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Review: Broad value to ‘Beating the Workplace Bully’

If you haven’t encountered a workplace bully, you’ve been incredibly lucky. Or, more likely, you haven’t been working very long. In either case, be thankful you’re one of the few who haven’t had to suffer a bully’s manipulative and malicious behavior. I worked for a bully for two years, 20 years ago, and my gut still knots up when I think about him. I remember the dread I felt every time I pulled into the employee lot and saw his Audi tucked into its parking space. Walking to the door, I would ask myself, “What will it be today? Another pointless assignment with ridiculous deadlines? A new wrongheaded and hurtful policy to implement? A browbeating for not solving a problem that never existed?” The staff had a nickname for him. They called him “El Loco.” I thought about El Loco this week as I was reading a new book, “Beating the Workplace Bully,” by Lynne Curry. I’ve known Lynne for decades, both as one of her coaching clients and as her editor. After reading her book, I realize now, I should have gone to her for help with my bully. At the time, I didn’t understand what was happening or why, or have a clue what to do about it. Now I do, after reading the book. Lynne is well equipped to help the victims of workplace bullies. She has a doctorate in social psychology and is a certified Senior Professional in Human Resources. She founded and runs Alaska’s largest management and HR consulting firm, with 3,500 clients in 14 states and five countries. More personally, she acknowledges that she herself was the victim of a bullying relationship. As more and more desperate victims of bullying bosses, co-workers or even subordinates came to her for help, she developed a series of strategies for her clients. She saw that most bullied employees found very little relief from either their employers or the law. And her clients reported back that her approaches worked. That led to the idea of a book that would catalogue the types and styles of bullying, tactics for coping with discrete types of bullies, and exercises for victims to make the mental adjustments to become less inviting targets. She also offers advice to workers who see bullying but aren’t sure what they can or should do to stop it. She defines three types of bullying in the workplace: -- Verbal bullying, meaning slander, ridicule, name calling, offensive remarks, -- Physical bullying, like pushing, kicking, obscene gestures, threat of assault, and -- Situational bullying, through sabotage, interference or acts of humiliation She describes the characteristics, behavior and vulnerabilities of seven workplace bully types: the Angry Aggressive Jerk, the Scorched Earth Fighter, the Silent Grenade, the Shape-Shifter, the Narcissist Manipulator, the Character Assassin and the Wounded Rhino. Most people who have spent much time in an office of any size will recognize at least some of these types. If you recognize all of them, you have my sympathy. Lynne explains that people bully for all kinds of reasons: because they grew up with bullying, as a way coping with feelings of inadequacy, as a strategy for job security and advancement, and more. She says bullies rarely stopped bullying; they just find other victims. The book combines readable, anecdotal accounts of real-life situations — “case studies” — with social psychology research about the behavior of both victims and bullies, especially as seen in the workplace, followed by step-by-step coaching on how to either side-step, minimize or defeat the bullying behavior. She reviews the physiology of human stress reactions and explains how victims of bullying can get control of their reactions, using visualization to help them to listen and respond effectively to attacks that otherwise might stun or intimidate them into shamed silence. She addresses relatively new but increasingly problematic cyberbullying (which is not confined to school kids), and concludes with a quick review of the law, as it does and doesn’t apply to bullying. (I learned, for example, that California is the only state that specifically outlaws bullying in the workplace.) When I sat down with “Beating,” I assumed it was a book of relevance only to current victims of workplace bullying. But after finishing it, I see a broader value. Everyone who has a job or is planning to get one ought to read it. It will prepare them to recognize bullying for what it is and give them the tools to address it, whether they’re the victims or simply find themselves on the sidelines of a bullying incident. Maybe I’ll send a signed copy to El Loco. Patrick Dougherty is the former editor of the Anchorage Daily News.

GUEST COMMENTARY: Fraser Institute: Alaska economic freedom on the wane

Editor’s note: This article originally appeared on AKHeadlamp.com, a website created by the Alaska Support Industry Alliance. Alaska: the land of mountainous expanses, tremendous natural resources, phenomenal wildlife, rugged and independent people, and lack of economic freedom. Wait, what? You thought Alaska was a land of opportunity, overflowing with economic freedom? Think again. The Fraser Institute recently released their 11th annual Economic Freedom of North America report and the findings concerning Alaska are grim. The report measures how economically free North America is at a national and sub-national level. According to the report, in terms of economic freedom, Alaska ranks 48th out of 50 U.S. states – just ahead of New York and California. Supporters of free markets and limited government should be exceptionally concerned that Alaska ranks anywhere near those two bastions of big government and tax and spend policies. The Fraser Institute defines economic freedom simply as the ability of individuals to act in the economic sphere free of undue government restrictions. The report measures a jurisdiction’s level of economic freedom by analyzing numerous variables from different policy areas such as government spending, taxation, and regulation of markets. Unfortunately, data from the report shows Alaska severely lacks a robust level of economic freedom needed to spur strong job growth, raise living standards, and create greater opportunity for all. According to the report Alaska is losing its competitive edge due to high levels of state spending, generous subsidies, government employee pensions, a sizeable state government workforce, and several other factors. The only policy area where Alaska shines is taxes, thanks to our lack of a state income and sales tax (though Gov. Walker and others are trying to reinstate the state income tax). It is worth noting that since the passage of oil tax reform under (Senate Bill) 21, our economic freedom measure concerning taxes has substantially increased! In 2016 the Legislature and Gov. Walker should have one major goal: increase Alaska’s economic freedom in order to facilitate a healthier economy, lift people out of poverty, fix our fiscal crisis, and increase general well-being. Right sizing government, by cutting spending to the sustainable level of $4.5 billion as developed by Dr. Scott Goldsmith, is one of the most important ways to achieve this goal. Not imposing new taxes, not raising taxes on industry, advancing the Alaska LNG Project, and increasing oil production will all help boost Alaska’s level of economic freedom. Headlamp hopes policy makers take notice of our dismal standing presented by the Fraser Institute, and will resolve to change it for the benefit of Alaska’s next generation.

GVEA purchase won’t help gas project, but should lower costs

Interior electric utility Golden Valley Electric Association’s decision to assume a more minor role in the Interior Energy Project than some hoped was perhaps the worst news for the project’s prospects in 2015. The Alaska Industrial Development and Export Authority had hoped the cooperative would line up for two billion cubic feet of natural gas per year, a substantial base demand that would help reduce costs to residential customers. Instead, GVEA settled on a 12-year deal with local refiner Petro Star to fuel its North Pole generation plant mostly with naphtha, committing to 600 million cubic feet of natural gas as a compromise measure. While this was hard news for the natural gas project, GVEA’s reasoning for making the decision is sound and in the best interest of its members. In order to make achieving the energy project’s $15 price point easier, backers at AIDEA and in the Interior community were hoping Golden Valley would sign on for 2 billion cubic feet of natural gas, a major base from which to build residential demand in the project’s early phases. More gas demand would spread costs out further, reducing the burden on residential customers to repay the bonds upon which the bulk of the energy project is being financed. The net difference in gas costs to residential customers with GVEA’s lessened 0.6 billion cubic foot commitment has been estimated at between $0.60 and $1.50 per thousand cubic feet for residential customers. In a project that has already struggled to achieve its $15 per thousand cubic foot price target, an additional $1 per mcf in cost to customers makes matters even more difficult. But though GVEA has been — and still is — a major part of the IEP, as an area-wide utility, it has more to consider than the target price for natural gas in Fairbanks and North Pole. Its overarching goal is cheaper energy for all of its members, many of whom won’t directly benefit from the natural gas project. And the persistent delays that have pushed back the delivery date for gas aren’t easy for residents to abide, much less a utility presented with a long-term, relatively low-cost fuel source. GVEA’s deal with Petro Star for naphtha locks in 12 years of supply at rates comparable to those available now. If residents could secure a deal like that for their own homes for heating oil, it’s a safe bet the natural gas project would be abandoned altogether. They don’t have that flexibility; GVEA did. It’s difficult to blame the co-op for pulling the trigger on a fuel source that should lower electricity costs for all of its members for years to come. Nonetheless, the natural gas project remains vital to Fairbanks and North Pole residents. Even in the absence of a trucking or rail delivery system, local gas storage and distribution would be essential for the community to take advantage of gas from the large-scale Alaska LNG plan when it comes online. And natural gas appears the best — and possibly only — solution to get North Pole’s air pollution problem under control. GVEA has been good enough to maintain a sizeable chunk of commitment to the project — while 600 million cubic feet isn’t two billion, it’s still a big anchor the project needs, especially since the co-op has pledged to take that gas in the summer, when residential demand will be close to nil. The Interior Energy Project is still a top priority for the community, and GVEA shouldn’t be thrown under the bus for their decision to seek surety in their fuel rates when the opportunity presented itself. That is, after all, what the IEP itself is all about. Golden Valley just took advantage of the opportunity to bring costs down earlier — and possibly more — than would have been possible with natural gas.

