transportation costs, I think it's stemming from--I just hate
to point fingers at anybody but I think, you know, we have a
Federal Government that sets policy and, you know, why are we
in an energy crunch right now in this nation, you know, we're
not just the only ones who are paying the price right now. I
think that with all the profits that are going on with the only
companies and we read it every day in newspapers, that enormous
profits are being made and who's paying the costs, we are.
In terms of providing trans goods from Seattle and
Anchorage through air and through shipping, I just, you know,
wonder how we can, you know, provide lower costs of the
transportation of flour, rice, et cetera. But I think the
leadership of this nation must take action right now to make,
no matter where you live, that you make everything sustainable
into the future or else, you know, if we do not, you know,
where do we find funding for all of these projects and these
trust programs; it's from the Federal Government. And I think
it's the trust responsibility of the Federal Government to the
tribes here in Alaska and in each village, it is the
responsibility to provide that. But, you know, I think right
now with the limited amount of funding that we have it's been--
we've been trying to extend the value of the dollar. So I also
agree with Ralph's comments on those flat funding, you know,
we've been--the funding has been going down and/or flat and the
value of the dollar has gone down as well but, you know, I was
trying to think of how we can get assistance for this and I
think we can somehow but we know the cost of war, we know the
disasters that are happening, you know, we're providing money
for those issues that are going on. But I think this can be
done but, you know, those were my recommendations that----
Senator Murkowski. Thank you.
Mr. Williams.--we need to do something. For example, the
bypass mail. We've been depending on the fruits of the bypass
mail but when I hear that it's going to be on the line and if
we lose it then how can we transport a thousand pounds to Akiak
at reduced costs, and if we pay the same amount of cost of that
thousand pounds, then we can't afford it.
So I really wanted to see--throwing that out on helping us
sustain ourselves out here for the transportation costs
because----
Senator Murkowski. Well, we have so much that we could talk
about all morning and each issue will take us even further. We
do need to move on to the next panel.
Before we do, though, your comments remind me, though,
you're talking about the federal role and I'm sitting here in
my federal capacity, most certainly, but I think we also
recognize as Alaskans, that it is not just the oil companies
that are standing to benefit from the high prices of oil, the
state of Alaska and our treasury and our people are benefitting
a great deal. I view this as an opportunity for us, as a state,
as our treasury gains $12 billion from last year because of the
high prices of oil, that this is our opportunity to invest in
ourselves, to take that resource from a finite resource, if you
will, and help develop that infrastructure, the clean renewable
energy resource that will take this state into the future for
as long as we will be around. I view that as our opportunity to
invest in ourselves and feel that that challenge is there for
us, it is not just the Federal Government, it is not just the
local community, it is all of us and we've all stated that, but
we've got an opportunity now as a state to be very proactive in
making this happen.
So I know Janie, you're itching, but very, very, very
short.
Ms. Leask. Very, very quick. And I just wanted to say on
that line, at an AFN leadership meeting that was held on energy
a couple of weeks ago, one of the speakers who happens to be on
our board of trustees challenged the Governor to set aside, I
think it was $200 million a year, toward finding solutions and
coming up with innovative sources of renewable energy and start
implementing that.
Senator Murkowski. We can do it.
Ms. Leask. $200 million a year for five years.
Senator Murkowski. Yes.
Ms. Leask. And, you know, I totally agree with you, I think
the state of Alaska with our money, we're giving out lots of
different things but we're not really addressing the core.
Senator Murkowski. We're not investing in ourselves and
providing for the long-term solutions.
Ms. Leask. Yes.
Senator Murkowski. I want to thank each and every one of
you for your testimony. Please know that if there's anything
further that you would like included, that you can also submit
addendums to your statement. With that we can close out this
panel and bring up Panel No. 2, please.
Mr. Williams. Thank you very much.
Senator Murkowski. Thank you.
[Applause.]
Senator Murkowski. I will apologize for not giving everyone
a stretch break but we ran over a little bit with that first
panel and we don't want to short change Panel No. 2 here, so
we'll just keep moving. If those of you need to get out and
stand up, it's a little bit warm in here, but without
disturbing the proceedings here, we would encourage you to do
that. We're joined again this morning, Panel No. 2, by Mr.
Myron Naneng, Matthew Nicolai, Gene Peltola and Ron Hoffman.
Gentlemen, I welcome all of you, appreciate all that you do in
your respective capacities. And, Myron, if you would like to
lead off, Myron, of course, is the president of the Association
of Village Council Presidents located here in Bethel, thank
you, and good morning.
STATEMENT OF MYRON NANENG, PRESIDENT, ASSOCIATION OF VILLAGE
COUNCIL PRESIDENTS
Mr. Naneng. Good morning. Quyana (In Native) Chairman
Murkowski, welcome and welcome to all the staff and people who
are here today to hear testimony regarding an issue that's
really affecting each and every one of us in our own
communities. It's nice to have you back here in Bethel, Senator
Murkowski.
Senator Murkowski. Thank you.
Mr. Naneng. And it's the hub of the Yukon-Kuskokwim Delta.
The Association of Village Council Presidents is a non-profit
human and social service entity that represents 56 federally
recognized tribes that make up the region. You have brought the
committee here because while the energy crisis affects America,
it is crushing Alaskan villages. Current prices, as of this
week, updated from my written submission, written testimony, we
called around yesterday, the Lower Kuskokwim averages, from
Bethel, we have $5.98 per gallon for gas, which is up 63 cents
since June 25th. $6.43 per gallon for heating fuel, which is up
$2.02 per gallon. The Upper Kuskokwim averages $6.30 per gallon
for gasoline, $6.60 per gallon for heating fuel. Lower Yukon
averages, and we got these from Emmonak, $7.25 per gallon for
gasoline which is up $1.34 per gallon since June 25th, and
$7.83 a gallon for heating fuel, which is up $2.98 per gallon.
Senator Murkowski. From June?
Mr. Naneng. From June. The Middle Yukon averages, and these
are from the village of Marshall, $6.41 per gallon for
gasoline, which is up 28 cents per gallon and $7.15 per gallon
for heating fuel and this is up 39 cents per gallon since June.
And on the coastal villages, Chevak and Scammon Bay, pay $6.50
per gallon for gas, $6.61 per gallon for heating fuels.
Those are the prices that are currently being paid by
people in our villages.
The irony of the situation, this national energy crisis and
debate focuses on Alaska, while rural Alaskans cannot afford to
heat our homes, drilling in the Arctic National Wildlife Refuge
is being debated and it has been debated for a long time,
especially in Washington, D.C. With the energy crisis it's more
of a hot button issue in this election year, especially in
other rural areas of the Lower 48 states. A Republican in
Colorado has toured ANWR this week to make her decision about
it in her race against her opponent who opposes drilling.
Missouri voters are asking their congressman what he thinks
about drilling in his bid for Governor. So other parts of the
country are talking about what they can get out of Alaska. But
this does not even matter that the rise of oil prices have
enriched Alaskan treasure, it still cuts the throat of many who
live in Alaskan villages, especially in rural Alaska, even with
the resource rebate. The State approved a bonus of $1,200 along
with the Permanent Fund Dividend for each resident to help
relieve some of the energy burden, our people expect things to
get much worse. Last years fuel prices in our communities on
the average 60 cents higher than the U.S. average. With each
successful seasonal fuel shipment the cost always increases.
There's never a decrease in fuel prices when they deliver them.
And our first snow is barely two months away and we're going to
have a critical winter, we can anticipate one.
Citgo Native American Heating Program gave our villages
some relief last winter and it's going to be needed again.
A University of Alaska study published in May showed that
rural Alaskans will spend 40 percent of their annual income on
energy this winter compared with four percent for average
Alaskan households, that means the urban areas. Our winters are
brutal, the winds and elements plus our aging and poorly
constructed early BIA HUD homes, commercial properties and
public and tribal facilities, energy upgrades for older
facilities will make the most immediate and sustainable impact
on energy costs.
Fuel price and other energy costs and use. Prices for
residential heating and regular gasoline increased over 100
percent since 2007 in many of our villages and the estimation
does not include taxes. Alaska Village Electric Cooperative,
which serves 53 small villages in Western Alaska, or most of
them in Western Alaska had a fuel bill that went up $26 million
from $14 million last year. Village residents are paying an
average of $300 a month in electric bills with an average
household income of 17,500. Many families are unable to
maintain their livelihood and support their households. Locally
owned utilities face power shut-downs and brown-outs throughout
the winter in order to conserve fuel and save energy costs.
Some of the villages have not increased their fuel prices
because they're trying to help their residents in their
communities.
The quotes that I submitted for sample fuel prices per
village from the Tundra Drums from January is no longer in
effect. I've stated the increases that I just noted for parts
of the areas within our region, and you can see the big
difference of that, they've increased substantially.
Taking charge biennial energy plan for 2008 and 2010. AVCP,
Calista working with the organizations that are represented
here are working to create the regional energy plan through
Nuvista Light and Power Cooperative in order to conduct energy
feasibility studies for the region and for the developing
project at Donlin. The energy study was completed by Nuvista in
2002 and was followed up with a feasibility study in 2004.
Nuvista is now engaged in energy planning and development for
the process for the AVCP Calista region. One of our partners, a
village located in (In Native), Chaninik Wind Group received
4.8 million grant in 2008 to develop energy projects and
determine feasibility of subregional wind energy for four
villages.
Regional wholesale cooperative is being considered for many
of the organizations within the region as well as the villages
because like the previous people that commented, some of the
school districts are having to reduce the salaries of their
teachers in order to meet their energy costs for the winter,
and that's going to be the same for many of the village
businesses.
Energy planning for the subregion. AVEC has established
three wind energy--wind generation projects, one in Toksook Bay
and one in Hooper Bay and in Kasigluk. Hooper Bay is
revitalizing the wind energy that they used to have in the
community many years ago before even talked about wind energy.
I grew up in a house that had wind generation on top of the
house and we lit our homes with one light bulb before we had a
generator in the community, a diesel generator in the
community. So other wind energy projects are feasible along the
Bering Sea Coast, the Lower Kuskokwim and the Bethel area. In
heavily treed areas of the Middle Kuskokwim and Lower Yukon
biomass projects could provide community facilities with
heating needs with biomass boilers and wood chippers that would
provide feed stock for these and a variety of community
facilities and home heating boilers.
In-stream turbines in other areas of the Kuskokwim and
Yukon Rivers and more powerful tributaries are worth
investigating as is ocean wave energy along the Bering Sea
Coast. But we know that ice conditions can limit some of that
ability. There is a geothermal potential at the NYAC mine with
the hot springs along with in-river hydroelectric potential for
nearby communities.
