Morris News Service-Alaska/Juneau Empire

Juneau Assembly supports Juneau Hydropower plan

JUNEAU — The City and Borough of Juneau Assembly has pledged its support to Juneau Hydropower Inc.’s $25 million district heating plant proposal, which company officials said will keep heat prices low and carbon emissions lower. At a Feb. 22 Assembly work session, Juneau Hydropower CEO Keith Comstock and Duff Mitchell, the company’s managing director, pitched their plan to use water from the Gastineau Channel to heat Downtown Juneau. They didn’t ask for much in return. “We’re asking for your love, tenderness and cheerleading support,” Mitchell said, channeling his inner Michael Bolton and eliciting a few chuckles from Assembly members and onlookers alike. Mayor Mary Becker showed the Juneau Hydropower some love when she moved that the Assembly write a letter of support for the plan. The rest of the Assembly turned on the tenderness when it voted, without objection, to pass Becker’s motion, but not before Assembly member Debbie White gave Comstock and Mitchell her cheerleading support by amending Becker’s motion, clarifying that it would be a “strong letter of support.” Boasting their district-heating plant’s 300 percent efficiency rating and its ability to reduce Juneau’s dependence on fossil fuels and outside markets, Comstock and Mitchell won over some of the Assembly’s toughest critics, such as Jerry Nankervis. “In the four years I’ve been hearing about this project, I’ve yet to hear anything about it that I don’t like,” Nankervis said after the pitch. With the Assembly at their backs, Comstock and Mitchell have to finish answering the four major questions that Comstock said need to be resolved in order to get the project going. They’ve already answered the first two: both think the project is both economically feasible and marketable. Now they need to finish getting their equity in order and securing financing, according to Comstock. “This is a large project so there’s a large amount of equity that has to be put down,” he said noting that Juneau Hydropower has friends on Wall Street ready to invest in the project. As for the financing, Mitchell and Comstock said they are looking for a low-interest loan from the federal government, and they are getting “strong signals of support.” “We wouldn’t be here talking to you if we didn’t intend to go into construction, and in order for that to happen we have to have all of these things in place,” Comstock said. Juneau District Heating’s system would take electricity from Juneau Hydropower’s Sweetheart Lake facility about 40 miles south of the city to power heat pumps in Gastineau Channel that “scavenge” the thermal energy in the seawater and transfer the heat to water in network of pipes used to deliver the heat to homes and businesses. It is essentially the same process used in large-scale refrigeration, except the heat is trapped as a valuable resource rather than being collected and dispersed as waste. The City of Seward is also investigating the potential of sourcing its heat from Resurrection Bay. The science behind the renewable energy is nothing new; it’s already being used on a smaller, and cooler, scale to heat the Alaska Sealife Center in Seward and the Ted Stevens Marine Research Institute in Juneau. At more than 180 degrees Fahrenheit, the district heat loop would run hotter than the systems used at the Sealife Center and Marine Research Institute. With two water lines, that hot water can simply be put hooked up to and replace a fuel oil-fired boiler system, which 78 percent of Juneau’s buildings, including Downtown state facilities, use for space heat. Juneau Hydropower estimates the cost to switch from fuel oil heat to the district heat system to be in the hundreds or low thousands of dollars — less than switching to natural gas. Information from a previous Journal article by Elwood Brehmer was added to the original story.