Board of Fisheries set to take up Yukon-Kuskokwim issues

Years of declining king salmon stocks will control the Alaska Board of Fisheries’ Arctic-Yukon-Kuskokwim meeting in Fairbanks set for Jan. 12-16. Since the last AYK meeting in 2013, the board and the Alaska Department of Fish and Game have put a tight leash on Yukon and Kuskokwim fisheries. Villagers along both rivers need ways to keep fed and keep paid, but simultaneously ask for even stricter controls on king salmon, especially on the Kuskokwim where middle and upper rivers users are seeing even less of the already-scarce fish. The major Kuskokwim proposals aim to tweak the king salmon management framework for fairer subsistence harvest. Bethel-area fishermen catch up to 80 percent of the river’s total, already below the amount needed for subsistence. Proposed fixes include installing a first-ever subsistence permit system, creating inriver goals for chinook, and tightening the trigger for commercial openings. Management during low abundance of kings hobbled the 2015 Kuskokwim season. The Kuskokwim River produced some surplus chinook for subsistence, but nowhere near the official amount needed for subsistence, or ANS. The ANS, a number set by the Board of Fisheries, is 67,200 to 109,800, and hasn’t been met in five years. The average subsistence harvest is 84,000. ADFG estimates the Kuskokwim River chinook salmon subsistence harvest in 2015 was between 17,000 and 25,000. The Bethel Test Fishery measures the run of king salmon as it comes in, but is not as accurate as a sonar counter, which the department likely cannot afford with budget cutbacks looming for state agencies. Several proposals want to use the test fishery to base restrictions that will allow upriver harvest. The Orutsaramiut Native Council proposed that no subsistence fishing be allowed in the river at all until 50 percent of the forecasted kings have passed the Bethel Test Fishery, reserving the other 50 percent for upriver users. Two proposals, submitted by the Kuskokwim Native Association and the Stony-Holitna Fish and Game Advisory Committee, ask that an in-river goal be set above the Bethel Test Fishery. An in-river goal, they theorize, will spread more salmon to the middle and upper river. By setting the in-river goal above the Bethel Test Fishery, they believe more salmon will work their way upriver rather than being caught in the comparatively population heavy Bethel area. The Stony-Holitna committee also requests that the board create a first-ever subsistence permit system to make the limited chinook more available to middle and upper river users. ADFG would be able to restrict licenses and dole them out evenly in times of low abundance, the committee believes. Yukon proposals, also impacted by chinook conservation measures, seek to stretch commercial fishing opportunities by allowing new gear types and even creating a fishery for new species. The weak 2015 outlook for Yukon chinook coincided with a below forecast chum salmon run. The 2015 summer chum salmon preseason estimate was 1.8 million to 2.4 million fish, leaving 800,000 to 1,400,000 for commercial harvest. Only 358,000 chum were harvested in 2015, alongside an escapement of 1.3 million. The trick is to catch the chum without killing kings. “The trend lately has been to find alternative gear types that allow for live chinook releases,” said John Linderman, a fish and game coordinator for ADFG’s Commercial Fisheries Division. The department has created several restrictions on the mesh size, depth, length, and allowable time for gillnets, which are the historical favorite for both subsistence and commercial Yukon fishermen. In their place, cleaner but less effective dipnets, beach seines, and fish wheels are used. One proposal would create a purse seine fishery for Yukon commercial fishermen, which would avoid the incidental chinook deaths gillnets tend to cause. Similar purse seine programs are used for hatchery chinook on the Columbia River but have no history on the Yukon or with wild chinook stock. The prospect could prove uneconomical for the delta residents. Conversion to purse seining operations would be expensive, and only allowed in times of low chinook abundance. The limited opportunity might not justify the cost. Kwik’pak Fisheries, owned by the Yukon Delta Fisheries Development Association, submitted a proposal to create a pink salmon fishery for the Yukon. Pink runs are fairly strong in the region — 513,599 pinks passed the Pilot Station sonar counter in 2014 — but also difficult to plan around chinook avoidance measures, as sizable runs come only every other year.

The Bookworm Sez: Thinking like Einstein made simple

Right in front of your nose. That’s where you usually find the solution to sticky problems: always right there, where you weren’t necessarily looking. This time, though, there’s no easy answer, no matter how much you ponder and pick but if you read the new book “How to Think Like Einstein” by Scott Thorpe, you could become a genius at things like this. Ever since revealing his Theory of Relativity in 1905, Albert Einstein’s held a special place in science, history, and culture. E = mc2 and Einstein = genius. That was true in the early years of Einstein’s career: fresh out of university, he was alight with “truly revolutionary thinking” but, alas, the fire waned as he got older. “He was still brilliant,” says Thorpe, but Einstein didn’t do the kind of work he did when he was a lad. Thorpe blames Einstein’s growing knowledge and his decreasing willingness to “break the rules.” And that, Thorpe says, is what made Einstein so darn smart: he was happy to ignore conventional wisdom and get out of “rule ruts.” Though we are trained to heed rules in life and in work, breaking them, he claims, is the “universal principle” for thinking like a genius. Wrestling with the unsolvable starts with writing the problem as a statement that “focuses your mind.” Identify why you want the problem solved and what you’ve already tried to do. What are the “rules” that might govern this issue? Once you’ve identified the problem, “create a better one” by “resizing” the conundrum, making it simpler, and changing your attitude towards it. Try to look at it differently, then write it down again. Journal your ideas, and remember that there are no “bad ideas” when problem-solving.  Learn methods to escape those irksome rule ruts. Know how to bust rules and “ignore inconvenient facts.” And finally, keep in mind that “Mistakes are essential to growing ideas.” Don’t make them on purpose but don’t discount them, either. Sometimes, it’s too easy to get too close to a problem, which makes it impossible to get past the issue. “How to Think Like Einstein” might help. And then again, it might not. I thought it odd that author Scott Thorpe puts the gist of his entire book on the bottom of the very first page: “…you’ve got to break the rules.” You know everything you need to know right there; what follows is just enhancement for those six words. It also struck me that problem-solving often doesn’t have the luxury of time, of which Thorpe’s process demands a fair amount. Readers do receive a nicely-varied, well-researched wealth of interesting illustrative anecdotes, but they were more entertaining than helpful in the immediate raison d’être of this book. I think there’s goodness here — in particular, an entire chapter of group exercises for breaking out of the “rule ruts” — but past that, help is going to take some serious digging. Indeed, the solutions you’ll find in “How to Think Like Einstein” are not as plain as the nose on your face. Terri Schlichenmeyer is the author of The Bookworm Sez, which is published in more than 200 newspapers and 50 magazines throughout the U.S. and Canada. Schlichenmeyer may be reached at [email protected]

Movers & Shakers 01/10/16

Dan Javes was named director of operations for NMS Food & Facilities Management, a division of NANA Management Services, the fifth-largest private employer in Alaska with more than 40 years of experience in the North Slope oil and gas industry. Javes will oversee operations in the education sector, at Fairbanks International Airport and restaurants operated by NMS Food & Facilities Management—The Varsity at the Alaska Airlines Center and MUSE Restaurant at Anchorage Museum. Operations for education clients include venues at the University of Alaska Anchorage and food services provided for K-12 schools. Most recently Javes was director of operations for Gate Gourmet, overseeing catering and facilities management at San Francisco International Airport. There, his achievements include implementing a safety culture that halved accidents, increased labor productivity and improved compliance with audits. Javes previously worked for NANA Services LLC for six years and held positions as president and vice president of operations for the global provider of federal and commercial services. He also has 15 years of experience with Sodexo/Marriott. Credit Union 1 employee Holly Tabaczka has been promoted to the position of branch manager at the credit union’s Midtown Branch. Originally hired in 2007 as a teller, Tabaczka later held the positions of member services representative, consumer loan processor, member service supervisor and assistant branch manager at the credit union’s Midtown Branch, the position she held prior to this promotion. In her new position, Tabaczka will oversee the branch’s standards for quality in providing service to its members, while ensuring compliance of state and federal regulations and internal policies. The Alaska Support Industry Alliance announced Hans Rodvik as its new external affairs coordinator. Rodvik was born in Anchorage, and is a lifelong Alaskan. He majored in political science and graduated magna cum laude from the University of Alaska Anchorage in May 2015 with a bachelor’s degree. During the 2014 legislative session he worked for Alaska Senate Majority Leader Sen. John Coghill, R-North Pole, as a legislative intern. Following that session, he worked as part of the Anchorage field team on the successful Vote No On One campaign. In the fall of 2014 he joined Americans for Prosperity Alaska, working as a field associate during the U.S. Senate race. In January, before graduating from UAA, Rodvik joined AFP-AK full time as field director. As field director, he worked to advance free market policies and limited government by organizing grassroots campaigns, using cutting edge technology, and effectively engaging elected officials. Each summer for the past seven years, Rodvik has also commercial fished for sockeye salmon; three years in Cook Inlet and four years in Bristol Bay. Rodvik joined the Alliance in 2015. Altman, Rogers & Co., CPA’s announced that Katherine Stachow, CPA, and Yulia Ellsworth, CPA, have been promoted to the position of manager. Stachow is a licensed CPA by the State of Alaska and is a member of the American Institute of Certified Public Accountants as well as the Alaska Society of CPAs. Stachow joined Altman, Rogers & Co. in June 2009. She has a bachelor’s degree in professional accountancy and public administration. She graduated from Carroll College in May 2009. Ellsworth is a licensed CPA by the State of Alaska and joined Altman, Rogers & Co. in July 2011. She has a bachelor’s degree in professional accountancy from the University of Alaska Anchorage. She also has a bachelor’s degree and master’s degree in economics and international business from Far Eastern National University, Vladivostok, Russia. She graduated from the University of Alaska Anchorage in May 2011. 

Setnet ban ruled unconstitutional

The Alaska Supreme Court overturned a lower court ruling on Thursday, declaring a ballot initiative to ban setnets in certain areas of the state unconstitutional. Calling the initiative a “give-away program” that was designed to appeal to the self-interests of non-commercial fishermen, the court issued an opinion on Thursday that put an end to a lengthy legal process that began in late 2013. Lt. Gov. Byron Mallott certified the ballot initiative after the initiative’s sponsor, the Alaska Fisheries Conservation Alliance, submitted 43,000 signatures in support of the measure, 36,000 of which were declared valid by the Division of Elections. The initiative would have almost exclusively impacted the Kenai Peninsula, where 735 setnet permits are registered alongside a large guided angler industry. Alaska residents hold more than 80 percent of the permits. After the initiative was filed, then-Lt. Gov. Mead Treadwell rejected it in January 2014 as an allocative measure, which is prohibited by the Alaska Constitution. AFCA appealed and won a reversal in Superior Court that allowed it to begin collecting signatures. "I'm still shaking," said Resources for All Alaskans President Jim Butler. Resources for all Alaskans, or RFAA, is a relatively new group formed to combat the setnet ban. It weighed in on the argument in March 2014 supporting the state's assertion that the initiative was a prohibited appropriation of state resources. At the time, Butler said the idea of banning setnetting at the ballot box was bad policy. "The proposal to ban setnetters is particularly destructive because it doesn't address the real reasons for declining king salmon populations and would instantly destroy 500 small Alaska family businesses and hundreds of other jobs," Butler said at the time. The Alaska Fisheries Conservation Alliance released a statement saying its members were disappointed by the decision and referring to the signatures of more than 43,000 registered voters who signed to have the ban put on the ballot. "We are disappointed with the court's decision to deny voters an opportunity to weigh in on the method and means for harvesting," said AFCA president Joe Connors in the written statement. Founding member Bob Penney is also quoted in the statement, he said he is "deeply disappointed because the Kenai Kings are the real loser here and it now seems their species will continue to decline. Maybe it’s time the federal government looked into this issue." According to the court, commercial setnetters are a distinct user group who would be unfairly stripped of a public resource allocation — their part of the millions of salmon that return to Alaska each year — to another party’s benefit. Most of the members of AFCA are sportfishermen who would ostensibly see more salmon inriver where the commercial nets to be removed from the water; one board member, Joe Connors, is a former setnetter. Banning setnets, the court wrote in a Dec. 31 ruling, that the initiative would essentially devote salmon to a specific user group on the Kenai Peninsula, to the exclusion of another.  “We concluded that the initiative in question was a give-away program because it was ‘designed to appeal to the self-interests of sport, personal, and subsistence fishers, in that those groups were specifically targeted to receive state assets in the circumstance of harvestable shortages,” the court wrote. The court also concluded that the ballot initiative would have narrowed the Legislature’s and Board of Fisheries’ ability to make allocations. “If (the initiative) were enacted, then neither the Legislature or the Board would be able to allocate any salmon stock to this significant, existing user group.” AFCA’s attorney, Matt Singer, had argued that Alaska has a history of making resource-related ballot initiative decisions, such as aerial wolf hunting and bear baiting. The Supreme Court said the argument is invalid, as the user groups for salmon are more clearly defined. “Under the Limited Entry Act and its implementing regulations, commercial set netters must obtain gear-specific setnet permits, which are limited in number, hold significant value, and may be bought and sold,” the court wrote. “This makes commercial setnetters a far more cohesive, recognizable, and permanent group than individuals who hunt wolves using same-day aerial techniques and snares, or who hunt bears using baiting or feeding methods.”   DJ Summers can be reached at [email protected]