We have also identified two potential targets for
hydrocarbon exploration. On top of supporting more energy
sourcing exploration, the plan considers an inter-tie to the
railbelt based on the economic development potential for
projects such as Donlin Creek Mine.
Developing fish oil and bio diesel from off shore-based and
floating salmon processors on the Kuskokwim and Yukon using the
Morse engine generator at a 50/50 raw fish oil-diesel blend.
Regional energy coalition is being talked about right now.
It is imperative to call for development of a regional energy
coalition that includes all utilities, major electrical
consumers, fuel operators in the region. And such a coalition
would enable regional electrical utilities and fuel agreements
in order to achieve energy cost savings and efficiencies. A
bulk fuel cooperative by the regions most solid businesses and
institutions would hold an immediate short-term solution that
could bring sustained savings. Right now non-profits are able
to buy fuel for their facilities at lower costs than those in
communities that have to buy it for their member villages.
Oil and gas exploration are conditionally green lighted.
The tribes within our region for the first time recently
rescinded a long-standing resolution that banned oil and gas
exploration. A change of heart came as a result of the energy
crisis. However, the technologists have dramatically changed
that since the destructive and crude exploration and discovery
processes first threatened our perception of land and
subsistence food resource safety. Along with pollution concerns
it is important to respect the rights and privileges of each
land owner, stakeholder directly involved in the utilization
and development of renewable resource energy on their property,
the communities have to have a say in what goes on with their
renewable energy projects, including oil and gas exploration.
What the state should do and can do. Provide a renewable
resource deployment assessment of the regions based on the MM/
BTU cost. This mandate will help us ascertain the development
and deployment of renewable energy projects based upon
available renewable energy resource in the region. State
financing should lead to local takeover of energy distribution
and management.
A continuation of the Power Cost Equalization Program and
improving its qualifying requirements to include schools and
other government facilities affected by the current energy
crisis would address immediate and dire needs and current
budget constraints.
State of Alaska should create a Department of Energy
cabinet office that includes regional representation for direct
support, training and technical assistance.
The State should establish a dedicated Renewable Energy
Deployment/Energy Efficiency Equipment Loan and Grant Fund in
coordination with statewide and local banking and financing
institutions.
The AVCP region supports the planning, development and
utilization of North Slope gas for rural Alaskan communities.
The creation of more bulk fuel refineries in rural outposts
such as those as Flint or Nikiski to meet heating fuel,
gasoline, diesel, aviation and propane needs in a way that
minimizes the costly shipment demands.
In closing. We'd like to thank the Committee on Indian
Affairs and you and your staff for coming all the way from
Washington, D.C., to address a very critical issue in a very
remote and challenging part of the country during our energy
crisis that affects us all.
Alaska may be the only state out of many you serve to hear
our needs and attempt to address our concerns but we are
grateful and earnest in helping you to build the record that
will hopefully result in actions.
I understand that some of the members of the Alaska
Legislature and other concerned citizens and business owners
throughout this state are in the audience today and I hope that
this testimony has brought you into agreement that the wealth
of the state of Alaska does not translate into a wealth of
infrastructure in most of rural parts of Alaska. We should have
had these--I know the energy issue had come up over and over
again throughout the last 20 or 30 years and we don't want to
shame Alaska or any of the urban areas anymore about this, we
want action, we want investments and we want returns in the
form of stable and sustainable energy source.
Alaska is a massive state with innumerable natural
resources and alternative energy options that we should be
striving hard to develop and utilize. Protecting our way of
life in the face of developing more responsible energy use and
consumption should be possible in this day and age.
We look forward to working with you to continue to press
this issue and seek solutions to make day to day living
possible in one of the most unique parts of the world.
With that, thank you.
[The prepared statement of Mr. Naneng follows:]
Prepared Statement of Myron Naneng, President, Association of Village
Council Presidents
Senator Murkowski. Thank you, Myron. Appreciate your
leadership on behalf of so many in so many villages.
[Applause.]
Senator Murkowski. Matthew Nicolai. Matthew it's always a
pleasure to be with you. Thank you for all that you do and your
comments this morning.
STATEMENT OF MATTHEW NICHOLAI, PRESIDENT/CEO, CALISTA
CORPORATION
Mr. Nicolai. Thank you, Madam Chair. We appreciate being
invited to address the Senate Indian Committee on Indian
Affairs. Welcome to Bethel and I hope that you had a good and
joyful night and got to visit with a lot of the people here in
Bethel.
We want to present our views regarding high fuel prices and
the effect to our shareholders and also to Calista. I have been
president of Calista for the past 13 years. I'm a 33 year
employee of the company.
Something that we want to share with you that's very
important for the Federal Government to understand is we have
regional statistics of the region that the U.S. Senate must
understand. We have two census bureaus, Bethel and the Wade
Hampton. The statistics in our region gathered in the year 2000
and 2002, when we look at the poverty level on the national
scale and also on the state scale, Bethel Census Bureau has 20
percent that has the impoverished district in the Bethel
Census. Wade Hampton is the most impoverished, is the Emmonak
area, where the average salary per capita in our region is
$8,717, while the state median income is $22,660. That's
considered the most impoverished district in the country. And
the reason we want to share this with you, we've gathered
information that Mr. Naneng read to you regarding the fuel
prices in our region, when you consider what was being
presented by a lot of the shareholders over the rest of the
summer that we just passed through, the subsistence hunting and
fishing activities, a lot of the shareholders in our region has
been curtailed as a result of high fuel prices. We're hearing
from, village by village, that families could not gather the
foods that they needed because of high gasoline prices. I made
multiple trips throughout the region and I hear that in the
Yukon River and the Kuskokwim River. We're going to see this
winter a result of high gasoline prices, many families that may
be without subsistence hunting and the foods that they've
gathered this summer.
Removing subsistence will definitely have a major impact
and this is the reason why Calista, you know, we've always said
that at AFN and we've always said that to you and we've always
said that to any candidate, Calista is the only regional
corporation that spent $4.8 million. We put in Title VIII of
ANILCA, no one did, we're the region that worked with AVCP
president, then Carl Jack, and we worked hard to make sure
Title VIII was protected. Because the effect of subsistence is
very important to our people. Calista, even though we're a
profit corporation, it was number 1 agenda, that we protect the
subsistence economy in our region. That's the reason why the
high gasoline prices are impacting the people that we serve.
For Calista, the energy costs that we're seeing this year,
we're seeing the exploration of our subsurface properties
curtailed. Each summer we have programs, I want to walk through
the past 12 years that I've been president, seeing exploration
programs on our subsurface properties, the highest number of
employment that we offered one summer was a little over 690
shareholders those were exploration jobs in NYAC, in Donlin, in
Goodnews Bay and New Stuyahok, these are the four major
exploration areas that we have. This summer the junior
companies that we're used to seeing explore our lands did not
show up. This summer we only had 135 employees actually work at
projects that we had and those are mainly Donlin Creek. So
we're seeing that effect of high diesel cost that the
exploration companies need for them to look at our properties
that we have.
Under ANCSA VII (i), Calista is holder of 6.5 million acres
of subsurface properties. It is our duty and the director's
understanding and our vice chair is here, Willie Kasayulie and
one of our directors, also George Guy and John are here, their
duty is to make sure that we meet the requirements of VII (i)
to ensure that we explore our properties are for future value
and the future value of high diesel cost this year has been
curtailed for future generations because any time when we're
not spending money looking at our subsurface properties it
curtails down into the future that future jobs are at stake.
Donlin, right now, one major issue for Donlin Creek and 190
million has been invested Barrick and NovaGold were up to last
year, where we haven't seen the new numbers for this year, if
energy was resolved to Donlin it would be a mine today, it
would have been in operation by 2008. If the mine became a
project, if Donlin became a project it would employee 500
people in our region. Right now we can't deliver the project
because of one major issue, energy. With the recommendations
that we want to offer to you, especially this committee, has a
trust responsibility to Alaska Natives and Native Americans, we
appreciate that you came here to listen to our views and I hope
that the committee does move forward on the recommendations
that you heard this morning to the tribes and also to the
regional corporations.
Something that's very important, as I read the policies of
the Federal Government, when I try to understand how the Office
of Indian Energy addresses Alaska Native organizations,
something the village corporations have tried in our region to
apply for funds through that organization, they're not eligible
because of the language that's in that program. And the reason
why I say the village corporations in our region, we have 17
utility companies and I have to speak for them, they're the
owners of the surface properties, under the agreement of the
Office of Indian Energy, the TERA, Tribal Energy Resource
Agreements, do not include village corporations in Alaska. That
means in my village George Guy runs a utility company, he
cannot apply for funds for planning purpose that he wants to
address for wind power or down in (In Native), those four
communities, cannot get those federal funds because one,
they're not eligible. So because a surface owner is a village
corporation, they should be eligible to receive those monies.
So I do hope that this committee looks at addressing that
issue.
I'm one that generally does a lot of research on
information on energy and something that we want to see in a
long-term basis that we hope that the State and also the
Federal Government address on the issue in developing a
partnership that can address and resolve energy problems to the
Bush Alaska. This has been done before. Historically, when you
look at the Appalachian Commission, it developed the Tennessee
Valley Electric Association that resolved energy to 16 states.
And that was a partnership of 16 states that basically
addressed energy and this is the 16 states even smaller than
Alaska. So you look at Alaska, you have to look at it as a
multiple state even though we're one state, we're the size of
those 16 states. So I hope you carry that forward to the Senate
Affairs, Indian Committee members that you cannot look at
Alaska as one, you have to look at Alaska as multiple states
with energy problems that can be resolved.
One major issue for regional corporations, we hold a lot of
the subsurface properties that we want to look at alternatives.
I hear from our neighbors up in NANA, that they want to address
western coal. Imagine if they'd be able to turn biomass of that
facility and develop gas out of that that can be used in light
of Western Alaska. We can't do that today because so many
barriers that NANA has to go through to develop coal. We try to
introduce coal into this region, we got shot, saying our people
are going to die from black lung, you go to Salt Lake City, no
one's dying from black lung. Right by the airport is a major
coal facility, it doesn't even drop one single iota of
pollution. The only pollution that they have is C02, and you
know how the greenies talk about C02, that we're lighting up
the world and we're having problems with what you call
greenhouse effect and it's affecting the Arctic. That's the
politics that we hear out of the greenhouse issues on
pollutants that come out of coal. Coal is a major resource in
Western Alaska owned by a regional corporation that will
benefit 223 village corporations, 12 regions because of the VII
(i) agreement if it was developed into a major energy source,
and I'm just explaining one project that can have a multiple
impact to the people that we serve.