Proposed mining tax increase gets poor reception at Feb. 19 hearing

JUNEAU — Miners opposed to a proposal by Gov. Bill Walker to raise taxes on the state’s top-producing mines got help from an unexpected source Feb. 19. Alongside the miners testifying against the tax increase was Graham Neale, director of the center for mine training at the University of Alaska Southeast. “Now is the time to evaluate how the state can attract investment,” Neale said, explaining that a tax increase might do the opposite. If mine developers are frightened away from Alaska by higher taxes, that would leave students of his program without jobs. “We could be putting Alaskans on pathways to careers that don’t exist,” he said. Higher taxes, if they reduce business, could end up reducing state revenue, not increasing it, Neale and others said. Several members of the Alaska House Resources committee, which was hearing public testimony on House Bill 253, appeared surprised by Neale’s testimony. “Your testimony is interesting,” said Rep. Andy Josephson, D-Anchorage, and a member of the committee. “You could take just that testimony and describe the entire session that way.” He went on to ask how to balance the fact that an employee of the University of Alaska Southeast, a state-funded institution, was arguing for a decrease in a tax that (as drafted) would earn about $6 million more per year for the state budget. Neale replied that the mine-training program is primarily funded by donations and gifts from industry, plus federal grants. It receives little state funding, he said. Neale declined to offer an alternative to the mining tax when prodded by Josephson and Rep. Geran Tarr, D-Anchorage, and he said he wasn’t comfortable talking about whether the higher tax is competitive or not. After the hearing, Neale said, “basically, my job is to put other people to work. If mining activity or new mines are discouraged, it’s pretty hard to find work.” For the past several years, Neale has worked as project manager of Niblack, a gold-silver-zinc-copper mine prospect on Prince of Wales Island. With declining mineral prices worldwide, that project has been put on the back burner. Neale also serves as chairman of the Ketchikan/Prince of Wales chapter of the Alaska Miners Association. He said he doesn’t think his testimony will hurt the mine-training center’s relationship with other UAS departments, which are supported by state funding. In addition to Neale, 13 others testified for and against the governor’s proposal during the two-hour hearing. HB 253 would raise the tax rate for the largest mines (those with a net income of $100,000 or greater) from 7 percent to 9 percent. Only 14 mines were in that tax bracket in 2014, according to state records. The 3½-year tax exemption for new mines would be eliminated, and there would be a fee for tax licenses, something that would affect mines of all sizes. According to state documents, the existing mining tax collected $38.6 million in 2015. The increase would collect another $6 million per year. Miners and industry advocates said that sum isn’t worth the harm that would be done to the state by the tax increase. “This could not have been proposed at a worse time in the past 45 years,” said professional geologist Donald Stevens of Anchorage. The slowing Chinese economy has meant less demand for minerals, which has deflated global prices and led producers to scale back mining efforts. A tax increase, testifiers said, would exacerbate problems and lead companies to invest in places other than Alaska. “Alaska competes worldwide for capital, and I saw this firsthand in Anglo-American’s boardroom in London,” said Jason Brune, who was laid off from his job as a spokesman for Pebble Mine after Anglo-American withdrew from the project. He now works for Southcentral Alaska Native Regional corporation Cook Inlet Region Inc. “I was a casualty of higher costs,” Brune said. Josephson pointed out during the hearing that the mining tax hasn’t changed since 1955, before the Alaska Constitution was written, let alone before Alaska became a state. “We haven’t changed the tax since right after the Korean War,” he said. Randy Powelson, a mining engineer now working at a family-owned placer mine, said that doesn’t tell the whole story. The federal and state regulatory burden has risen, even if taxes haven’t. “Maybe it hasn’t changed since 1955, but I’ll guarantee you that everything else in the world has, and it’s making you uneconomical,” he said. In response to questioning from Rep. Paul Seaton, R-Homer, Nome placer miner Doug Tweit said a $200,000 lower limit for the top tax bracket might make more sense. Though most of the comments Feb. 19 were against the proposed tax hike, two commenters supported the governor’s proposal. George Pearce of Kasilof urged committee members to “get the best deal for the Alaskans, not the destroyers of the renewable resources like fish, water, habitat,” while Julia Mickley of the Northern Alaska Environmental Center said “development doesn’t come without a cost, and the public should be compensated for minerals removed from the land.” The bill was held in committee after the hearing, and committee co-chairman Rep. David Talerico, R-Healy, said people who didn’t testify Feb. 19 will get another chance. “We certainly don’t expect this to be the only public testimony on this bill,” he said.