Walker: ‘We’re TransCanada now’

If 2015 was Alaska’s “year of the budget,” Gov. Bill Walker is looking forward to 2016 being the “year of the gasline.” Walker said he hopes his administration can present the Legislature with a virtually complete Alaska LNG Project fiscal package sometime in the second half of the upcoming legislative session, which begins Jan. 19. The portfolio of Alaska LNG documents the governor wants to take to Juneau includes the project’s fiscal terms, governance agreement and tax policy, and the associated constitutional amendment. The Department of Law has indicated an amendment will be needed to exempt the project from limitations the state Constitution puts on lawmakers preventing them from locking the state into long-term tax policy. The terms of the Alaska LNG Project gas production contracts, essentially gas tax contracts, will likely bind the state for up to 25 years and therefore need to be exempted from constitutional limitations. Walker said he is excited about being able to spend more time on the North Slope natural gas project — a cause the governor has championed in various forms for decades — and he has committed to attending each project sponsor meeting. “Now that we’ve sort of ripped all the Band-Aids off on all the different areas of the budget and all the other stuff now we can get down to the gasline,” he said in a Dec. 22 interview with the Journal. Having the tentative agreements in place as soon as possible should give the Legislature time to critique them during the regular 90-day session before another gasline-dedicated special section later in the spring. The special session is when the fiscal terms of the $45 billion-plus North Slope natural gas export pipeline project the state is in with BP, ConocoPhillips and ExxonMobil would be debated and voted on by the Legislature. Walker said he expects to hold the gasline session immediately following the regular session because legislators will want as much time as possible in late spring and summer to campaign in their districts, as 2016 is an election year. However, when the session is held will depend on what legislators want as well as when the regular session wraps up. Typically 90 days, Alaska’s annual winter-spring session can be extended up to 120 days if pressing issues — the state budgets, taxes and Medicaid expansion and reform this year among others — remain unresolved in late April. The Legislature took just 13 days to adjourn its most recent gasline special session that began Oct. 24; but that was for whether the state should buy out TransCanada Corp.’s share of the Alaska LNG Project. It amounted to an up or down vote. TransCanada, a pipeline company, previously held the state’s 25 percent interest in the North Slope gas treatment plant and the 800-mile gas pipeline. Now, the State of Alaska is a 25 percent partner in the entirety of the project with the three producer partners owning shares equivalent to their in-ground gas holdings devoted to the project. Prior to taking on TransCanada’s role of the project, the State of Alaska held a quarter-share of the LNG plant planned for the Nikiski area on the Kenai Peninsula — a $25 billion operation itself. The special session Walker is anticipating would have multiple, complex financial agreements that, if approved, could have tremendous impacts on the state for decades to come. Regardless of the other moving parts, the constitutional amendment needs to be approved by legislators and shipped off to the Division of Elections by June 24 for inclusion on the November general election ballot. If the late June deadline were missed, the project would likely be delayed two years until the next general election. Walker transformed the leadership of the Alaska Gasline Development Corp., or AGDC, in 2015 by appointing six new members to the seven-member state corporation board. He also asked for, and got, a new AGDC president when financier Dan Fauske resigned the position Nov. 20. The governor said at the time that AGDC needed executive leadership with pipeline expertise to reflect the state’s growing role in the project. He reiterated that sentiment to the Journal. “AGDC does look different now than a year ago,” Walker said Dec. 22. “But a year ago we weren’t in the pipeline business. A year ago we were looking at a portion of an LNG project and we’re looking at a pipeline, at the upstream conditioning. So now, we’re TransCanada; we need to look like TransCanada.” While the State of Alaska will not be expected to match the expertise of TransCanada or ExxonMobil, the project’s pipeline manager, the state will have to provide a “fair representation” of a pipeline company to make its contributions to the Alaska LNG Project, Walker said. Finally, getting gas supply commitments from at least two of the producers, BP and ConocoPhillips, was a significant hurdle cleared, according to the governor. Walker said one of his biggest concerns with Senate Bill 138, the legislation that maps out the project’s structure passed under former Gov. Sean Parnell, was the lack a provision to move forward if a partner withdrew. He noted that, as far as he knows, Alaska LNG is the only project the industry giants are collaborating on — a uniquely challenging aspect given each company has other plans for other investments around the globe. The proof of the challenge lies in the fact that Alaska’s North Slope gas is still in the ground, according to Walker. “The economics have always been in this (AK LNG) project, yet it has not been done to date,” he said. Elwood Brehmer can be reached at [email protected]

Utilities update RCA on Railbelt grid upgrades

Leaders of the state’s largest electric utilities submitted a draft plan to state regulators on Dec. 22 outlining how they will address more than $900 million of needed infrastructure upgrades. The early-stage business plan, developed in conjunction with Wisconsin-based American Transmission Co., is an update for the Regulatory Commission of Alaska on the utilities’ efforts to form the Alaska Railbelt Transmission Co. A Railbelt region electric transmission company, commonly referenced as a TRANSCO, would eliminate the disparate management of the region’s aging electric transmission system and bring it under one entity. In theory, operational savings drawn from sole control of the Railbelt’s transmission lines and substations would ultimately benefit ratepayers through lower electric rates. More important, perhaps, would be the ability to spur investment in and improve the reliability of Railbelt transmission infrastructure. The six utilities, from Homer Electric Association to Golden Valley Electric Association in the Interior, signed a nonbinding memorandum of understanding with American Transmission Co. in December 2014 to examine the formation of a Railbelt TRANSCO. Those six utilities provide about 80 percent of Alaskans with power. The RCA released a report at the behest of the Legislature last June that was critical of the utilities’ collective lack of substantive action to form a TRANSCO, which is assumed to be the best path towards addressing the Railbelt’s electric transmission issues. If the utilities did not take meaningful steps to voluntarily form a TRANSCO, the RCA warned it would seek legislative authority to handle the situation itself. The latest progress report to on a Railbelt TRANSCO projects a certificate of public convenience and necessity application, essentially a utility’s business license, could be submitted to the RCA by fall 2016. That could have a TRANSCO up and running by the spring of 2017, based on the utilities’ timeline. The utilities expect to have the potential benefits of a TRANSCO validated and a fair cost-recovery structure for transmission assets settled by next spring. A detailed, formal TRANSCO business model would be developed at the same time. The utilities would then take the agreements to their governing bodies — director boards and local governments — sometime next fall. Which utilities participate in the TRANSCO will largely depend on the benefits that can be identified for their individual ratepayers, the report states. If all six regional electric utilities participate, the TRANSCO would be governed by representatives from each utility, American Transmission Co., five independent directors and its CEO on a large board of directors. Some independent power producers in the state have criticized the Railbelt utilities for allegedly attempting to retain control of the transmission system by limiting access to it, thus squashing competition. Utility leaders collectively claim they will gladly purchase power from the cheapest source, regardless of who provides it. The challenge in the current system is keeping power from nontraditional sources economic as it travels the Railbelt on lines with multiple owners, each with their own transmission tariff needed to pay for the infrastructure. This often leads to what is known as tariff, or rate, pancaking in the industry. American Transmission Co. Business Development Manager Eric Myers said a lot of progress has been made casting an outline for a Railbelt TRANSCO, but noted it’s hard for any utility to commit to the idea at this point. “We’re in the middle of a process of coming up with a workable business model that can serve as a basis for decisions by the companies, and consequently by the regulators, but we’ve got to get all the details down,” Myers said. A 2013 Alaska Energy Authority study estimated $903 million worth of transmission upgrades are needed in the Railbelt to bring the entire system up to single redundancy. AEA is working with a consultant to update that study. Transmission investments in Alaska’s Railbelt would not only improve reliability — some areas are linked with a single transmission line — but could also save consumers money through economic dispatch. AEA has estimated that maximum use of the Railbelt’s cheapest power sources could save ratepayers between $80 million and $240 million per year. Bottlenecks in the system prevent adequate amounts of economic power from being shipped across the lines, forcing power to be purchased from more expensive sources. If AEA’s identified savings are actually realized will likely depend on how infrastructure investments are financed through the inner workings of a Railbelt TRANSCO. Myers said the first priority would probably be de-constraining state-owned Bradley Lake hydropower near Homer. “(Bradley Lake) is really inexpensive power and the more you get that power to market at peak times when demand is high — there’s value in that,” he said. Myers noted that the biggest cost savings along the Railbelt is traditionally avoiding oil-generated power, primarily from Golden Valley Electric Association. Low oil prices, if they last long-term, could challenge the economics of some otherwise obvious line capacity improvements. Ownership of Railbelt transmission lines is divided amongst the utilities and their service areas. The Alaska Energy Authority also manages 173 miles of electric intertie owned by the state between Willow and Healy. Improving transmission is a financial challenge for the individual utilities because expansive service areas and small customer bases can make projects that might benefit consumers elsewhere in the region a large cost burden to bear. Selling or leasing existing transmission infrastructure to the TRANSCO would allow the utilities to pool money for capital projects and allow ATC to invest in transmission, either directly or by attracting third-party investment. Milwaukee-area American Transmission Co. was the first multi-state, transmission-only company when it formed in 2001 to prioritize investment for the owner utilities in its service area of eastern Wisconsin and Michigan’s Upper Peninsula. By 2021, the fourth year full year of operation for a Railbelt TRANSCO under the current proposal, the transmission utility’s gross annual cost is estimated at $11.6 million.  At the same time, it’s projected to save the utilities more than $4.3 million per year, making a TRANSCO’s net cost in 2021 about $7.3 million, a cost that equates to an additional 96 cents per month on an average consumer’s bill. The economic benefits of a TRANSCO would not likely be manifested directly in significant savings on ratepayers’ electric bills. Rather, a TRANSCO would slow or stall significant rate increases by providing the most economic power on a more reliable transmission system. Elwood Brehmer can be reached at [email protected]