So what we're asking you, I hope that you take into
consideration, and you've heard some recommendations made this
morning, we would like to see a partnership that you in the US
Senate could offer to this Governor that we have, and we just
had an energy conference in Anchorage that Senator Stevens,
Senator Inouye and Governor Palin listened to the concerns that
we had in AFN and I was very happy that Ralph Andersen carried
those forward and those are the same messages that we heard. We
want to see public private partnership to resolve rural energy.
Anchorage, I've lived there 33 years, I have the cheapest
power, guess where I get my power from, rural Alaska. I get it
there. North Slope Borough, everybody in Anchorage thinks it's
part of Anchorage, it's not, it's rural Alaska providing power
to Anchorage and we get the greatest subsidy that we resolve
from oil tax subsidies that we got this huge money for cheap
energy for urban communities and guess what urban communities
do, they don't want to hear problems, and I'm glad Nancy's
here, they don't want to hear about rural problems. This is the
reason why I'm stating this. This is something that you, as a
leader of the committee, can offer a public private partnership
with this Governor. This Governor appointed a very good person,
Steve Haggenson to lead energy direction and he's looking for
alternatives that will resolve problems that we have.
We've been studied to death.
When we hired Bob Charles in the back, back there, to lead
Nuvista Light and Power on behalf of this group, we found $25
million worth of studies came to our region and not even one
resolution yet, $25 million of state money and not even one
resolution. We hired one individual, Frank Bettine, that's the
father of that Railbelt Energy, he recommended a railbelt to be
addressed to Fairbanks, we hired him and he found through the
records what we need to address regionally, that's the reason
why this body here is working together and we've submitted to
you 13 recommendations that we have, I'm not going to go
through those, in the energy plan that we have. This plan is
still in a draft plan, we gave it to you in rough draft form
with many deletions in there so you could understand the
working committee here, we are trying to address the problems
but we need your help. The committee can be of assistance to us
in resolving energy problems--resolving energy problems, Madam
Chair, will spur economic development and create jobs and I do
hope that you carry forward that to the chair, who I'm very
happy sent letters to us and said we want to read your
recommendations and we are going to be moving those forward.
Thank you, Madam Chair.
[The prepared statement of Mr. Nicolai follows:]
Prepared Statement of Matthew Nicholai, President/CEO, Calista
Corporation
Senator Murkowski. Thank you so much, Matthew.
[Applause.]
Senator Murkowski. I Appreciate your leadership. We also
have with us this morning Gene Peltola. Gene has done wonderful
work in the area of health care as the President and CEO of the
Yukon-Kuskokwim Health Corporation, so if you can enlighten us
on what's happening in the health care world as a result of
higher energy prices.
STATEMENT OF GENE PELTOLA, PRESIDENT/CEO, YUKON-KUSKOKWIM
HEALTH CORPORATION
Mr. Peltola. Okay, good morning, Madam Chair. I'm Gene
Peltola, for the record, president and CEO of the Yukon-
Kuskokwim Health Corporation. And we thank you for bringing
this forum out to us here in rural Alaska.
The Yukon-Health Corporation has been contracting with
Indian Health Service since before the enactment of the Indian
Self-Determination Act. Today we provide comprehensive health
care to 28,000, largely Yup'ik Eskimo people across a roadless
area larger than the size of Oregon.
Where the average per capita income is less than 15,000.
Gas in our hub city of Bethel, as stated earlier, is almost $6
per gallon. In our villages it's approaching $8 a gallon, the
same price we pay for milk. When considering the high energy
food and personnel costs against the IHS appropriation that
does not allow for mandatory medical inflation costs, providing
health care for our 58 tribes is a daily and extraordinary
challenge. For the past three years YKHC has accommodated for
dramatic energy increases. Regarding utility costs in fiscal
year 2000 YKHC saw a 21 percent increase or a $1.1 million
increase over anticipated utility costs. Fiscal years 2007 and
2008 YKHC utility costs increased on an average of 8 percent or
half a million dollars. The fiscal year 2009 budget includes an
anticipated 22 percent increase or another $1.4 million worth
of utility costs. The total increase in utility costs for the
last three fiscal years total over $3 million.
Increases related to fuel have also been dramatic. For
fiscal year 2009, our freight, patient and corporate travel
costs will increase over $700,000. YKHC is committed to
delivering health care at a high level and expanding services
where they are needed and/or financially feasible. However,
with relatively flat revenues and substantially increase in
expenses, the delivery of health care cannot help but be
affected out here.
Although YKHC's budget amounts, our corporate totals, we
should notify you of our increased costs at the village level.
One of YKHC's main partners, our tribal and city governments in
our 50 YKHC communities are suffering too. In our member
villages, either the tribe or city governments own their
respective health clinics. The governments receive a monthly
rental fee from YKHC that is used for their rent, fuel,
janitorial services and general upkeep. This is called an IHS
Village Built Clinic Lease Program. According to IHS, current
lease funding covers only 55 percent of operating costs. Many
tribes and cities are requesting increased rental payments for
clinics to accommodate expected utility increases. YKHC is
tentatively expecting 30 percent or $187,000 to subsidize these
increases.
For organizations that compact or contract IHS and BIA
programs an energy solution exists that is already authorized
by law, the full funding of contract support costs.
And just to give you a head's up, if Congress were to fully
fund or negotiated contract support costs over 50 percent of
those funds nationwide would come back to Alaska. We're so
advanced over the Lower 48 in assuming IHS and BIA programs.
Over 20 years ago former Chairman Inouye of this committee
wrote that the single greatest impediment to the success of
tribal self-determination was a failure of the Indian Health
Service to pay contract support costs. I can testify that what
Chairman Inouye said in 1987 is just as true today.
In Fiscal Year 2007 YKHC's annual true shortfall exceeded
$10 million for the very first time. It has gone up
approximately one million each year as we seek to take on ever
growing IHS programs in a climate of ever rising costs. This is
truly a crisis. To give you an idea, that $10 million is true
costs, it's cost of utilities, it's cost of workman's comp,
it's cost of personnel benefits, and where do we make up those
costs, we have to cover those costs from third-party revenues.
Most people hear about contract support costs and their eyes
glaze over but these are very real costs. Either the fixed
costs of our overhead, such as utilities or else the cost of
providing workman's compensation insurance, as I said, and
health and retirement benefits to our staff, that's what
contract support cost, they are fixed and they are real.
In 1992 and 1993, when we began operating the IHS hospital
here in Bethel, we suffered a shortfall of over $2.2 million on
contract support costs. The impact to YKHC and the region and
the people we served was immediate. Over 40 positions were laid
off within months after hospital operations began. Subsequent
rounds of reduction in force and layoffs occurred in 1997,
2006, 2007. These events have had a very severe impact on the
quality of health care that YKHC can provide, however, the
impact is not just measured by the $10 million shortfall. As a
result of this underpayment YKHC cannot employ as many primary
care providers or provider teams. The care that those teams
provide to our patients is typically billed to Medicaid,
Medicare or third-party private insurance payors. The result is
that the $10 million in reduced direct care services translates
into approximately an additional $6 million in lost revenue
from these sources. So the real loss is at least $16 million to
our programs, to the people we serve, and the tribal
governments that we serve. And even more when you consider that
we direct those lost third-party revenues back into staffing
additional teams throughout our villages.
I have four recommendations today.
First, the committee should consider requesting additional
funding for energy efficiency and conservation projects for
aging federal facilities like the Yukon-Kuskokwim Delta
Regional Hospital. Our hospital is now over 30 years old. And
we have done the necessary study, the environmental work, the
engineering work, we have a membrane roof on our hospital. It's
patched, it's leaking all over again, and we have determined
that at a cost of $1.2 million we can replace that membrane, we
can insulate that roof, put some additional insulation in the
roof and we'd have a cost savings in our heating bills
immediately of $120,000 a year. But the mere funds that are
appropriated by Congress to renovate and upgrade federal
facilities, that type of funding is not available to Alaska.
Funding for research and deployment of realistic long-term
energy technologies should also be considered, especially when
Alaska's potential for wind, hydro, geothermal and tidal
solutions is tremendous.
YK, like has been said, is one of the four partners who's
been working along with Calista and AVCP and our housing
authority in developing a regional energy plan. Matthew
referred to the draft version that we made available to you.
There's a couple action plans in there that I want to speak
about.
One is that we've decided to go forward and look at
creating a fuel purchasing cooperative, made up of not only the
four of us, of the CDQs, municipalities, our school districts,
our utilities, our village corporations. Hopefully, we can
achieve economy of scale and bring the cost of fuel in the YK-
Delta down. Another thing we've been talking about, and I
relate back to a discussion I had with Senator Stevens in
Anchorage last winter, we were talking about the ever
increasing cost of fuel and the cost of utilities in rural
Alaska, and he made the comment that, Gene, what we need in
rural Alaska is a refinery. And I thought to myself and for
some time I gave it a lot of thought and I didn't believe then
that the volume was out here in rural Alaska, in Western Alaska
to be able to sustain a refinery. And just recently as the four
groups were meeting, we're discussing the opportunity that the
Aleut Corporation has in Adak. Basically all the supportive
infrastructure for a refinery exists in Adak, along with over
20 million gallons of storage facilities already in place. They
have a deep sea port. They have some of the longest runways in
the state of Alaska. They're geometrically located where they
can purchase fuel from Indonesia, the Sulkan Islands or Valdez.
If the Chukchi leases that were just given out ever go into
production for a small window during the summer, you could
tanker crude right directly to them, I mean you still have to
look at the volume to sustain it. They're geographically
located so they could--fishing vessels in that portion of the
Aleutian Chain and the Bering Sea don't have to go back up to
Adak to fuel up, they are just north of the east/west North
Pacific shipping lanes. And you take a look at it and not
looking at longitude and latitude, but just looking at a map,
they're as close or closer to Hawaii and the South Pacific
Islands than the West Coast of the United States is and that's
where they're barging their fuel in. And with the military
requirements at Guam, I think then that you have the volume to
be able to sustain an operation like that. And if our regional
corporations from NANA, Bering Straits, Calista, Bristol Bay
and Aleut could get together, I think a feasibility study
should be determined whether that's economically feasible.
Second, the committee should consider directing the General
Accountability Office to study the actual impact of the
continuing shortfalls tribes are suffering in their contract
payments. I am sure that YKHC's experience is not unique. And
hopefully a GAO report will help energize Congress to do its
part in remedying the situation. As part of the GAO study some
examination should be made into IHS' new policy announced only
two years ago. And that is not to provide any contract support
costs whatsoever, for any new contract or compact operation
regardless of circumstance and notwithstanding Congress making
available up to $5 million for this purpose every year. The
current situation is bringing to a stop all forward progress in
tribal self-determination and self-governance nationwide.