McGuire’s bill to use Permanent Fund earnings gets hearing

JUNEAU — For 13 months, Sen. Lesil McGuire, R-Anchorage, has been working on a plan to use Permanent Fund earnings to partially balance Alaska’s state budget. In form and function, McGuire’s plan (formally, Senate Bill 114) introduced late in the 2015 session, resembles the one brought forward by Gov. Bill Walker late last year. “With my plan, you’ll bring in approximately $2 billion, and that will put you on a glidepath (to balancing the budget),” she told members of the Senate State Affairs Committee on Feb. 9. She added that “mine is not a whole plan,” and while it would eliminate a substantial chunk of the state’s deficit, additional taxes and further cuts will be needed to balance the annual budget. “This is only meant to stabilize one part,” she said. State Revenue Commissioner Randy Hoffbeck said the governor’s staff and McGuire’s staff used the same financial models and budget figures, and that any similarities aren’t coincidental. “Quite frankly, I think all the plans out there have the same essential target in mind,” Hoffbeck said. The principal difference between the two plans is their emphasis. The governor’s plan is designed to provide $3.3 billion per year to fund state government, but after its first year, Permanent Fund Dividends would be about $500 per person. Senate Bill 114 has a minimum $1,000 dividend, and it provides only about $2 billion per year for state operations. If oil averages $56 per barrel this fiscal year (July 1, 2015, through June 30, 2016), the state’s annual deficit will be about $3.5 billion. Through Feb. 8, oil has averaged $47.08, which puts the deficit at roughly $3.7 billion. McGuire said her bill “still leaves open the conversation for restructuring the size and cost of government.” The mechanics of McGuire’s plan are relatively simple. Right now, investment earnings from the $50 billion Permanent Fund end up in the Earnings Reserve account. That account pays dividends but otherwise accumulates interest and grows. Right now, it contains about $7 billion. While no one can spend from the Permanent Fund proper without a statewide vote, lawmakers can spend from the Earnings Reserve with a majority vote. McGuire’s plan would set up an annual transfer of 5 percent of the Permanent Fund’s value from the Earnings Reserve to the state budget. If the Permanent Fund’s $50 billion principal account earns more than 5 percent when invested on global markets, the system holds up. Dividends, instead of coming from the Earnings Reserve, would come from the state’s annual oil royalty check. Three-quarters of the state’s oil royalties (last year, about $961 million) would be devoted to dividends. The remaining quarter of the state’s oil royalties would go into the Permanent Fund principal. If implemented this year, McGuire’s bill would result in a dividend of a little more than $1,000. If not implemented, the traditional dividend formula (based on the Permanent Fund’s investment returns) is expected to result in a dividend of more than $2,000. One thousand dollars is “still a big dividend,” McGuire said, adding that in a state whose economy is dependent upon government spending, it’s important to keep the state budget balanced and stable. “The Permanent Fund Dividend is important,” she said, “but it’s not the only thing that’s important. Even Republicans can say that.” The Senate State Affairs Committee will meet again on Feb. 11 to hear legal analysis of the governor’s Permanent Fund earnings plan.