For Sullivan, focus on foreign policy, fulfilling promises

It has been a busy first year in Congress for Alaska Sen. Dan Sullivan. Elected in November 2014, the former state Natural Resources Commissioner and Attorney General took office in January in the new Republican-controlled Congress. Sullivan has an increasing role in foreign policy with his military background — he still serves in the U.S. Marine Corps Reserve — and his U.S. State Department experience, where he was Assistant Secretary of State for Economic, Energy, and Business from 2006-09. As a freshman, Sullivan is 100th in Senate seniority, but he did well last spring in his initial committee assignments and landed all four of his priorities: Commerce, an important committee for fisheries (Sullivan is one or two freshmen on the committee); Environment and Public Works, Armed Services, and Veterans’ Affairs. On Armed Services, Sullivan has already formed a close relationship with chairman Sen. John McCain, R-Ariz., and has been tasked with coordinating the committee’s oversight of Pacific region defense issues, to which Sullivan has added an emphasis on the Arctic. In an extended interview with the Journal Dec. 22, Sullivan ticked off accomplishments of the Senate in 2015 under its new Republican leadership. He feels good about his own performance there, too. “My focus is on the themes I campaigned on. This is important because there is a lot of cynicism out there (about government) and people notice,” when an elected official doesn’t follow through on commitments, Sullivan said. “It breeds more cynicism.” “With every vote I make I can point to something I campaigned on.” Return (mostly) to regular order What’s most important, Sullivan said, is that under new leadership the Senate is now functioning as it should, with bills and appropriation measures moving through committees where hearings are held and bill “markups” are done. Legislation then moves on to the Senate floor where amendments can be offered, and sometimes adopted. Sullivan contrasted this to a non-functional Senate under Democratic leadership and its former Majority Leader, Nevada Sen. Harry Reid, where few amendments were allowed on the floor and budget bills did not move through the normal process. “In 2014, under Harry Reid, there were a total of 14 roll call votes on the Senate floor. That’s about one a month. In contrast, in 2015 there have been over 200 roll-call votes,” Sullivan said. “We’re now operating in regular order.” Highlighting two issues, Sullivan said the enactment by Congress of a bipartisan five-year surface transportation bill was a significant accomplishment after years of stalemate and one-year extensions of the former program. He gave credit to Alaska’s senior Sen. Lisa Murkowski, for leadership on the House-Senate conference committee on the transportation bill along with an education bill that took control of school curriculums away from the federal government and send it back to states and local school boards. Among other bills, an amendment by Sullivan to a federal Human Trafficking measure gives states the ability to go after sex offenders if the U.S. Justice Department chooses not to. The senator’s interest in this came from his experience as Alaska’s attorney general where the Justice Department blocked the state in pursuing a high-profile case. “This is about protecting people who are most vulnerable. It was my first accomplishment in the Senate, and it went on to pass the House,” Sullivan said. There is actually more bipartisan action in the Senate than is commonly believed, he said. An example is the Senate’s vote approving the Keystone oil pipeline, a highly-charged energy issue, where one quarter of Democrats in the Senate voted with Republicans to approve the project before President Barack Obama vetoed it. The vote to override the veto failed 62-37, a few votes short of the two-thirds needed to override a veto. However, the old ways are not completely gone from the Senate. Sullivan said he voted against the federal spending bill, passed in late December, because of the less-than-transparent way it was handled, which was in a manner reminiscent of the Harry Reid era. “Harry Reid, (House Minority Leader) Nancy Pelosi, (Senate Majority Leader) Mitch McConnell and the White House made the final agreements behind closed doors on this 2,200-page, $1.8 trillion-dollar Omnibus Appropriations Act. We got this bill on Tuesday and were told we had to vote it on Friday,” Sullivan said. Sullivan voted “no” on the bill, in protest. “I dug my heels in,” he said. “There is a possibility that there are bad things for Alaska tucked into this bill, and we don’t know what there are.” He cited an example of a last-minute, little-scrutinized 2014 bill that contained language making changes to the U.S. Small Business Administration’s minority contracting bill that were very adverse for Alaska Native corporations in that business. Sullivan’s vote split the Alaska delegation on the spending bill. Murkowski and Rep. Don Young voted yes. Before the end-of-year omnibus spending bill he voted against, Sullivan said the Senate’s performance in passing budget appropriation bills in an orderly process showed the process working as it should. “We had 12 budget appropriation bills brought to the Senate floor and those were on a bipartisan basis,” Sullivan said. However, the Senate Democrats filibustered every appropriations bill when brought to the floor, including three times against the National Defense Authorization Act, or NDAA, a bill that Obama eventually vetoed Oct. 22. “I don’t know what they were really after,” in the filibuster, Sullivan said, “other than to force a jam-up of bills at the end of the year.” Congress rebuffed Obama’s veto by passing a virtually identical NDAA in November by veto-proof margins of 91-3 in the Senate and 370-58 in the House. On the spending bill, Sullivan noted that many of his fellow freshman Republican senators voted against it, having campaigned against passing budgets in such a fashion, as well as several committee chairmen who were upset that their appropriations bills had been killed. There were also more partisan bills that passed the Republican-led Senate, such as the repeal of Obamacare and bills dealing with intrusive new federal rules like Environmental Protection Agency’s Waters of the U.S and the new EPA rule on carbon emissions. “The president will likely veto those, but we (the Senate Republicans) felt it was really important to make the case,” he said. Frequent flier It is in foreign and military affairs that Sullivan feels he can contribute the most, taking advantage of his background in the U.S. State Department in the George W. Bush administration and his own military status as an officer in the U.S. Marine Corps Reserve. Being in the reserves allows the senator to interact with troops when on periodic active duty, and this gives him a direct perspective on current issues uniformed military personnel deal with that would be difficult for any other senator. The Senate leadership recognizes this value, leading to the request by McCain and Majority Leader McConnell that Sullivan help oversee the military realignment toward the Pacific. It is highly unusual for responsibilities like this to be given to a freshman senator. It puts Sullivan in key meetings in the Pacific, however, including a one-on-one in Tokyo earlier in 2015 with Japan’s Prime Minister Shinzo Abe. Sullivan used the occasion to pitch the Alaska LNG Project to Abe, and he found the prime minister surprisingly well-briefed on the effort. He also brought up AK LNG at a press conference in Singapore May 28 at the Asia Security Summit as part of a delegation led by McCain and Sen. Jack Reed, D-R.I., noting when he had a chance to speak that he mentioned the project had just that day received a key export permit from the Department of Energy. Sullivan has also been active in jawboning U.S. Army officials to slow, or halt, the transfer of 2,600 troops from the 4th Brigade Combat Team (Airborne) at Joint Base Elmendorf-Richardson, or JBER, downsizing the unit to battalion-size. He succeeded in getting an amendment on the defense spending bill requiring the Defense Department to develop an Arctic Operations Plan and got verbal assurances from the Army that troops would not be withdrawn until the plan was finished. Army brass wasn’t happy about the amendment because operations plans are very detailed, requiring a threat assessment, and they take time, Sullivan said in the interview. Sullivan’s argument for the plan, citing Russia’s Arctic military buildup, got a lot of attention from other senators, however, that rose above common parochial concerns whenever military troops are reduced from an area. “They (Russia) have positioned four brigade-size combat teams and built 11 new airfields in the Arctic, as well as installing a sophisticated new air defense system and commissioning 40 new icebreakers, some of them nuclear. What are we doing? Squat, and at the same time we’re talking about withdrawing the only airborne combat brigade in the Pacific, one of six in the Army, and the only U.S. troops who are Arctic-trained,” Sullivan said. “The good news is that many other members of the Armed Services Committee now recognize this.” The issue is not yet settled. A critical test will come in February when the Army plans to take elements of the 4th BCT from JBER to Louisiana to participate in tests on its ability to operate as a smaller, battalion-sized unit, or essentially what would remain at JBER if the 2,600 troops were to leave. Sullivan plans to attend and observe the tests. The senator agrees the Army needs to cut costs but trimming combat troops is not the way to do it, pointing to the military’s “tooth to tail” ratio. The U.S. military has the longest “tail,” or ratio of support to front-line personnel, of any of the world’s armed forces, and if reductions are made the “tail” should be looked at first, he said. Meanwhile, another foreign policy issue Sullivan is watching closely, although it may now be beyond Congress’ ability to do anything, is the lifting of economic sanctions against Iran that is part of the recently-agreed nuclear accord. Some senators have discussed possible legislation that would prevent at least the U.S. sanctions from lifting until the administration certifies that Iran is no longer a state sponsor of terrorism, in effect taking Iran off the list of nations that sponsor terrorism. Whether the idea will get traction isn’t known, however. Sullivan is not a fan of the nuclear agreement, however, because it has already been shown that Iran has violated it with its tests of long-range missiles. President Obama was too quick to sign off on the deal without ways of ensuring compliance, the senator said. An example he cited is that Iran basically self-inspects its nuclear facilities under the deal. There is no real independent inspection and verification. What rankles Sullivan particularly is that Iran is being freed of sanctions while four U.S. citizens are still being held prisoner, and that Congress has been cut out of the loop on such an important foreign policy decision. “There are a lot of Democrats who opposed this deal. It’s a bad precedent,” Sullivan said. “Through all of our nation’s history, all major foreign policy initiatives have been bipartisan and involving Congress,” through actions like ratification of treaties or formal declarations of war, Sullivan said. The senator feels he has a stake in the matter because as a top State Department official in the Bush administration Sullivan was instrumental in knitting together an international coalition of nations on the economic sanctions that ultimately brought Iran to the bargaining table. Much of what that accomplished is being lost by an agreement that is weak and difficult to enforce, Sullivan said.