Third, the committee should examine why the IHS Village
Built Clinic Lease program is currently not eligible for
contract support costs and why lease funding has remained
virtually the same since 1989. This is especially disheartening
given tribal compactors and contractors subsidize the lease
program with their own health care monies due to the sharply
increasing energy costs.
Finally. I would ask the committee to look into the status
of pending contract support litigation. After 12 years of
litigation YKHC recently settled its old claims, but this is an
exception. For other tribes with old and new claims, litigation
is grinding on in various courts and boards.
The fairest approach would be for Congress to extent the
statute of limitations for all tribal contractors to pursue
their claims over historic IHS underpayment for prior years.
A more comprehensive approach would be a Legislative fix to
create a new claim payment mechanism that would permit all
tribes to receive appropriate compensation through the Judgment
Fund without draining litigation that takes years to resolve.
Ultimately, receiving full contract support costs is not
about money, for tribal organizations like YKHC it means being
able to systematically address cancer, suicide and other major
challenges like high energy costs.
It is the ability to hire a provider to perform portable
mammographies in our villages to detect breast cancer early in
Stage 1 when the five year survival rate is over 90 percent
versus a later stage. Or our ability to hire a counselor to
deploy to our communities wide behavioral health initiatives in
order to save a teenager from taking their own life.
Most importantly, receiving full contract support costs is
an ability to provide an array of health services to a
population suffering dramatic health disparities and even pay
our light bill. In an environment without full contract support
costs, flat IHS appropriations and dramatically increasing
energy costs, eventually YKHC, as well as other health
providers in our state will have to decide on which services to
cut in order to pay our light bills and fuel bills.
The funding for full contract support costs, and more
importantly it's relationship to directly improving American
Indians and Alaska Native Health's status is a matter entirely
within Congress' power to address.
And I'd like to say that full funding of contract support
costs is one small step for Congress but it's one giant leap in
addressing the health care of Native Americans nationwide.
I want to thank this opportunity to thank you for bringing
this committee to Bethel and giving me the honor of addressing
you.
Thank you.
[Applause.]
Senator Murkowski. Thank you for your leadership on the
issue of contract support costs. You've come back to Washington
to testify on this issue several times and I think it's been
very enlightening, very helpful for the committee.
Mr. Peltola. And I won't give up.
[The prepared statement of Mr. Peltola follows:]
Prepared Statement of Gene Peltola, President/CEO, Yukon-Kuskokwim
Health Corporation
Senator Murkowski. Last on the panel here this afternoon is
Mr. Ron Hoffman. Ron is the CEO of AVCP Housing Authority and
he's also President of the Alaska Housing Authority, so,
welcome.
STATEMENT OF RON HOFFMAN, PRESIDENT/CEO, AVCP
REGIONAL HOUSING AUTHORITY; PRESIDENT, ASSOCIATION OF ALASKA
HOUSING AUTHORITIES
Mr. Hoffman. Thank you, and good morning. For the record my
name is Ron Hoffman, I am the President and CEO of AVCP
Regional Housing Authority and of the Statewide Association of
Alaska Housing Authorities.
I'd like to welcome each and every one of you to Bethel.
I wanted to express a special thank you and welcome to you,
Senator Murkowski. Thank you for holding this hearing on an
issue that is a crisis for the people of rural Alaska. I hope
the information you gather can be used to craft legislation
that provide both immediate relief to desperate rural Indian
families and long-term solutions to the unbelievable high costs
of energy in rural Alaska.
Our Regional Native Housing Authorities were created to
provide safe, sanitary and affordable housing, in particular,
to rural Alaska.
For example, my housing authority serves Bethel and the
Wade Hampton census district area representative Alaska off the
road system. We are this committee's people. The Bethel census
district population is approximately 78 percent Alaska Native;
Wade Hampton's population's about over 90 percent Alaska
Native.
We also have unemployment rate at more than 15 and 23
percent respectfully. Looking at the numbers, the Native people
of rural Alaska are living with the highest unemployment at
poverty rates in the country. Factor in the crisis and you
begin to have a picture of the critical need for immediate
relief and a long-term solution.
Off the road system, in Hooper Bay, with a population
approaching 2,000, gasoline is at $7.24 per gallon. Heating
fuel is at $7.37 per gallon. In the village of Kakhonak on Lake
Iliamna the gas is nearly $9 a gallon, with heating fuel at
9.25.
In May the Institute of Social Economic Research at the
University of Alaska reported that in 2000, an Anchorage family
spent 5.5 percent of its income on energy, while a family in
rural Alaska spent 16 percent. By 2008 the Anchorage family was
spending nine percent of its income on energy, the family in
rural Alaska had to spend 47 percent of its family income on
energy. Imagine that. The gap between the two families has more
than tripled. The rural families is spending one-half of its
family income on energy. Beyond the direct impact on families,
energy affects the cost of doing business with increases passed
on to its residents, air fares, groceries, our electric bills
are through the roof. These costs are passed on to an Alaska
Native population that simply cannot support them.
For the people of rural Alaska to survive two things need
to happen; unemployment and poverty numbers must be brought
down through funding of training for current and future jobs.
Second, we must explore all energy possibilities, including
development of alternative sources of energy.
As one example, the Alaska Electrical Cooperative is using
wind through lower costs and reduced dependency on fuel,
projects like this should be supported by funding and tax
credits.
Other solutions for consideration.
Expediting a gas pipeline from the North Slope with Alaska
access to that particular energy source.
Legislation to allow and require the refining of Alaska oil
here in Alaska with a product accessible to all Alaskans.
Other proposals to consider, opening ANWR for exploration
and drilling.
Relaxing the excess tax on fuel for rural Alaska.
Energy and transportation subsidy for rural Alaska.
I would like to expand on this just briefly. The Housing
Authority recently, or this spring procured construction
materials for our housing development, the transportation cost
was roughly 40 percent of the actual cost.
And the development of a central bulk fuel area, such as
Gene related to Adak Naval Base.
In some places in this country, the high cost of fuel is
inconvenient, in rural Alaska this winter, our families will
have to decide between feeding their children or keeping warm.
This winter hundred dollar barrel oil will begin to take
not just livelihood but the lives of rural Alaska.
I ask you to come up with immediate relief and a short-term
solution that will allow us to get more from our present
resources while we explore new technologies for safe, clean and
affordable energy.
Thank you for the opportunity to testify.
[Applause.]
[The prepared statement of Mr. Hoffman follows:]
Prepared Statement of Ron Hoffman, President/CEO, AVCP Regional Housing
Authority; President, Association of Alaska Housing Authorities
Attachments
Senator Murkowski. Thank you. I have a whole series of
questions that intended to ask, unfortunately I'm not going to
be able to do as many as I would like because it's already
11:45 and we still have our last panel to hear from. So what I
intend to do is submit those questions to you and ask that you
respond to them as part of the record.
I would like to ask a question, though, and this follows up
from one of the questions that I asked the first panel in terms
of conservation. And we recognize that when it comes to our
housing there are things that we can do, the programs that the
State has with weatherization, the energy assistance programs
that are out there, but to be eligible for at least one of the
state programs, an energy audit is required. Do I understand
that AVCP is working to train auditors, do we have any auditors
out here, can we even take advantage of these State funds out
in the rural areas right now?
Ron.
Mr. Hoffman. Please allow me to respond to that.
Senator Murkowski. Yes.
Mr. Hoffman. Over the past couple months the Housing
Authority has been actively supporting and sponsoring training
for our residents, and we do have certified individuals right
now that are able to conduct energy audits.
Senator Murkowski. How many do you have, do you know?
Mr. Hoffman. It's well over 10.
Senator Murkowski. Well, the word that I hear in Anchorage
is, yes, we've got energy auditors, but we don't have enough
and it is fully a six month wait to get an energy auditor into
your home and, of course, you've got timelines that are at
play. So we set up programs with all wonderful intentions and
then we don't have the individuals that can move through the
eligibility requirements. So I'm pleased to know that there's
10. I'm hopeful that they're actually able to get out and to
respond to the community needs.
Mr. Hoffman. Yes. We plan to expand that training program
for, you know, our region, but we are establishing other
training programs. In fact, the Association of Alaska Housing
Authorities plan to go ahead and sponsor such a training
program.
Senator Murkowski. That would be helpful.
Mr. Hoffman. The legislative appropriation for the
weatherization, you know, came forth very quickly and I'd like
to thank and recognize Senator Hoffman for his sincere efforts
in expediting this process. Then we were under emergency
regulations in May, then we finally got the final regulations,
so that there impacted as to how we do business. And, of
course, one of the mandates was that we have an energy audit or
an assessment on a unit prior to utilizing those dollars. But I
feel confident that we will overcome this and we will, you
know, renovate and weatherize the homes that are badly needed,
especially in our region.
Senator Murkowski. Gene, I wanted to ask you one quick
question. Back in Washington several months ago, you indicated
to me that one of your concerns about your increasing costs was
what you--what YKHC would anticipate spending for medivac's
because of the cost of fuel to fly the medivacs. What have you
experienced this summer in terms of your costs due to increased
fuel for your medivac operation?
Mr. Peltola. Senator. Our medivac costs of this summer,
since the advent of fuel being barged out here this spring, has
gone up significantly. And like you said earlier, we're finding
that the acuity of the medivacs coming in from the villages to
our hospital are greater because they can't afford to come in
when----
Senator Murkowski. So they delay care.
Mr. Peltola. Pardon?
Senator Murkowski. They delay care coming into town.
Mr. Peltola. Yes. And then we ship a medivac out when
acuity gets to the point that they need to be medivac'd into
Bethel or on to Anchorage.
Senator Murkowski. So not only are you seeing increased
costs to your budget, but you're seeing patients coming in that
are probably higher risk than they would have been?
Mr. Peltola. Yes. And then another step we're working on is
we anticipate our efforts between Providence Alaska and their
LifeGuard Program and our AeroMed Program, we've been working
for a number of months now to merge those two into one
comprehensive effort, medivac operation, and achieve economy of
scale and that should take place around November 1st this year.
Senator Murkowski. Good. Hopefully that will make a
difference. I want to applaud AVCP and Calista and those that
are part of the regional plan here for really taking that
initiative and setting forth proposals. I think as the State
works through its plan and incorporating the various regional
plans that have been proposed, that's how we get the best
operations put together, is when it comes from the ground up.