Administrators favor scrapping new standardized tests

JUNEAU — After almost four years of preparation and planning, plus millions of dollars in implementation, Alaska’s new standardized testing scheme appears bound for the garbage can less than two months before students take it the second time. On Jan. 25, Lisa Skiles Parady, director of the Alaska Superintendents Association, told the Alaska Board of Education and Early Development that a majority of the state’s school district leaders favor abandoning the Alaska Measures of Progress testing scheme. The AMP test was administered to Alaska students for the first time last year under a $5 million per year contract with the Assessment & Achievement Institute of Kansas. Parady presented the results of a superintendent survey that found only five of 42 responding superintendents favored continuing AMP testing. Twenty-three of the 42 said they do not support continuing AMP. The 42 superintendents represent about 80 percent of Alaska’s school districts. Deena Paramo, superintendent of the Mat-Su Borough School District, participated in the meeting by telephone and called AMP testing a “failure” that “does harm” to Alaska’s school system because it does not provide useful feedback to teachers or administrators. In an October memo, the Mat-Su school district declared: “the AMP summative assessment is useful for state compliance purposes only. There is no value to districts from the assessment, and in fact learning opportunities are lost as a result of having to administer the assessment.” Speaking during the meeting, Alaska Education Commissioner Mike Hanley said “there’s nobody more frustrated with AMP than I am.” Hanley, who has been commissioner of education since 2011, oversaw three years of preparation before students took the test for the first time last year. Teachers, administrators and parents helped draft the test, which was prepared for “Alaska’s unique needs” and offered a tougher, more accurate, measurement of students’ knowledge, according to promotional material last year. While testing went well, problems came afterward. “We had glitches in the data, we had glitches in the timing,” Hanley said. Results came back from AAI much later than had been promised, and they didn’t offer the diagnostic information that schools were hoping for. Marianne Perie, AAI’s Alaska project manager, told the Fairbanks Daily News-Miner in November that the company had made mistakes. Perie did not respond to interview requests by this story’s deadline. “One of the most accurate comments was just there was such a loss of confidence in this tool that I don’t know how to get it back,” Hanley said. While Hanley and district superintendents might be frustrated, they have few options at the moment. While Congress has approved and President Obama has signed legislation that replaces the No Child Left Behind Act, the state is still required by state and federal law to conduct standardized assessments. “I just see no other option to meet the letter of the state and federal laws” than to have students take AMP tests this year, said state school board member Barbara Thompson of Douglas. Hanley said that even though it appears the state is locked into AMP testing this spring, he doesn’t plan to wait on replacing it. “I’m not interested in continuing down a path that’s not working,” he said. Rather than immediately seeking alternative proposals from competing testing companies, Hanley said he likely will begin by consulting with school districts to determine what approach works best for them. “Let’s not wait to pursue a new path forward,” he said. The state’s arrangement with AAI is structured as five one-year contracts, Hanley said, and he will gather information to determine the final choice the state takes this summer. In related business, the school board voted unanimously (member Sue Hull absent) to take the first step to cancel a program that would have tied teacher evaluations to students’ test scores.

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.

Murkowski puts hold on nominee over GM labeling

Alaska’s senior senator isn’t backing off her fight to label genetically modified salmon, and she said Monday she’ll go as far as blocking confirmation of the Food and Drug Administration’s next commissioner. In a statement released Monday, Sen. Lisa Murkowski, R-Alaska, said she “will not stand back and just watch these genetically engineered creatures be placed in our kitchens and on our tables without a fight. The “creatures” Murkowski refers to are the genetically engineered Atlantic salmon approved for human consumption by the FDA on Nov. 19. The fish, engineered by the Massachusetts-based company AquaBounty, grow at twice the rate of farm-raised Atlantic salmon due to a growth hormone gene from Pacific Chinook salmon and a genetic switch from the ocean pout, which keeps the growth hormone gene active year-round. Murkowski said she intends to block the confirmation of Dr. Robert Califf as the new FDA chief as a way to continue her pursuit of mandatory labeling of “frankenfish.” Mike Anderson, the spokesman for Sen. Dan Sullivan, R-Alaska, said by email the state’s junior senator “supports Senator Murkowski’s efforts on this issue – which includes placing a hold on the FDA nominee.” Added Anderson, “At a minimum — these newly approved Frankenfish must (be) properly labeled so that Americans know exactly where their salmon came from.” The Alaska delegation and other lawmakers in the Pacific Northwest, whose fisheries stand the most to lose when the modified salmon hit market shelves in a couple of years, pushed for labeling regulations during the FDA’s approval process of AquaBounty’s AquAdvantage Salmon. Concerns are that when the modified fish are displayed next to the real thing, consumers won’t know which is which. “I am furious about this decision, but now I must do everything I can to make sure it is labeled — consumers have a right to know what it is they are eating,” Murkowski said. The FDA has said the modified fish don’t require additional labeling because there’s no nutritional difference between them and natural fish. “There are no biologically relevant differences in the nutritional profile of AquAdvantage Salmon compared to that of other farm-raised Atlantic salmon,” the Associated Press reported the agency as saying. Murkowski doesn’t see it that way. “Genetically modifying salmon is messing with nature’s perfect brain food,” she said. “The real thing is not only the safe choice, but it’s the best thing.” In 2013, a New York Times poll found three-quarters of Americans had concerns about genetically engineered food, and 93 percent said they supported laws requiring the labeling of such foods. Murkowski also said she would continue supporting stores that will refuse to carry AquAdvantage Salmon. To date those stores include Costco, Target, Safeway, Trader Joe’s, Whole Foods and Kroger.
Subscribe to RSS - Morris News Service-Alaska/Juneau Empire