Walker plans for better relations with Legislature

What a long, strange trip it’s been — and that was only year one. In his first year in office, Gov. Bill Walker faced unprecedented state budget deficits; an obstinate Legislature, which would eventually sue him; an historic presidential visit; and an oh so precarious state economy, all the while trying to put his mark on an immense natural gas pipeline project led by three of the largest companies that has for years been his overwhelming desire for Alaska. Despite those challenges and countless others, some self-inflicted, Walker still embraces the gubernatorial post. “There’s really no part of I haven’t enjoyed,” Walker told the Journal during a Dec. 22 interview. “It’s been tough — the budget, the financial stuff has been tough —but that’s not deterred me. Sometimes I’ll come home late at night and my wife (Donna) will ask me, ‘Are you still happy to be governor?’ and I say, ‘Yes, I’m still happy to be governor.’” As he noted, today’s Alaska is much different than the one Walker thought he would be leading when he announced his second run at the state’s high office in 2013. Then, the price for Alaska North Slope crude averaged more than $100 per barrel for the entirety of 2013, the only year that has happened. Now, we are all too aware of where that market has gone and what it has done to the state. Then, Walker thought he would be running as an Independent with an Independent running mate. Now, he has a Democratic lieutenant governor in Byron Mallott after the two combined their tickets. Then, the Alaska LNG Project was still a pipe dream. Now, maybe it still is, but the state has committed to spend at least $13 billion for its share if the pieces come together this time. However, the governor said he has the right team in place to match what faces the state’s 13th administration. It was that team that decided to lay out his ambitious state spending reform plan all at once Dec. 9, rather than to parse the tax, Permanent Fund Dividend, and revenue proposals, which would have been the politically expedient thing to do, Walker said. “It was a group decision around the cabinet table, realizing that’s not the politically correct way to do it necessarily,” the governor said. Since, Walker’s New Sustainable Alaska Plan has been picked apart by Republicans who say it doesn’t cut spending enough before resorting to a statewide income tax to help fund state government as the administration has proposed. Democrats have chided the governor’s plan to revamp how state dividend checks are paid to Alaskans, saying the governor’s plan, which would likely cut checks in half, at least in the near term, amounts to an unfair tax on low-income residents without amply taxing the oil industry. This most recent debate with the Legislature is far from his first, however. A series of kerfuffles over the state’s role in the $45 billion-plus Alaska LNG Project kept Walker at odds with the Republican majorities almost all year. In the midst of those, Walker kept a campaign promise and expanded Alaska’s Medicaid system administratively when Majority leadership in the Legislature held up Medicaid legislation. That led to the Republican-led Legislative Council filing suit against the governor in August on grounds that he overstepped his authority. While a last minute injunction to stop Medicaid expansion failed, the lawsuit is ongoing. Even where to hold a special legislative session became a contentious issue. The Majority outright ignored Walker in late April when it pushed to adjourn a special budget session Walker called for Juneau. The Legislature reconvened on its own a few weeks later in Anchorage. A partial, $200 million veto of $700 million in the state operating budget to pay for refundable oil and gas tax credits drew the ire of not only Republicans in the Legislature, but also some in the industry. Walker said he made the unexpected move after the tax credit sum was not addressed in the special budget session, as he predicted. It’s also one he stands behind because it got people talking about a credit program he considers unsustainable. “It started the discussion; it really did,” Walker recalled Dec. 22. “It was a heated discussion, but it started the discussion.” As the start of the next legislative session nears Jan. 19, the governor said he has made plans this year to meet with the leaders of the House and Senate Finance and Resources committees every two weeks, “because just about everything goes through Resources or Finance,” as a way to improve communication between executive and legislative branches, he said. Walker also surmised that the state’s budget deficit, nearing $3.5 billion, might actually improve relations with the Legislature. “I think that this session is going to be easier in some ways, as far as relationship-wise just because we’re all in this together,” he said. “The entire boat’s taking on water. I think we’re going to have a better working relationship.” On President Barack Obama’s three-day, late summer visit, Walker said the president “connected with Alaska” the impact of the visit on the state probably won’t be known until after Obama is out of office. “Some people said when he came back to the White House he was pretty much on fire about Alaska. Now, that could be interpreted two different ways,” Walker quipped. Interpretation one: Alaska is a great national park and must be kept as such. Interpretation two: Alaska needs to develop its resources to promote economic prosperity. Walker said he continues to push the White House for access to the resources on and under federal control his state. “I am not done with my outreach to this administration at all,” he said. He recalled a conversation he had with Obama in which the president was surprised by the fact that only a small portion of the Arctic National Wildlife Refuge would be needed to be opened to exploration in order for the state to access potentially billions of barrels of oil. “The 1002 (Coastal Plain) section is 8 percent of ANWR. We only need half of it; we only need the western half — 4 percent,” Walker said, attempting to put in perspective how a little of the revered wilderness could go a long way towards helping the state’s financial situation, which he said Obama is clearly aware of. Walker also noted that each time he’s raised the issue of ANWR with Obama, the president quickly changes the topic to the AK LNG Project. “Like I continue to tell Washington, we can self-heal if we are allowed access to the resources that we were promised,” the governor reiterated. Elwood Brehmer can be reached at [email protected]

Alyeska pouring efforts into cold-weather ops

It has been a warm winter so far, and operators of the Trans-Alaska Pipeline System operators are thankful. But winter has just begun, and the worry of cold temperatures in Interior Alaska and a midwinter “event” that halts pipeline operations, like what happened in 2011, is never far from mind. Since that suspenseful event when Alyeska Pipeline Service Co. engineers were concerned they couldn’t restart the pipeline, they have been aggressive about putting countermeasures in place. It costs money, but heating the oil flowing through the pipeline has now become standard procedure. Without the heating, oil could cool to 31 degrees Fahrenheit or lower by the time it reaches Valdez, at the pipeline’s southern terminus, a temperature at which ice formation and wax buildup would cause operational problems, Alyeska officials say. The company operates TAPS on behalf of its owners, the large North Slope oil producers. The problem is mainly is caused by the low volumes of oil as North Slope production has continued to decline. TAPS, completed in 1977, now operates at about 25 percent of its 2 million barrels-per-day design capacity, Admiral Thomas Barrett, Alyeska’s CEO, told an Alaska business group in a briefing.  “Our operations in winter are increasingly complex,” Barrett said. At Prudhoe Bay, oil that once entered TAPS at its Pump Station 1 at 140 degrees Fahrenheit now comes in at 108 degrees. When the pipeline operated at full capacity of 2 million barrels per day it took four days for oil to reach Valdez, and with the pipeline full the friction of fluids moving against the pipe walls kept the oil warm. Now it takes 15 days for oil to travel the 800 miles and because half the pipeline is built above ground there’s ample exposure to winter temperature that can reach minus-50 degrees. There isn’t enough oil flowing for the pipe wall-friction mechanism to do what it previously did. “The real danger for us is if there is an unexpected winter shutdown. There could be significant problems,” if the oil were to congeal and ice were to form as water dropped out, Barrett said. Exactly this happened in 2011 when a small oil leak at Pump Station 1 caused TAPS to shut down for several days during cold weather. At several points along the pipeline in Interior Alaska, the crude temperature dropped below freezing. When regulators finally gave the OK, Alyeska was able to restart the pipeline, but with difficulty.  Pipeline operators are now adding heat at four locations by circulating the crude through loops of piping so that the friction adds heat. At Pump Stations 3, 4, 7 and 9, heat is added by running oil through recycle loop, at a rate of up to 25,000 barrels per hour at Pump Station 3. Last January, oil left Pump Station One at a 106 degrees and an ambient sir temperature of minus-17 degrees. When the oil reached Pump Station 3, 100 miles south, its temperature had dropped 51 degrees. Recirculating at Pump Station 3 added 15 degrees back. The same process is repeated at Pump Stations 4 and 9, although at Pump Station 7, which has been shut down, a mainline pump has been kept active to do the recirculation. In 2015, Alyeska added a new heat source, a diesel-fuel heating skid placed 17 miles north of Pump Station 7, at Remote Gate Valve 65, a point along the pipeline where cold winter temperatures are common and the pipeline could be vulnerable to ice formation. Oil is extracted and circulated through a loop with about 2 degrees added by the heat skid. Alyeska is considering the addition of similar heat skids at various points. TAPS also gets a bump in heat by the return of residual oil from a small refinery near Fairbanks owned by Petro Star Inc., an Alaskan refiner. Petro Star takes crude from TAPS and makes jet fuel and diesel, returning unused portions of the crude, at a high temperature, to the pipeline. Michelle Egan, Alyeska’s spokeswoman, said the main strategy is to protect Pump Station 9, near Delta, southeast of Fairbanks, where the oil must be warmed enough to get the rest of the way to Valdez and over Thompson Pass in the Chugach Mountains. “The higher winter production from the North Slope is a big help. On a lot of days now we’re moving 550,000 barrels per day, so the volume helps,” she said. But throughput continues to decline at rates that have averages 5 percent a year and pipeline operators are concerned with wax buildup if rates reach 400,000 or 350,000 barrels per day, she said. Meanwhile, one experiment tried by Alyeska has turned out to be unsuccessful. In a special test facility built at the University of Tulsa, the company experimented with a strategy of removing water from North Slope crude, from its ambient content of 0.2 percent water to 0.02 percent, to see of the crude could be run at temperatures below freezing without ice being formed. Unfortunately, ice still formed even at the lower water content, Barrett said in his briefing. “We learned we can’t flow it colder, so adding heat is now our main strategy,” Egan said. Interestingly, the idea of circulating the crude oil through loops of pipe at pump stations to add heat was born in the crisis atmosphere of the 2011 early winter shutdown, when engineers were seriously worried that after several days the oil had cooled and gelled to the point that the system might not restart. It wasn’t an immediate solution to the problem at hand but in a brainstorming session Alyeska’s engineers suggested it as a preventative measure for the future, and management adopted the plan. The 2011 shutdown also brought some drama between state and federal regulators, and Alyeska’s management, over the restart. The Pump Station 1 leak was still being repaired but Alyeska asked for government permission to temporarily restart the pipeline flow to warm up the oil. The U.S. Environmental Protection Agency, which had taken over control the federal agency management of the problem, refused, according to Dan Sullivan, now a U.S. Senator but who was state Commissioner of Natural Resources at the time. The state and Alyeska forcefully pressed the issue, warning EPA that the system could be down for weeks or even months with serious consequences to U.S. west coast oil supply and state of Alaska finances. Sullivan said he was working back channel to the White House at the time, and EPA eventually backed down, allowing the temporary restart. As Slope production continues its decline the point at which TAPS can no longer operate, as currently configured, is still unknown. Below 300,000 barrels per day, some form of “batch operation” could be implemented where the pipeline is operated periodically, drawing down oil stored at Prudhoe Bay. Meanwhile, the steps Alyeska has to take is adding significant operating costs, a factor in the increasing tariffs for moving North Slope oil to Valdez.  “The real solution for us is finding more oil on the North Slope and adding new production and throughput,” Barrett said. Although it would have been a decade away, new production from the Chukchi Sea from Shell’s exploration was being looked on by many Alaskans as a long-term savior for TAPS. Shell pulled out last fall, however, saying citing regulatory delays and costs amd disappointing results from the one exploration well completed this past summer. Tim Bradner can be reached at [email protected]