You know better out here what works rather than us in
Washington saying, we think that, you know, the entire state of
Alaska needs to be powered by X, Y or Z. The solutions coming
from the ground up are very important so I appreciate your
leadership on that.
With that, I'll thank the members of the panel and you can
look forward to my questions and, again, if you'd like to
supplement your testimony we welcome that.
And we will come to the final panel please.
[Applause.]
Senator Murkowski. Gentlemen, thank you for coming so far
to be with the committee here today and to be with the people
of Bethel and the region. I think you've heard from the
previous two panels that there is no issue that is more
paramount in the minds and in the lives of those out in the
region, whether it's individuals or whether it's from the
health care, education perspective, energy is it. We welcome
you today. Appreciate the fact that you have traveled from
Washington, D.C., to present your testimony. Again, the easy
thing for this committee to do in a field hearing would have
been to stay in Anchorage but I don't think that you get the
full perspective by staying in Anchorage, so I think the extra
flight out here allows you an opportunity to see another part
of our incredible state and to perhaps gain a deep appreciation
of what we face here.
We will start here this morning with Mr. Steve Morello, who
is director of the Indian Energy Policy and Programs with the
Department of Energy. Mr. Morello, we've had an opportunity to
have many conversations before, appreciate your leadership and
if you can provide your testimony to the committee.
Thank you.
STATEMENT OF STEVEN J. MORELLO, DIRECTOR, OFFICE OF INDIAN
ENERGY POLICY AND PROGRAMS, DEPARTMENT OF ENERGY
Mr. Morello. Thank you, Madam Vice Chairman. My name is
Steven J. Morello. I am the Deputy Assistant Secretary for
Intergovernmental and External Affairs at the Department of
Energy and I'm also the director of the Office of Indian Energy
Policy and Programs. I'm a proud citizen of the Bawating
Anishinabeg people, the first people of the rapids, federally
recognized as the Sault Ste Marie Tribe of Chippewa Indians.
I'm delighted to be here to have this opportunity to discuss
with you energy solutions for Alaska Native communities.
And before I turn to my prepared remarks, I want to take an
opportunity to thank Dr. Robert Middleton, who has been my
partner during the past year that I have been in office, the
Department of Interior has worked very, very closely with the
Department of Energy and we have tried to marshal our resources
so that together we're more powerful than if we were separated
for the benefit of Indian country and for the Alaska Native
people.
Since Secretary Bodman named me to be the first Director of
the Office of Indian Energy Policy and Programs just a year ago
in September of 2007, I have made it a personal priority to
visit Indian country and Alaska in order to assess the serious
energy challenges facing tribes and Alaskan Natives, while also
exploring the tremendous opportunities for the development of
renewable energy resources. This trip marks my fourth visit to
Alaska in my capacity as director and during each of these
trips I have had the privilege of meeting Alaska Native people
and understanding their issues. Clearly, the most pressing
issue facing the Interior villages is the high cost of energy.
My real concern is that if we do not find a way to provide
affordable energy to these villages, we could face, as soon as
this winter, an out-migration of huge scale.
The best hope for long-term relief is to implement a
portfolio approach using various renewable technologies,
including biomass, geothermal, solar, wind and hydro. In
tandem, a robust regional transmission grid could allow
Alaskans to be energy independent and lead to a net export of
some excess electricity. Likely short-term solutions are the
combination of conservation and energy efficiency measures with
small localized biomass generators located in the Interior
villages to replace the diesel powered generators currently
being used there. Additionally, some villages may well generate
electricity from hydro, solar or wind as well.
The role of private investment in the success of these
energy solutions is important because if the power generating
projects have customers much of the power generating capacity
can be financed privately. Since my time as director, I have
worked closely to try to bridge the gap between Native people
seeking out sources of investment funding and private sources
who recognize that assisting Indian Country and Native Alaska
is just good business.
The Department of Energy is committed to being a good
partner in search for a solution to the energy shortfalls in
the rural Alaska Native villages. For example, the Tribal
Energy Program within the Office of Energy Efficiency and
Renewable Energy is currently soliciting requests for
information to identify ways to accelerate renewable energy
development in the Alaska Native villages.
I'd like now to provide more specific details regarding the
types of renewable energy projects that could help solve the
energy crisis in Interior Alaska.
I'll begin with Biomass.
Interior Alaska is well situated for using biomass
resources because of its tremendous supply of wood waste and
fish oil processing at the villages. The development of a model
project to demonstrate the success of biomass in Alaska is
essential. Furthermore, Alaskan villages could employ local
people to participate in the entire production chain from the
cultivation and harvest of the biomass material to the
building, operation and maintenance of the generation facility.
I'm pleased to report that just this month the Department
of Energy announced plans to make available up to $2.2 million
for two renewable energy project awards selected for
negotiation, pending further collection of data and
environmental review, based on this competitive solicitation.
One of which is aimed at advancing biomass in an Alaskan
village and serving as the model project demonstrating the
viability of this technology in rural Alaska. The Council of
Athabascan Tribal Governments, under the Fort Yukon Wood Energy
Project, plans to use wood fuel from a region rich in forest
resources to displace diesel fuel being used for heating. The
project plans to displace up to 30,000 gallons of fuel oil
annually, typically flown or barged into this community by
using biomass to heat the Ft. Yukon school and gym.
The prospect of stand-alone biomass units are another area
of potential for Alaska. Portable generating units that rely on
biomass may be ideally situated for power production in the
remote villages of Alaska. I'm hopeful that future progress
will make this a viable option for Alaska villages in the
short-term.
Geothermal.
Geothermal's another renewable energy resource that is
found in many Native American lands and Alaskan lands as well.
According to the geothermal resource map of Alaska, there's a
geothermal resource belt located throughout the NANA region.
The Department of Energy is funding a feasibility study
that is currently underway with the NANA Corporation in
attempting to ascertain the geothermal power generation
potential for remote off-road village scale application.
Further, the Department of Energy's Geothermal Program has
provided $565,000 and $1.2 million respectively for a
geothermal resource assessment and technology demonstration of
low temperature geothermal power plant in Alaska at Chena Hot
Springs outside of Fairbanks.
Solar.
The promise of solar power is another important
consideration for Alaskan Natives. The Department of Energy has
funded several feasibility studies on the potential of solar
power for off grid use in the remote villages. And I want to
also commend the efforts of the Cold Climate Study Group at the
University of Alaska-Fairbanks, because they are studying--
leading the way in Alaska in studying the various applications
of solar throughout the state.
Wind.
The State of Alaska has wind resources that could allow
cost competitive wind energy production. The Department has
supported five wind feasibility projects including the Sealaska
Native Corporation, among others, here in the state. And I
recently met with representatives of the American Wind Power
Association who expressed that many of their commercial members
are seriously interested in pursuing wind projects here in
Indian Country and in Alaska. My role will be to continue to
forge these partnerships between commercial entities and tribal
constituencies.
Transmission issues.
An essential part of a long-term solution to the problem of
power in Alaska's Interior villages and elsewhere for that
matter is a regional power grid. I have become aware of an
important study by the Southeast Conference to address the
concept of building a network of power transmission lines
connecting most of the communities in the region. This
Southeast Alaska Inter-Tie study includes the delivery of hydro
generated electricity to several of the Alaska Native villages
in the region. The Department of Energy officials from the
Office of Energy Delivery and Energy Reliability provided
technical assistance to the researchers, and we believe this
report could provide important data regarding transmission
requirements in Alaska and we look forward to reviewing the
findings.
I also want to bring to the committee's attention to what's
being to other states for leading the country with regard to
renewable energy as a potential road map for what might be done
here in Alaska.
California's Renewable Energy Transmission Initiative
(RETI) is a statewide program to help identify the transmission
projects needed to accommodate renewable energy goals, support
the future energy policy and facilitate transmission corridor
designation, siting and permitting. The RETI will assess all
competitive renewable energy zones that can provide significant
electricity to California's consumers by the year 2020, and
will identify those zones that can be developed in the most
cost effectively and environmentally benign manner.
In Texas, the Competitive Renewable Energy Zones (CREZ) are
being designated in the most viable areas of the state. An
electric transmission infrastructure will be constructed to
move renewable energy from those zones to markets where people
use the energy the most. The state's transmission operator is
charged with collecting wind data and nominating a number of
CREZ's based on the transmission cost calculation for each
CREZ. In other words, they are putting the transmission where
the renewable energy is and not expecting that you can't build
renewable energy in a certain place because there is no
transmission.
The Department of Energy has long recognized the renewable
energy production potential on American Indian and Alaska
Native land. We look forward to continued successful
relationships with tribal governments as we work together to
meet the growing demand for affordable, clean and reliable
energy, especially in the midst of the particular crisis of
energy costs here in Alaska.
This concludes my statement, and I would be pleased to
answer any questions the committee may have.
[The prepared statement of Mr. Morello follows:]
Prepared Statement of Steven J. Morello, Director, Office of Indian
Energy Policy and Programs, Department of Energy
Vice Chairman Murkowski, I am Steven J. Morello, Deputy Assistant
Secretary for Intergovernmental and External Affairs, Director of the
Department of Energy's Office of Indian Energy Policy and Programs, and
a proud citizen of the Sault Ste Marie Tribe of Chippewa Indians. I
would like to thank you for the opportunity to discuss energy solutions
for Alaskan Natives.
Introduction
Since Secretary Bodman named me to be the first Director of the
Office of Indian Energy Policy and Programs in September 2007, I have
made it a personal priority to visit Indian Country and Alaska in order
to assess the serious energy challenges facing Tribes and Alaskan
Natives while also exploring the tremendous opportunities for the
development of renewable energy resources there. This trip marks my 4th
visit to Alaska in my capacity as Director. During each of these trips
I have had the privilege of meeting Alaskan Native people and
understanding their issues. Clearly the most pressing issue facing the
interior villages is the high cost of energy needed to heat and light
their homes and workplaces. My real concern is that if we do not find a
way to provide affordable energy in these villages we could face, as
soon as this winter, an out migration of huge scale.
The best hope for a long-term relief is to implement a portfolio
approach using various renewable technologies including biomass,
geothermal, solar and wind. In tandem, a robust, regional transmission
grid could allow Alaskans to be energy independent and lead to a net
export of some excess electricity. Likely short term solutions are the
combination of conservation and energy efficiency measures with small
localized biomass generators located in the interior villages to
replace the diesel power generators currently being used almost
exclusively. Additionally, some villages may well generate electricity
from hydro, solar or wind sources as well.
The role of private investment in the success of these energy
solutions is important because if the power generating projects have
customers much of the power generating capacity can be financed
privately. Since my time as Director, I have worked closely to try to
bridge the gap between native people seeking out sources of investment
funding, and private sources who recognize that assisting Indian
Country and Native Alaska is just good business.