AJOC EDITORIAL: Time to put up or shut up for Legislature

With just a couple weeks to go until the next legislative session begins, Alaska’s elected officials have a hefty to-do list. In no particular order, here it is: • Restructuring the Permanent Fund earnings in order to use a portion to pay for state government, and possibly reducing the annual citizens’ dividend. • Considering whether to raise or institute new taxes. • Cutting spending. • Reaffirming approval for the sale of pension-obligation bonds; and deciding whether to fund the capital budget with general obligation bonds subject to voters’ approval. • Allocating $15.7 billion in payments-in-lieu-of taxes, or PILT, between the state and municipalities for the Alaska LNG Project. • Reforming the oil tax credit program, and possibly raising or hardening the production tax floor. • Dealing with the Anchorage Legislative Information Office hot potato. • Funding the expanded class of Medicaid recipients that the House and Senate majorities are currently suing the governor to overturn. • Approving Alaska LNG Project fiscal terms, commercial agreements and a constitutional amendment securing those terms to be presented to voters in November. Any one or combination of the above items would bog down a Legislature that has gone down to the last minute or overtime just to pass budgets in healthy fiscal years. Taken in total mere months from a statewide general election, it would be wildly optimistic to expect a series of profiles in courage to be written from the halls of the Capitol in Juneau. Both sides are going to have to be realistic. Republicans should know they can’t cut enough, and Democrats should drop their incessant insistence on raising oil taxes. Reforming the credit program or hardening the tax floor is one thing; pretending that there’s some vast supply of money on the Slope that can be tapped at $35 per barrel is not. Republicans have stated Gov. Bill Walker’s budget doesn’t cut operating spending enough, by only $100 million compared to their desire for a $400 million reduction. If they can cut operating spending by another $300 million compared to Walker’s budget, it would eliminate the need for $200 million in revenue from a state income tax. Whether they have a plan or the wherewithal to execute such a reduction remains to be seen. If the Republicans can’t propose a budget that balances, or choose to move some of the Constitutional Budget Reserve into the Permanent Fund Earnings Reserve as part of the restructuring to fund government, then the House minority Independent Democrat caucus will still have the same leverage it exerted last session to protect its members’ funding priorities such as education or Medicaid expansion. Senate President Kevin Meyer, R-Anchorage, has said some in the majorities could be comfortable with a budget that doesn’t fully close the $3.5 billion gap, which could be a preferable compromise between not slashing state spending to the bone while reducing the annual draw from the CBR to a much smaller level. With a 15-5 advantage in the Senate, Meyer can pass such a plan without Democrats; such is not the case in the House. If the Republicans don’t want to raise or create taxes to fully close the deficit, the House majority is going to have to work far more constructively with the minority than it did last year when, at an impasse, the leadership proposed to transfer the entire Earnings Reserve into the Permanent Fund to eliminate the requirement for a three-quarters vote to pull from the CBR. Democrats are correct to be concerned that new taxes, higher taxes and a reduced dividend will impact low income Alaskans disproportionately. Taken in total, Walker’s fiscal plan would remove some $1.15 billion — $500 million in taxes, $650 million from the dividend payout — from the private economy to help fund government. But funding government is also a Democrat priority, and they’re not going to be able to have it both ways. Republicans are also correct that taking money out of the private sector and disrupting the oil tax system for the fifth time in 10 years is likely to chill investment and economic output at a time when state government can least afford it. None of the options are good, but legislators will have to remember what Hyman Roth said in The Godfather Part II: “This is the business we’ve chosen.” If they’re not ready to make the hard choices and compromise, the voters may send them into another line of work. Andrew Jensen can be reached at [email protected]

FISH FACTOR: Groundfish stocks look mostly healthy as season begins

“Tis the season for even bigger Alaska fish catches when groundfish seasons open at the start of the New Year. Catches of pollock, cod, flounders and other groundfish account for nearly 85 percent of Alaska’s harvest poundage, and 67 percent of the nation’s total groundfish harvests. Those numbers could increase due to boosts in several catch quotas in both the Gulf of Alaska and the Bering Sea for the next two years. For pollock, the nation’s largest fishery, the catch is up slightly to 1.3 million metric tons, or just under three billion pounds. The Pacific cod quota is down a bit to 525 million pounds, not because of stock declines, but to accommodate the catches of competing gears and fleets, said Diana Stram, Bering Sea groundfish plan coordinator for the North Pacific Fishery Management Council, which oversees fisheries from three to 200 miles offshore. Flatfish stocks also are very healthy, Stram said, but catches were lowered due to halibut bycatch concerns from trawl and longline vessels. “The fisheries worked voluntarily last year to reduce their halibut bycatch and they did a good job, but it still remains a concern,” she said. No matter how robust the stocks are, Alaska fish managers always opt for sustainable harvest numbers. In the Bering Sea, that means never exceeding a two million-metric ton harvest cap. “The biomass overall in the Bering Sea is extremely healthy for all of the stocks. In terms of the catch quotas, the balancing act is really the constraint of the two million metric ton cap,” Stram explained. “While a lot of the stocks could have higher TACs (total allowable catches), the Council balances between the different stocks and the different fleets in order to meet that limit.” There are 22 different species under the Council’s purview, Stram added, along, with non-targeted species like sharks, sculpin and squids taken incidentally in other fisheries. Fish stocks also are booming in the Gulf of Alaska where catches will be up overall by 6 percent. “It sure looks good. Pollock is up about 30 percent and Pacific cod is down just a smidge but nothing we’re too worried about,” said Jim Armstrong, plan coordinator for Gulf groundfish. Gulf pollock catches will be 572 million pounds in 2016 and 2017, and cod at about 158 million pounds. A total of 25 different species are tracked throughout the Gulf, he added, “and about 130 when various complexes, like rockfish, are broken out.” One red flag, Armstrong said, is sablefish, which is managed both in the Gulf and Bering Sea as a single unit stock. A continued downward trend has decreased those catches by 14 percent. “It’s a concern,” he said “One of the reassurances is that this coming year we’re going to have a sort of second opinion by the Center for Independent Experts who will review the sablefish stock assessment so we’ll better understand what’s behind the downward trend.” Both coordinators credit the Council for its ecosystem approach to fisheries management and always deferring to the best available science. “Our council has always valued the scientific input and the rigorous assessments that go into each fishing cycle, as well as taking into consideration other things that are going on in terms of bycatch of halibut, and also salmon and crab and herring. And just looking at the catch setting process on an annual basis is a really good example of that,” Stram said. Armstrong credits the multi-levels of scrutiny and review the Council scientists and advisory panels contribute each year. He is a newcomer to the NPFMC staff since July, after a 10-year tenure with the mid-Atlantic council. “This is the big leagues,” he said. “It’s 10 times greater in terms of the value and the quantity, the number of fish species that are managed, and I think it scales up the amount of energy that is put into management itself. Everything is bigger here.” Millions more pounds of groundfish also will hail from state managed fisheries within three miles of shore. Got jellies? Jellyfish abundances, or a lack thereof, can tell a lot about what is happening in the oceans on a larger scale. Researchers are now calling on “citizen scientists” to post jellyfish observations on a special website: jellywatch.org. “Citizen science in general is valuable because it is multiplied with such large numbers. To tap into that pool of has huge advantages for a data set,” said Dr. Steven Haddock, a researcher from University of California at Santa Cruz who studies marine bioluminescence, zooplankton and deep sea jellyfish. He hopes to gain more insights on near shore jellyfish varieties to model to add to the wider ocean range. Haddock also wants to test hypotheses that claim a warmer climate has boosted jellyfish blooms. There is a misconception that jellyfish thrive in warmer waters, but any seagoing Alaskan knows that’s not the case. “A common belief is that jellyfish like warmer water for some reason, but in Alaska, the species like the lion’s mane, are really restricted to colder water,” he told KTOO in Juneau. Haddock said it’s great if website postings include a photo, but descriptions alone are helpful, such as one from a Ketchikan diver. “He didn’t have a photo, but he gave a description of this jelly that sounds like a deep-sea species that we discovered here in Monterey. It’s called Tiburonia and we call it ‘the big red’ because it’s the size of a beach ball,” Haddock explained. “So this guy diving said ‘I feel like I’m reporting a big-foot sighting.’ I think it actually could be a sighting of this relatively newly discovered deep-sea species that he saw while scuba diving off Ketchikan.” Observations of no jellyfish sightings also are helpful. Haddock said “clean seas” reports make documented sightings more valid, as seeing none are as valuable as seeing many. Give salmon a brake Washington State is protecting salmon by removing copper from automotive brakes. A Better Brakes law passed in 2010 went into effect this year, and will phase out copper completely by 2025. “You touch your brakes and a little bit of material gets deposited on the road. And from there it washes into a stream or river where salmon may be spawning or trying to go home or getting back to the ocean,” said Ian Wesley, Better Brakes Coordinator at the Washington Department of Ecology. The program was spawned after years of research showed that even trace levels of copper in water will damage a salmon’s ability to smell. “The Northwest Fisheries Science Center has done a lot of work on how copper affects a salmon’s ability to smell, and juvenile salmon are particularly susceptible to these effects,” Wesley explained. “Even trace levels of copper will damage their ability to smelling, which inhibits their ability to avoid predators. They will release a hormone into the water that alerts other fish when there is danger nearby, and it prevents other salmon from being able to smell that. So they won’t know when danger is in the water and they won’t hide from it.” Wesley said the program was driven by a partnership between brake makers, water quality watchers and regulators. Brake manufacturers agreed that if it was shown their products were causing environmental harm, they would work to phase copper out of their brake pads. Now, any brakes sold in the state come with a Better Brake logo. “If you want to sell brakes in Washington State you need to mark your products with a three leaf logo,” Wesley said. “The brake manufacturers have registered it, and it shows the level of copper concentration in a brake pad. If all three leafs are filled in, it means there is no copper in the product, when two are filled in, it means there is less than five percent copper, and when one is filled in, it means there is no asbestos or lead in the product.” The copper-free brakes cost the same as the less fish friendly models, Wesley said. Penalties for noncompliance starting in 2025 will be applied to the brake makers, with a maximum penalty of $10,000 per violation. California has followed suit and the Better Brake program is going nationwide. “The break manufacturers have signed a memorandum of understanding with the EPA to voluntarily agree to comply with Washington’s requirements on a nationwide basis,” Wesley said. “The large retailers and distributors and manufacturers have agreed to only sell certified brakes throughout the country, and to make sure the copper requirements are met for all the brakes made.” Wesley credits U.S. brake makers for willingly making changes to give salmon a break. “The brake manufacturers really deserve a lot of credit, and they have been moving faster than we expected them to,” he said. “They’ve really gone above and beyond.” Washington laws also strongly encourage grassy alternatives to drains and pipes that let road runoff become cleanses by percolating through the ground, as it did before urban areas were paved over. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Movers & Shakers 01/03/16

The Anchorage Chamber of Commerce recently welcomed Lisa Noland to its team as the director of marketing and business development. In this position Noland will work to increase membership and improve marketing programs at the chamber along with working in the area of administration. She joined the Anchorage Chamber in early December from The Arc of Anchorage where she most recently served as chief marketing officer. Prior to The Arc of Anchorage, Noland worked with Community Connections Inc. in Ketchikan, and has owned and managed two successful small businesses. Noland holds a bachelor’s degree in social work from Pacific Union College and a masters of public administration with emphasis in non-profit management and leadership from Walden University. True North Federal Credit Union is pleased to announce that Lauren Culp has been selected to attend Crash the GAC by The Cooperative Trust and Credit Union National Association and represent the Alaska Credit Union League. Crash the GAC will bring young credit union professionals together, running a tailored program alongside the main event and allowing for mentor sessions with key individuals; previously from the likes of National Credit Union Foundation, Credit Union National Association, Filene Research Institute and CUNA Mutual Group. All Crashers receive a complimentary registration to attend GAC, from Credit Union National Association. Bran Pollard, civil engineer at R&M Engineering Inc., has earned his professional engineers license in the state of Alaska by meeting the comity requirements as established by the state’s professional licensing board. Pollard joined the R&M team in August 2014, and has more than 13 years of experience working on public and private civil engineering projects. Pollard is a graduate of San Diego State University and holds a bachelor’s of applied science in civil engineering and has been a licensed P.E. in the state of California since 2010. The Rural Alaska Community Action Program, Inc. announced that Jacqueline Dailey of Juneau was re-elected president of the board of directors. Dailey, representing the Alaska Native Brotherhood and Alaska Native Sisterhood Grand Camp, has extensive human resources experience. In addition to the election of Dailey as board president, Ted Angasan of South Naknek representing the Bristol Bay Native Association was reelected vice president, and Margaret Roberts of Kodiak, representing the Kodiak Area Native Association, was reelected secretary/treasurer. The Arc of Anchorage announced the appointment of Gwendolyn Lee Zaavodnick to serve as interim CEO of The Arc of Anchorage. With decades of experience in social services, Zaavodnick previously served The Arc of Anchorage as the executive director for 12 years. She will provide leadership to the organization until The Arc’s board of directors select a new CEO in 2016. Zaavodnick assumes the role on Jan. 4. She succeeds the previous CEO Dr. Mary Van Haneghan, who served The Arc until December 21, 2015. Rasmuson Foundation has elected a new member to its board of directors and reorganized its management team, resulting in several promotions and one new hire. Jason Metrokin was elected to the board. Metrokin is president and CEO of Bristol Bay Native Corp. and chairs the ANCSA Regional Association, which represents the presidents and CEOs of the 12 Alaska-based Native regional corporations. Deborah Bitney recently joined the Foundation as vice president and chief administrative officer. Bitney has 30 years of experience as an administrator in a wide range of sectors. Most recently, she was administrative services director for the Alaska Gasline Development Corp., where she worked to establish AGDC as an independent corporation of the State of Alaska. Previously, she was director of the Alaska Permanent Fund Dividend Division. Sammye Pokryfki has been promoted to senior vice president. Program Officer Aleesha Towns-Bain has been promoted to vice president and chief operating officer. Communications Director Cassandra Stalzer has been promoted to vice president of communications.

Leg. Council seeks help from AIDEA with Anchorage LIO

The Legislative Council is hoping the Alaska Industrial Development and Export Authority can help it out of an untenable situation, while keeping legislators in their Anchorage offices. Council members voted unanimously Dec. 19 to recommend the full Legislature not pay the $3.3 million per year lease it has for the Anchorage Legislative Information Office, or LIO. At the same time, they voted to request help from state agencies in brokering a deal between the Legislature and the building owner that is equal to the cost savings that would come from moving legislative offices into the Atwood Building in Downtown Anchorage, which houses executive branch agencies. The cost of the lease has been heavily criticized by legislators and the public both in and out of Anchorage while the state faces annual deficits nearing $3.5 billion, although when signed a year ago it met state law that requires long-term state lease extensions to be at least 10 percent below market value. That is one of the points of contention in a separate lawsuit filed by Jim Gottstein challenging the lease as illegal as neither an extension nor 10 percent below market value. Sen. Peter Micciche, R-Soldotna, made the advisory motion, noting that it is the Legislature’s duty to operate government as cost-effectively as possible. The state agency to help the council would very likely be the Alaska Industrial Development and Export Authority, or AIDEA. A quasi-government finance entity, AIDEA manages unique business transactions throughout Alaska, some of which are done at the request of government’s political bodies. If a deal isn’t reached after 45 days, the council’s motion would recommend not funding — or breaking — the 10-year lease with building owner 716 West Fourth Avenue LLC, co-owned by Anchorage developer Mark Pfeffer and Bob Acree. The leaseholder company name is the Downtown Anchorage address of the LIO. Pfeffer has indicated he is willing to sell the 64,000 square-foot building for $36 million, which cost $44.5 million in 2014. The Legislative Council decided to rebuild on the old LIO building site in 2013 after numerous attempts to find existing suitable space that meets the unique needs of a public government body in Anchorage failed. The Legislature contributed $7.5 million towards the construction cost, so Pfeffer and his company ultimately funded $37 million, about $28 million of which is long-term debt and $9 million is Pfeffer’s cash equity position in the property. A year of the lease has already been paid for at $3.3 million, which mean Pfeffer’s property company would walk away with $39.9 million over two years at his sale price. The lease is paid through May 31, 2016. The Legislature could terminate the lease seemingly without legal ramification because of a clause in nearly all government contracts stating fulfillment of the agreement is “subject to appropriation,” in this case, by the Legislature. If the Legislature doesn’t fund it, for any reason, the lease or contract falls apart. The “out” clause is virtually never used, though, and ascribing it to the Anchorage LIO lease situation could call the State of Alaska’s credit worthiness into question. While breaking the lease may not directly lead to a credit downgrade for the state, it would not look good after credit rating agencies have warned that the consequence of not addressing the budget deficit will be a downgrade from the state’s AAA credit rating. A consequence of moving out of the LIO to the Atwood Building could be slightly higher bond rates and generally a poorer perception of the state’s trustworthiness. Before a break in the hours-long meeting resulted in Micciche’s motion when the meeting came back to order, Legislative Council members urged against taking action until all options are fully vetted, as the idea of employing AIDEA, nor the consequences of moving had not been fully vetted. Rep. Liz Vasquez, R-Anchorage, a former attorney, vehemently warned against taking a politically expedient way out in testimony to the committee. “It appears to me we have not done our due diligence and we’re going to pay for it in litigation,” Vasquez said. Sen. John Coghill, R-North Pole, characterized the appropriation clause less as an option for the Legislature and more of a “last resort.” If an agreement is not reached that keeps the Legislature in the Anchorage LIO for cost on par with the Atwood Building, the issue is sure to be a big part of a session already ripe with budget conundrums. 716 West Fourth Avenue spokeswoman Amy Slinker said in a formal statement the firm is happy the Legislative Council is gathering more information before making a decision. “We believe there are several options that save the state money without taking the drastic step of breaking the lease and risking what others have said would be serious negative credit implications,” Slinker said. Moving to the Atwood Building, with 30,000 square feet of usable space, would cost $10.1 million over 10 years, which would include a $3.5 million initial refurbishment. The Anchorage LIO is 64,000 square feet; however, it has about 45,000 square feet of usable space, which omits restrooms and other common areas. Pfeffer said he would sue the Legislature for terminating the lease, which could cost the state anywhere from $1 million to $2 million in legal fees, regardless of the outcome, according to an attorney for the Legislative Council. In a Dec. 14 interview with the Journal, Pfeffer also noted that he entered the agreement with the Legislature — the state appropriator in charge of funding the lease it signed — and not a state agency with less control over what is funded. AIDEA’s ability to finance, sometimes at lower than market rates, for special projects, combined with the state’s positive investment returns, could make an authority purchase of the LIO building the best option, AIDEA Chief Investment Officer Mark Davis testified to the council. First, the Legislature would remain in the LIO. Second, AIDEA’s purchase would be preferable over an outright purchase by the Legislature because the authority can borrow money at a rate lower than state savings and investment returns. The Legislature would then lease the building from AIDEA, which would pay a portion of its return on the building back to the state in the form of its annual dividend to state coffers. Elwood Brehmer can be reached at [email protected]

User conflicts over halibut, salmon on horizon for 2016

The year about to end saw the beginnings of some fisheries regulations and legal battles that will either resolve, or present further issues, in 2016. Halibut has dominated the federal fisheries agenda for the North Pacific Fishery Management Council, which oversees the Exclusive Economic Zone from three to 200 miles off the coast. Shrinking halibut stocks and dual management have collided to produce a fishery bitterly divided among bycatch users, directed users, and charter anglers struggling to make ends meet with fewer legally harvestable fish. The council will enact or further review several measures to ease the situation and provide a more collaborative and holistic approach to halibut management. A program for Recreational Quota Entities will be released for public review in 2016. Recreational Quota Entities, or RQEs, would purchase halibut quota from commercial halibut fishermen for the charter fleet to use. Currently charter operators may only lease quota. Commercial concerns about raising the price of commercial quota, among others, prompted the council to tweak the RQE proposal. It will likely release it for public review at its February meeting in Portland or April meeting in Anchorage. The council will also review a broader halibut management framework plan to smooth some of the difficulties it has managing the resource in tandem with the International Pacific Halibut Commission, a joint U.S.-Canadian body which sets quota limits for the directed halibut fishermen. Among the most important points of the framework is a potential for biomass-based halibut bycatch limits. Currently, halibut bycatch limits for the flatfish trawlers in the Bering Sea are capped, and do not move with the abundance of legally harvestable halibut. The council will review methods for abundance based halibut limits in 2016. In state fisheries, all eyes will be on the Supreme Court of Alaska to rule on a ballot initiative proposed by the Alaska Fisheries Conservation Alliance. The initiative would ban setnet gear in urban areas, almost exclusively impacting Cook Inlet East Side setnetters where 735 setnet permits are registered alongside a large guided angler industry. Alaska residents hold more than 80 percent of the commercial permits. The Alaska Supreme Court heard arguments in August from the Alaska Fisheries Conservation Alliance and the State of Alaska; the state is arguing the measure is unconstitutional as a prohibited allocation of a resource while the AFCA argues it is not allocative and simply bans a gear type. If allowed, the initiative could appear on the 2016 ballot and go into effect as early as 2017. State fisheries managers and legislators will wish to avoid the messy Board of Fisheries confirmation fights of 2015. The board will look to the Legislature to confirm the most recent appointee to the seven-member board, Bob Mumford, during the 2016 Legislative session. Mumford was named by Gov. Bill Walker to fill the seat after his first two nominations didn’t make the cut, one withdrawing from the process and the second defeated by the Legislature. Alaska Department of Fish and Game managers will keep a close eye on both the returns of chinook salmon, which have largely been in decline statewide over the past several years, and sockeye salmon, which showed eye-raising behavior in 2015 with late, large runs and below-average size. To catch them in Bristol Bay, the state’s largest sockeye run, fishermen are asking for guarantees they’ll get paid more than in 2015. Bristol Bay fishermen signed a petition late in 2015 to ensure some kind of contract transparency for their dealings with processors. In 2015, Bristol Bay fishermen were only paid 50 cents per pound, half the average rate, due to a confluence of market factors. Though that price is tied to a web of influences, fishermen often suspect processors’ prices.