The Department of Energy is committed to being a good partner in
searching for a solution to the energy shortfalls in rural Alaskan
Native villages. The Tribal Energy Program within the Office of Energy
Efficiency and Renewable Energy is currently soliciting information to
identify ways to accelerate renewable energy development in Alaskan
Native villages. The deadline for this Request for Information is
September 19, 2008.
I'd now like to provide more specific details regarding the types
of renewable energy projects that could help solve the energy crisis in
interior Alaska.
Biomass
Interior Alaska is well-situated for using indigenous biomass
resources because of its tremendous supply of wood, wood waste, and
fish oil processing at the villages. The development of a model project
to demonstrate the success of biomass in Alaska is essential.
Furthermore, Alaskan villages could employ local people to participate
in the entire production chain from the cultivation and harvest of the
biomass material to the building, operation, and maintenance of the
generation facility.
I'm pleased to report that just this month, the Department of
Energy announced plans to make available up to $2.2 million for two
renewable energy project awards selected for negotiation, pending
further data collection and environmental review, based on a
competitive solicitation, one of which is aimed at advancing biomass in
an Alaskan village and serving as the model project demonstrating the
viability of the technology in rural Alaska. The Council of Athabascan
Tribal Governments (CATG), a consortium of ten remote villages along
Alaska's Yukon River, under their Fort Yukon Wood Energy Project plans
to use wood fuel from a region rich in forest resources to displace
diesel fuel used for heating. The project plans to displace 30,000
gallons of fuel oil annually, typically flown or barged in to this
community, by using biomass to heat the Fort Yukon School and gym. The
award will be cost-shared, with the Council of Athabascan Tribal
Governments providing a proposed $1.1 million and DOE providing up to
$1.0 million.
The prospect of stand-alone biomass units are another area of
potential for Alaska. I am aware of on-going efforts in the private
sector to pilot the use of wood chips to produce biomass off the grid.
Portable generating units that rely on biomass unit may be ideally
situated for power production in the remote villages of Alaska. I'm
hopeful that future progress will make this a viable option for Alaskan
villages in the short term.
Geothermal
Geothermal is another renewable energy option on many Native
American lands. According to the geothermal resource map of Alaska,
there is a geothermal resource belt located in the Northwest Alaska
Native Association (NANA) region. The communities of Deering, Buckland,
Kotzebue, Shungnak, Ambler and Kobuk may have access to this resource.
Local knowledge of geothermal pools in the vicinity of Deering,
Buckland and Shungnak, coupled with exploratory wells in Kotzebue
documenting hydrothermal resources at 160 degrees Fahrenheit further
indicate that there is geothermal power generation potential in the
NANA region.
As a result of Department of Energy funding for a feasibility study
that is currently underway, the NANA Regional Corporation (NRC) is
attempting to ascertain the geothermal power generation potential for a
remote, off-road, village-scale application.
Further, the Department of Energy's Geothermal Program has provided
$563,000 and $1.2 million respectively (53 percent of the total cost)
for a geothermal resource assessment and technology demonstration of a
low-temperature geothermal power plant in Alaska at Chena Hot Springs
Resort outside of Fairbanks. The 400kW geothermal power plant, designed
and built by United Technologies Corporation, was brought online in
July 2006 and is pushing the envelope for low-temperature power
generation. Again, this and other projects like it will act as models
for the deployment of renewable energy heat and/or power systems
throughout the State.
Solar
The promise of solar power is another important consideration for
Native Alaskans. The National Renewable Energy Laboratory estimates
that there is potential from ten to fourteen kWh/m\2\/day of solar use
during the summer months in portions of northwestern and southern
Alaska.
DOE has funded several feasibility studies on the potential of
solar power for off-grid power use in remote villages. One such study
addresses the villages of Venetie and Arctic, located above the Arctic
Circle in northeast Alaska. These villages studied the feasibility of
powering the villages using solar energy during the season of the
midnight sun. The solar electric photovoltaic systems currently
installed are replacing diesel generator power during the summertime,
and proving solar can be a viable option in rural Alaska.
Wind
The State of Alaska has wind resources that could allow cost
competitive wind energy production, especially along its coasts and
western regions, many of which exist in rural Alaskan tribal
communities. The National Renewable Energy Lab estimates that at least
30 communities have wind energy production potential. The Department
has supported five wind feasibility-related projects including the
Sealaska Native Corporation, the Yukon-Kuskokwim Health Corporation,
the Bristol Bay Native Corporation, the Kenaitze Indian Tribe, and the
Aleutian Pribilof Islands Association.
I recently met with representatives of the American Wind Power
Association who expressed that many of their commercial members are
seriously interested in pursuing wind projects in Indian country. My
role will be to continue to forge partnerships between commercial
entities and tribal constituencies.
These projects are just a few examples of renewable energy options.
Please see the attachment, Table 1, which lists all Alaskan Native
renewable energy projects funded through DOE's Tribal Energy Program.
Transmission Issues
An essential part of a long term solution to the power problem in
Alaska's interior villages, and elsewhere for that matter, is a
regional power grid.
I have become aware of an important study by the Southeast
Conference to address the concept of building a network of power
transmission lines connecting most of the communities in the region.
This Southeast Alaska Intertie Study includes the delivery of hydro-
generated electricity to several of the Alaskan Native Villages in the
region. DOE officials from the Office of Electricity Delivery and
Energy Reliability provided technical assistance to the researchers. We
believe this report could provide important data regarding transmission
requirements in Alaska, and look forward to reviewing the findings.
California's Renewable Energy Transmission Initiative (RETI) is a
statewide program to help identify the transmission projects needed to
accommodate renewable energy goals, support future energy policy, and
facilitate transmission corridor designation, siting, and permitting.
RETI will assess all competitive renewable energy zones that can
provide significant electricity to California consumers by the year
2020, and will identify those zones that can be developed in the most
cost effective and environmentally benign manner.
In Texas, Competitive Renewable Energy Zones (CREZ) are being
designated in the most viable areas in the state. An electric
transmission infrastructure will be constructed to move renewable
energy from those zones to markets where people use the most energy.
The state's transmission operator is charged with collecting wind data
and nominating a number of CREZs based on transmission cost
calculations for each CREZ.
EPAct 2005 and The Energy Security and Independence Act (EISA) of
2007 contain initiatives, to be implemented by DOE's Office of
Electricity Delivery and Energy Reliability, to bolster transmission
development and modernization. EPAct 2005 contains several
transmission-related initiatives, one of which required the Department
to designate National Interest Electric Transmission Corridors, which
will help to put transmission development on an equal footing with
other alternatives to relieving electric transmission congestion by
giving the Federal Energy Regulatory Commission (FERC) back-stop siting
authority. Title 13 of EISA has provisions furthering the development
of a Smart Grid as well as Energy Storage technologies, helping to
foster the type of modernization our existing transmission will need to
keep pace with rapidly growing energy demand and a changing fuel supply
mix.
EPAct 2005 also required the Department to work with other federal
Agencies to designate energy transport corridors. The Office of
Electricity Delivery and Energy Reliability recently begun scoping for
the designation of energy transport corridors in the Eastern States,
Alaska, and Hawaii. A Notice of Intent to conduct a Programmatic
Environmental Impact Statement regarding corridor designations in these
remaining 39 States will soon be published by the Agencies.
Also, as the challenges to continued electric reliability are not
only technical, but also structural, DOE is also working to harmonize
the multitude of State and Federal regulatory rules such that they
complement, rather than conflict with each other. Today, a key
challenge to timely development of the appropriate network of wires and
other facilities required to reliably deliver new electricity to
American consumers is the rigorous and lengthy State and Federal
authorization requirements. Hopefully, addressing these regulatory
rules will provide us with solutions to apply in Alaska.
Conclusion
The Department of Energy has long recognized the renewable energy
production potential on American Indian and Alaskan Natives land. We
look forward to continued successful relationships with tribal
governments as we work together to meet the growing demand for
affordable, clean and reliable energy, especially in the midst of the
particular crisis of energy costs in Alaska. This concludes my prepared
statement and I would be pleased to answer any questions the Committee
may have.
Senator Murkowski. Thank you, Mr. Morello, appreciate your
traveling all the way.
And now the last individual to speak before us this
afternoon, Mr. Bob Middleton, who's the director of Indian
Energy and Economic Development at the Department of the
Interior. Welcome Mr. Middleton.
STATEMENT OF DR. ROBERT W. MIDDLETON, DIRECTOR,
OFFICE OF INDIAN ENERGY AND ECONOMIC DEVELOPMENT, DEPARTMENT OF
THE INTERIOR
Mr. Middleton. Thank you, Madam Chair. And thank you so
much for inviting the Department of Interior to this important
field hearing.
I'm going to keep my remarks very short. We have the
written statement that we put forward. I know that we're under
a little bit of time constraint, so I just want to mention a
few things.
I've been fortunate enough as a career Department of
Interior employee to travel to Alaska quite a bit, probably
over 20 times during my career and I've seen energy issues in
Alaska go from being an inconvenience to a concern, and then
most recently from being a concern to being a crisis. And it's
not a crisis of dollars and cents so much as a crisis of social
and cultural issues. When we see the out-migration from
villages to more urban areas, we see a destruction of the
social fabric in many areas. And I believe that this is
unacceptable in 21st Century America.
I have several programs that we manage at the Department of
the Interior that I think could be of benefit and provide some
solutions. But as Mr. Morello pointed out, we've been working
very closely in partnership since he took office because I
believe that we do need these partnerships, and it needs to be
more than the Department of Interior and the Department of
Energy. We need to include USDA, we need to include Department
of Commerce, Small Business Administration, as well as the
corporations, the State, Congress and the Native villages
themselves. But I think that a partnership that comes together
to look at the various programs that we all could bring to bear
would be able to allow us to find solutions to the crisis that
we're now facing.
Three programs that I'd like to point out that are in my
office that I think could come to bear and provide some of
those solutions are a Work Force Training and Development
Program. Most of the Alaska Native villages participate in the
Public Law 102-477 program, which allows the participants to
commingle federal dollars that come from the Department of
Commerce, HHS as well as the Department of Interior to provide
work force training, and up to 25 percent of those funds can,
in fact, be used for economic development activities.
As we face solutions in Interior Alaska on the energy
issues, I would really like to see my program being used in
such a way that we train folks, in fact, address the energy
issues that are facing the remote areas, providing the training
needed to be able to either build, manage or operate remote
energy systems. I think this is one solution. It also will keep
the dollar cycling in the villages as opposed to hiring
somebody from the outside to come in to either repair or manage
these systems.
We have the Guaranteed Loan Program in my office. It
provides an opportunity, where we can, to be able to use the
Guaranteed Loan Program to provide the capital investment for
developing renewable energy resources. We think there are
opportunities for us to be innovative in this so that we can,
in fact, look at the savings that may come from putting in a
remote--a renewable energy system and use that to service loans
that would be able to put these facilities in place.
We're currently working with the city of Nome, looking at
the wind energy project they have there and we're also working
with the city of Hoonah, or the village of Hoonah to look at
the Inter-Tie program. I was just down there last month talking
with them about that and we're trying to find innovative ways
to use that.
And then, of course, I have an Energy and Minerals
Development Program. And we have several projects that are
going on in Alaska looking at geothermal resources, looking at
wind resources to try and find the resources that could be put
in place that will allow us to do some of this renewable energy
development to defray some of the costs.
Economic development for us means not only finding ways to
find jobs and businesses to create economies but also cost
avoidance and this is a very important issue.
With that, I'd like to close my remarks. I thank you again
for the opportunity and I'm willing to take some questions to
see if we could find additional solutions.
[The prepared statement of Dr. Middleton follows:]
Prepared Statement of Dr. Robert W. Middleton, Director, Office of
Indian Energy and Economic Development, Department of the Interior
Senator Murkowski. Well, thank you. I appreciate your
involvement in not only the energy issues, but from the
perspective of the Interior and your focus on some of our
challenges that we face here in the state.
Let me ask both of you, in terms of the technical
assistance that might be made available to areas such as the
Bethel region here, you had an opportunity to hear the comments
from the other panelists. We've got programs within the state,
we heard from the Alaska Energy Authority in terms of what may
be available there, the fact that the State has just recently
established a renewable energy fund, so we're putting together
the pieces, where it seems like we could use a little more help
to facilitate is how we bring this all together. Do you have
within the respective departments, Energy and Interior,
programs or opportunities that could be made available to
provide for the technical assistance? Let's say we get beyond
identifying where the resource is, you've spoken of some of the
geothermal projects that you're working out on the Aleutian
chain, what can you offer in terms of ideas and concepts from
the federal perspective that we could dovetail more closely
with what is available at the State, for both of you?
Mr. Middleton. Both of our programs can provide technical
assistance. We have geoscientists that can provide some of the
same skills necessary that the Department of Energy could bring
to bear, but we also have other programs that, I think, are
greatly in need.
One of the technical assistance aspects that was raised
today was the need for grant writing. And we actually have a
number of programs we started in my office to look at bringing
in academia to help tribes and we've been taking advantage of
it mostly in the Lower 48 but we've formed business
partnerships with many of the leading business schools across
the United States, where we provide some funding to a tribe to,
in fact, hire a top notch graduate student and their faculty
advisors to come in and develop economic models, to look at
business plans, to develop the financial instruments that
tribes need to take to the capital investment market, and it's
worked very well. We've had close to eight or nine projects
that we've moved forward over the last couple of years that
have shown some great results. As a matter of fact the model is
so good we're moving that to the engineering schools and we're
going to be working with academic engineering schools to be
able to provide the tribes with that skill that they need to
look at for civil engineers for community planning or
electrical engineers for utility work and many of the tribes
are very interested in this opportunity.
But we also have the opportunity to, in fact, provide the
wherewithal for tribes or Native Alaska villages to bring in
the experience they need to start looking and applying for
grants.
Senator Murkowski. Do you get many requests from the tribes
in Alaska for assistance?
Mr. Middleton. We have not to this point but----
Senator Murkowski. Why do you assume that is?
Mr. Middleton. I think it's simply that they're unaware of
the program right now. My office really was only put into
effect in 2005 and so we're still expanding and we're still
getting the word out the capabilities our programs can bring. I
have had a chance to talk to a number of folks in Alaska over
the last couple of years and we're getting an increase in
interest and we're finding ways to make our programs better
known.
Senator Murkowski. Are you planning on attending the AFN
Convention this year?
Mr. Middleton. Yes. I was there last year and I plan on
getting up there, unfortunately there is a conflict with NCAI
also this year.
Senator Murkowski. I'm just thinking out loud here that it
would be a good opportunity to spread the word in terms of the
availability of these grant opportunities, these training
programs because I think this is an area where we do recognize
there's a gap there and we're not quite able to figure out how
we get from where we are over here to access whether it's those
federal grant monies, so just making that more readily known, I
think, it would be helpful and I would encourage you to do
that.
I'm assuming that you heard the comment that Matthew
Nicolai made in stating the concern that village corporations
can't access certain energy grants. Can either one of you speak
to that issue and tell me what it is that we need to do to make
sure that there is the ability to access.
Mr. Middleton. I think he was specifically referring to
Title V of the Energy Bill 2005, which is part of my programs,
the Tribal Energy Resource Agreements that can be developed.
And unfortunately the legislation specifically excluded Alaska
villages and corporations from the activities under that
provision of the bill. I'm not exactly sure why, I wasn't
working on that at the beginning when the legislation started.
But I think that early in the 2000s when the legislation was
being developed and starting to be incorporated into the
previous energy bill that people were focusing in on more of
fossil fuels, oil, gas and coal, and they really weren't
thinking in terms of renewable energy resources, which I
believe the--if included in Title V would be available to
Alaska Native villages, but unfortunately as the legislation
moved through the process, they were excluded.
Senator Murkowski. That was in the 2005 Energy Act. In the
most recent energy independence, is there anything that we
included in that that would provide for greater access?
Mr. Middleton. No. But beyond being specific to Title V of
the Energy Bill of 2005, I mean there are opportunities for the
Alaska villages and corporations to take advantage of some of
our other programs that would deal with energy issues.
Senator Murkowski. Well, and, of course, part of that
problem, though, is providing the funding----
Mr. Middleton. Yes.
Senator Murkowski.--so that the Native corporations could
avail themselves of that----
Mr. Middleton. Yes, sure.
Senator Murkowski.--and that's something that we would
certainly like to work with you on is to ensure that we don't
just put the authorizing language into play but then have
nothing to show for it as a consequence of that.
Mr. Middleton. Yes.
Senator Murkowski. I think in order for these programs to
have success, we've got to put our money where we've said there
was a priority there.
Mr. Morello, can you speak to what might be available
through the Department of Energy that could be made available,
whether it's technical assistance, grant writing assistance, is
it pretty much in line with what Mr. Middleton has stated here?
Mr. Morello. Well, one of the--or four or five of the crown
jewels of the Energy Department are technology labs, our Los
Alamos Lab, our Sandia Lab, our Idaho National Lab, NREL lab
that we have in Golden, Colorado, each of these labs are hot
houses of scientific research in various aspects of energy also
including renewable energy. And while these labs don't offer
grants, what they do offer is, in their contracts with the
Department, is the opportunity for tribes and Alaska Native
villages and other organizations to approach them with
technical problems. They will seek to provide solutions to
these technical problems without charge. And we have a tribal
liaison at each of the labs and I'd be happy to assist anybody
that has a technical problem that wants to go into the lab for
assistance. But a perfect example of this is the Desert Rock
Project, the coal to electric project that the Navajo Nation
just had permitted by the EPA. One of the outstanding issues
with that permit was how to sequester carbon, and we have is a
lab that is studying that very diligently and is working with
that tribe on carbon sequestration techniques. The same kind of
issue comes up when you want to do coal to liquid, which is a
very viable option here in Alaska, which has recently been
announced as a project that the Crow Nation is going to
undertake in Montana. There's a concern that in the coal to
liquid process there may be some carbon released so we're
looking at ways to capture that carbon and sequester it in the
ground.
Those are technical advisory services which our labs can
provide to Indian Country and to Native Alaska and which we're
delighted to do.
Senator Murkowski. So if you wanted to provide for some
hydrokinetic energy project in a river, tap the currents there
but the concern is we don't want to interfere with the fish in
the river, obviously a huge subsistence resource here----
Mr. Morello. Sure.
Senator Murkowski.--you're not going to trade your energy
for your food source.
Mr. Morello. Right.
Senator Murkowski. Are you saying that we could tap the
brains there at Sandia and Los Alamos and say, help us figure
out a way that we can have the energy resource without
impacting the fishery resource?
Mr. Morello. Yes. If there is a technical question with
regard to how to do that project, we'll find an expert
somewhere in our labs and put them to work on it to assist
the----
Senator Murkowski. All right. We'll work with you because
we need to figure out a way to get there without impacting the
fisheries resource there.
I think the concern that I have heard from Alaskans is
we've got the resource back in Washington, D.C., through
Energy, through Interior but we don't see how it translates out
here in Alaska, we don't see how it translates out into rural
Alaska. You've given some examples of where you are working
with us on various projects, of course, we know the geothermal
up in Chena Hot Springs, but, again, the issue is, well, you've
got $563,000-$565,000 here, you've got a million dollars there,
but as you can see the need here is enormous and the
initiatives that we will have to undertake in order to allow
for a level of energy security in this, in all parts of the
state, I think, are going to be challenging, so we need to work
with you to make sure that the funding is there for the good
programs that we have put in place. We've been very frustrated
that the Indian Energy Programs as authorized under the Energy
Act in 2005 just, we haven't seen that momentum, and it's not
just here in Alaska, it's all over Indian Country. And I think
that is a reality that we should not have accepted. And I think
we're now seeing, because of the high energy prices, a push on
a lifestyle, a subsistence lifestyle, a culture that has been
part of this land from time immemorial, and we kind of reach a
tipping point, if you will, and I think we're seeing out here
in many parts of Alaska that you will have that destruction of
a culture brought about by energy that is not accessible unless
we all act, and we is everyone in this room. It's those at the
federal level, it's those at the State level, at the local and
the tribal and the personal, the individual in their home,
their families.
I will tell you I'm very concerned with where we are as a
nation right now in terms of our energy insecurity. We've got
challenges, we're going to be working on those when we get back
to Washington, D.C., but from a state perspective I'm very
concerned about the people that I represent and how many of
those people--how many of them and their families are going to
make it through the winter. And I know they're going to be
calling me, I know they're going to be calling Bob and Nancy
and Lyman and our new representative here, and they're going to
be seeking quick and easy answers and we simply have quick and
easy answers.
We need to be working with you for these longer term
solutions. And they're difficult and they're often very, very
costly. But the consequence, I think, of inaction is not
acceptable. The answer is not for the people in this region to
move to town, and we should not have situations in place where
people are forced to leave their home land, leave the land that
they grew up on and their grandfathers and their great-
grandfathers grew up on because they simply can no longer
afford to live here and because their subsistence lifestyle is
no longer sustainable. So we've got a lot of work to do.