New year will reveal impacts to economy from budget cuts

There is a strong sense of uncertainty regarding Alaska’s near term economic future in state industry circles, while basic indicators continue to show growth. The state’s unemployment rate was 6.4 percent in November, steady from October and down very slightly from a year ago. A 6.4 percent unemployment rate is significant for Alaska, as it hasn’t been less than 6.3 percent in the nearly 40 years the state Labor Department has tracked the metric. Unemployment is less than 6 percent in the state’s urban hubs. The average number of working Alaskans is up more than 2,700 over 2014, according to the department. Historically strong commercial salmon harvests and a strong-as-ever tourism industry — more than 1.9 million visitors in 2015 spending on average more than $900 apiece — have pushed employers to add positions the last few summers. Low oil prices wreak havoc on the state budget, but they encourage Lower 48’ers spending less on energy to travel and spend that cash in Alaska. Disposable income has been freed up in Alaska as well, particularly for residents who heat their homes with heating oil. Behind those metrics, however, are less optimistic numbers. Alaska’s population growth has flattened, which could distort unemployment figures. The state had a net outmigration of about 7,500 people in fiscal year 2014, most of whom were likely working-age adults, economic experts have said. That was offset by in-state births that kept Alaska’s population nearly perfectly flat at 735,600 from 2013 to 2014, according to the most recent data available from the state Labor Department. A naturally transient population, combined with a healthy Lower 48 economy, can cause out-of-work Alaskans to leave the state rather than file for unemployment. Oil and gas industry employment was down 900 jobs statewide in November from a year prior, based on preliminary Labor numbers. In a state heavily reliant on government spending, a lot rests on what legislators and Gov. Bill Walker do to address the state’s budget deficit, growing towards $3.5 billion as oil falls to less than $35 per barrel for the first time in more than a decade. The governor’s aggressive proposal — and similar ideas floated in the Legislature — to revamp how the state manages its revenue would provide a foundation to fund government long-term and set a clearer economic picture. However, his plan includes industry and income taxes and likely smaller dividends that would certainly impact private spending at least a little. And while minimal capital spending from the state will probably be the norm for at least the next few years, the producer partners and the State of Alaska will continue pumping several hundred million new dollars into the economy each year they design and ponder the Alaska LNG Project. Oil prices have been down from a $110 per barrel peak for more 18 months; at the same time, the 30-year average price for a barrel of Alaska oil is about $50 when adjusted for inflation, which makes current prices low, but not a historical anomaly. Alaska’s economy is slowly diversifying and the next year or two will speak volumes as to whether it has diversified enough to make the state viable without the security blanket of dominating petroleum revenue.  Elwood Brehmer can be reached at [email protected]

Southeast residents air complaints about ferry reductions

JUNEAU — On Dec. 15, Capt. Mike Neussl of the Alaska Marine Highway System tried to spread oil on troubled waters. The 66 people listening to him did their best to light that oil on fire. “One of the things we don’t hear from those legislators up north is when they’ll close the Parks Highway one or two days a week,” said one man, raising his voice to interrupt Neussl’s presentation. In the fifth of six presentations across Southeast and Southcentral Alaska, Neussl — deputy Transportation Department commissioner and the head of the ferry system — outlined the problems facing the ferry system and for more than three hours heard an earful from Southeast residents upset about those problems. “Hang on a second — you guys are firing (questions) faster than I can answer them,” Neussl said at one point to soft laughter. More often than not, the conversation was serious and, at times, emotional. Karla Hart was among those who spoke about the ferry system’s impact on the tourism industry. “If I were trying to run a system into the ground, I would be doing just what you’ve been doing,” she said, describing how tour companies now deter RV drivers and independent travelers from using the ferry system because of its unpredictability. “The state Constitution tells us ... that everything belongs to us equally,” said Albert Howard by phone from Angoon, “yet other communities on a regular highway get a break. We pay the regular tire tax, we pay the gas tax ... and then we pay for our ride to Juneau.” In the past three fiscal years, the Marine Highway has seen a $27 million cut to its operations budget and a $3 million drop in its capital budget, which pays for required annual maintenance. The ferry system has gotten rid of bars and gift shops aboard ship, it’s gotten rid of discounts, increased cancelation fees and cut nearly 30 shoreside positions. In 2016, the ferry Taku will stay docked all year, and in the summer, it may be joined by as many as three other ferries. “We’re running out of low-hanging fruit. There’s no more bars to close, there’s no more gift shops to close. ... There’s not a lot left,” Neussl said. Later, speaking in response to a question about Angoon losing all service for a month this winter, he added, “I think we’re headed back to the days where there was one vessel for a particular area, and when that vessel goes out for maintenance, there’s no service.” One of the things that is left is a fare change, which the state expects to partially implement in the next year. Unfortunately, Neussl said, the state can’t charge tourists more than it does Alaskans. “The federal government frowns on us discriminating against other Americans,” he said. Another change, suggested by ferry crews, involves simply slowing down. “One of the consistent messages we’ve been getting ... another way to save money is to slow down,” Neussl said. “We’re going to look at those things and try to reduce the 10 million gallons of fuel we burn each year.” Through various means, Neussl said, the Marine Highway expects to be able to bring one of the fast ferries back online to serve Sitka and Cordova this summer. In the longer term, the state may need to consider selling one or more of its ferries, likely the laid-up Taku first. “What do you all think of laying up a vessel in the Marine Highway System permanently?” Neussl said. He added that during his tour of community meetings across the state, he’s heard that people don’t care how many ships are in the state’s fleet or which ships serve which communities, they just want to make sure they get served. Lt. Gov. Byron Mallott is expected to convene a meeting in Juneau in February of delegates from across the state to further discuss the future of the Marine Highway, but Sen. Dennis Egan, D-Juneau, sitting in the audience, cautioned that it will be difficult to get relief from the political process. Southeast Alaska and coastal Alaska in general doesn’t have the numbers in the Legislature to keep funding secure. “We’re rural versus roaded now,” he said.

COMMENTARY: Fossil fuels are a gift that keeps giving

The Paris summit on global warming ended with a triumphant, hands-holding, chipper vow to vastly reduce the world’s use of fossil fuels. Some who would love that, such as pioneering alarmist James Hansen, are nonetheless furious, saying the whole shebang was a fraud that will do next to nothing. Let’s hope so. Cheap, powerfully efficient fossil fuels are one of the best things ever to happen to humanity. Oil, natural gas and coal make the modern, industrialized world go. Without them, we wouldn’t have affordable computers, electric lights, TVs, effectively functioning hospitals, machines helping to produce gobs of needed food, transportation that gets you here, there and everywhere and more, much more, endlessly more. So says Alex Epstein in “The Moral Case for Fossil Fuels.” As a philosopher, his standard for what counts most in the climate issue is human life, and he clearly, convincingly shows how inexpensive, abundant energy is that without which you would not have the longevity, the nutrition, the health, the degree of safety and the flourishing that are with us now. At this stage of technological development, we aren’t going to obtain such benefits in more than a niche way with renewable fuels, he says. Windmills go only when the winds blow, and solar panels do their job only when the sun shines. That means they are unreliable on top of other problems. Nuclear energy is much safer than many think and could do a lot in time if it weren’t still so pricey. But aren’t fossil fuels themselves going to do enormous harm, eventually heating this planet to the point of it being uninhabitable? Secretary of State John Kerry once said “science is absolutely certain” of fearsome outcomes minus significant quelling of carbon emissions. He has cited a study supposedly showing 97 percent of climate scientists say so. It actually showed many merely believing greenhouse gas effects contribute to warming, as do most skeptics. The issue, Epstein argues, is that the weather system is enormously, puzzlingly complicated and that predictions of what’s going to happen with temperatures have repeatedly been wrong. Look at Hansen, who once said CEOs of fossil fuel companies should be “tried for crimes against humanity and nature” because they’ve known about the alleged harm they are doing. In 1988, when he was a scientist with NASA, he made prognostications about dangerous warming down the road. We are now at a point down the road where they are far from coming true. Epstein maintains that fossil fuels remain in large supply and should for a long time and that the industrial society they make possible is crucial in developing new technologies enabling adaptation as warming occurs. Kerry has said there would be only benefits in dramatically lessening fossil fuel use even without climate catastrophe. Epstein says there could be billions of premature deaths. Those deaths would happen mostly in poor countries, of course, and the solution of the Paris climate conference is for richer countries to join in sending those sacrificing countries $100 billion a year. The conferees should have listened to those pointing out how corrupt governments enlarge their dictatorial clout by hijacking such aid that can have other ill effects. As it turns out, the help to the poor countries is not binding. Nor is there anything binding in the rest of what the conference did. It set some goals based on the pledges of individual nations that will have to decide how much they want to disrupt their economies to keep their word. Some analysts say that even if they do follow the pledges, it wouldn’t make much climate difference. A good bet is that economic damage will in fact be done, but less than if people like Hansen had their way and maybe not enough to disable important innovations better helping to avoid the worst climate eventualities. Jay Ambrose is an op-ed columnist for Tribune News Service. Readers may email him at [email protected]

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