[Applause.]
Senator Murkowski. I will work with all of you. We will
work with all of you.
I want to thank all of the witnesses that have joined with
us this morning. Many of you have come from quite a ways away
but it was, again, very significant to be here in Bethel.
I want to thank the University of Alaska, the Kuskokwim
campus, I want to thank AVCP, the Native leadership here in the
YK-Delta. I also want to thank Senator Dorgan, the Chairman of
this Committee, Senator Dorgan has been a wonderful Chairman to
work with on the Indian Affairs Committee. He has some
challenges in his home state of North Dakota as well and we
have an opportunity to talk about those challenges. I keep
telling him that one of these days I'm going to go visit some
of the reservations in North Dakota and I'd like to be able to
bring him here and introduce him to some of you fine people.
Again, we do invite any written comments and testimony that
people would care to submit.
I apologize that our forum doesn't allow for additional
oral testimony but all of the comments that you have heard
today, as well as any supplements that they might be willing to
submit, will be part of the official record. The hearing record
will be kept open until, as I said, Friday, September 12th. And
your comments will be printed in the official record, the
government printing office will print this up sometime in the
next couple months, copies will be made available free of
charge, all you need to do is contact our office, we'll make
sure that you receive that. Your comments can be emailed to
[email protected], and, then, again, if you would
prefer to submit comments by mail we will give you an address
to send them in.
I do hope that from this hearing this morning, we have
spurred people's creative juices. We've caused you to think
about, not only the problems, but what the potential solutions
may be. I firmly believe that with all of the challenges that
we face in this state brought about by Mother Nature and our
beautiful geography, and all that it has to offer, our problems
are all solvable, that we have more options and certainly more
options when it comes to energy sources than any other state in
the union, and it's just up to us to figure out how we use our
creative juices to tap into them. And we haven't had to over
these past years because we've been able to just--families have
been able to get by, now we're at that point where it's much
more difficult and we need to be more creative and we need to
be more collaborative. But I fully believe that even with these
very large challenges that face us, we can figure out the path
forward to sustainable communities brought about because we
have sustainable renewable affordable energy. So that's what
we're going to be working for.
I have a huge action list after my 24 hours in Bethel and I
thank you for what you have given me, and I thank you for what
you have given to the Committee by sharing the record today.
And, with that, we will adjourn the hearing and thank you
for your participation.
[Whereupon, the Committee was adjourned.]
A P P E N D I X
Prepared Statement of Carl Berger, Executive Director, Lower Kuskokwim
Economic Development Council
Thank you for the opportunity to submit written testimony for
inclusion in the field hearing, regarding the effects of the energy
crisis on Alaska's people, especially in rural Alaska and across the
Yukon Kuskokwim Delta.
My name is Carl Berger, for 16 years I have been the executive
director of LKEDC, one of eleven Alaska regional economic development
organizations (ARDORs) representing most areas of Alaska. Organized as
a 501(c)(3) non- profit organization, our mission is to advance Alaska
natives and rural residents of the Y-K Delta toward economic self
sufficiency, by promoting small business and economic development
activities in Bethel and 26 surrounding villages.
An ongoing problem toward local enterprise and small business
development in our region are the high costs of electricity, motor gas
and diesel fuel used for home heating throughout our region of mostly
treeless tundra. With the most recent increases in these product costs,
the problems to local residents are greatly exacerbated. Though the
State of Alaska has maintained a Power Cost Equalization program for a
number of years, its benefits do not extend to small businesses, who
have to pay the full cost of power, currently 0.36c/kWh in Bethel and
much higher in the surrounding villages. Likewise, an energy rebate to
all Alaskans eligible for the Permanent Fund Dividend, recently granted
by the state legislature in the amount of $1,200 is woefully inadequate
to rural residents, who will be paying over $6-8/gal for motor gas and
diesel home-heating fuels. Maintaining heat in all the sub-standard
housing throughout our region at these prices will certainly be a
budget buster for most of us. Finally, the proposed energy rebate paid
out in this way is subject to federal taxes, further diminishing its
effect.
The following are recommendations, for the Senate Indian Affairs
Committee's consideration:
1. The United States and State of Alaska governments need to
take immediate action to subsidize transportation of all fuel
types to rural Alaska.
2. Ongoing renewable energy project grants need to be provided
to rural communities, in order to harness wind energy, biomass,
solar and hydro power as available, and assist the tribal
governments to develop their alternative energy.
3. The SOA Power Cost Equalization program needs to be modified
to include commercial small business users in its energy
savings plan.
4. Buy down the debt of rural utilities in order to reduce
costs passed on to consumers and include a price cap on fuel
stock purchased.
5. Expand and support bulk fuel purchasing, transportation and
cooperative purchasing agreements.
6. Invest some of our excess earnings throughout Alaska toward
projects that promote renewable or alternative energy and
conservation.
Thank you for the opportunity to provide this testimony. I urge
you, the Senate Committee on Indian Affairs, to provide increased
energy assistance or other similar actions, which will provide a much-
needed solution to the energy crisis now facing our state and its
citizens.
______
Prepared Statement of John Wallace, Resident, Bethel, Alaska
I appreciate this opportunity to record my comments concerning the
effect of high energy prices on our Native communities in rural Alaska.
I have lived in rural Alaska for the majority of my life. I am not
an Alaska Native by blood history. I am married to a lady from
Nunapitchuk and we are living and raising our family in Bethel.
As part of my life history, I have had many opportunities to travel
extensively throughout the Yukon-Kuskokwim region of Alaska. As an
Alaska National Guard search and rescue crewchief, I flew to almost all
of the villages in the area. Presently I operate a small business,
Alaska Technologies, providing technology assistance and Internet
installations in the whole of the area. In other words, I have spent a
great deal of time with ``boots on the ground'' in the villages.
I want to share just a few of my experiences of the effects of
energy prices in the towns and villages of rural Alaska.
I would like to begin by saying that although the nation now is
experiencing high energy prices; we in rural Alaska have had to deal
with this issue for the last 8 years or so.
When the local retailer in our area sold to an Australian
conglomerate, our fuel prices rose 40 percent in one day!! I will never
forget the year that my wife and I were so excited because our kids
would both be in school and we could count on the added money in our
pockets because we wouldn't have to deal with childcare. Our joy was
short lived because that year the price of fuels rose $1.00 as the
barge delivered fuel. The price increase took all of the money we would
have saved plus extra.
As the fuel wholesalers have changed hands over the years we have
had to deal with price increases that include a more than 340 percent
increase in the cost of fuel since 1996. I have attached the cost
calculation from the Alaska Cooperative Extension service for the
committee members. The point is that though this issue is at the
forefront on the national stage, it has been an issue for several years
in rural Alaska.
I would like to share an experience that I have never forgotten: In
the Y-K Delta, as in many areas of rural Alaska, residents do not have
jobs per se. Many subsist off the land as the seasons roll through the
year. I was in Tuntutuliak, Alaska, waiting for my ride to the Village
Office in which I would be working. As I sat waiting near the local
Fuel Sales business, an old man pulled in with an 18 foot skiff loaded
with his family. I said Hi and asked where he was going. He said they
were headed berry picking. He told the Fuel guy that he needed to fill
up, but the pump wasn't working. The Fuel guy told him that it worked,
but he would have to pay before he could fill his boat. There was also
no more credit available, so he would have to pay cash.
The old many reached into his pocket and pulled out twenty dollar
bill. He asked if it would fill his boat. Unfortunately it would only
buy a couple of gallons, not enough for the berry picking venture. The
man went back to the boat and drove back to his parking spot. Berry
picking would not happen today.
That story has never left my memory. That family would have been
doing three things that are very important to village life.
1) Conducting and passing on the tradition of subsistence.
2) Providing important foodstuffs that are an important part of
the native lifestyle as well as not having to live on processed
and imported foods.
3) Conducting an activity. This simple task of having something
to do is important to every human. It is this or sitting
around. Rural Alaska has a great suicide rate. Doing instead of
sitting is very important.
But of all the problems of life in rural Alaska, what would be the
solution?
My opinion is that it cannot be in the form of cash payments to
residents. Band aid approaches have never worked and will never work.
Turning on the money hose and hosing the area down with money will not
work. Whatever form of aid is giving has to be well thought out and
long term so that the aid will incentivize the aid.
A friend of mine, a river boat captain, and I were hauling fuel to
the villages one winter. The village tanks at the time were too small
to hold an entire fuel supply because the Government had added more and
more housing without a tank farm with enough supply to keep the homes
heated for the year. That coupled with funding that was bi-annual, made
it so we had to haul fuel in the dead of winter with small trucks. A
very inefficient form of transportation, but it was the only
alternative. We were taking break one afternoon and we saw a mink
scurry around. I asked him why people didn't trap them anymore because
they are the most desirable mink in the world. ``Too damn easy to go to
the Post Office,'' he said. I asked what he meant and he said that it
was too easy to go to the Post Office and get a check rather than do
something productive. A hardnosed evaluation maybe, but it has some
validity. Whatever aid is produced needs to be evaluated to make sure
it has the desired effect.
The best example of this kind of aid actually comes from Germany.
In Germany, the Government provided 50 percent instant tax rebates for
all alternative energy installations. They made it a huge incentive for
a person or business to reduce their energy use. Germany went from one
of the largest consumers of energy in Europe to one of the smallest.
Lastly I want to mention one impact of high energy prices that is
probably the most insidious of all of them. High energy prices have
begun to start an exodus of sorts from rural Alaska. Anchorage School
District has had to hire 18 positions more than they anticipated
because of the influx. As more and more people leave rural Alaska, the
problems in rural Alaska will be exacerbated.
Due to the large area of Alaska and the lack of residents, we are
considered ``Rural.'' But for all intents and purposes, each village is
a Micro-Urban environment. Each village, as a unit, depends upon its
residents for its survival. Villages as little tribal elements cannot
survive if there is a great out flux of people. The impact of this is
that the many unique aboriginal traditional elements of the native
tribes will be eliminated. This above all may be the worst impact of
the high energy costs.
The Yupik/Cupric culture is one of the last in the country that
still survives in language and tradition. Yes it is changing, but to
see it destroyed would be a true tragedy.
I would like to thank the committee for the opportunity to make
these comments. I would especially like to thank Senator Lisa Murkowski
for bringing the hearing to rural Alaska. Her insight into our lives
has been truly beneficial for Alaska and the Nation at large.
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Prepared Statement of Loretta Bullard, President, Kawerak, Inc.
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