HB 259

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                                       HOUSE BILL NO. 259
                    IN THE LEGISLATURE OF THE STATE OF ALASKA
                   THIRTY-FOURTH LEGISLATURE - SECOND SESSION
 BY REPRESENTATIVE MEARS
 Introduced: 1/20/26
 Referred: House Special Committee on Energy, Community and Regional Affairs
                                               A BILL
                                    FOR AN ACT ENTITLED
1  "An Act relating to large energy use facilities; relating to electric and gas utilities;
2  relating to community benefit agreements with municipalities; and relating to the duties
3  of the Regulatory Commission of Alaska."
4  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:
5    * Section 1. AS 42.05.381 is amended by adding a new subsection to read:
6(r) Costs incurred by an electric utility or gas utility that would not have been
7incurred but for the utility furnishing service to a large energy use facility may not be
8included in any rates or charges of the utility unless the rates or charges are designed
9to recover those costs solely from the large energy use facility. During a rate
10proceeding, the portion of the utility's revenue requirement associated with the costs to
11serve the large energy use facility shall be assigned to the facility. In this subsection,
12"electric utility," "gas utility," and "large energy use facility" have the meanings given
13in AS 42.05.435.
14   * Sec. 2. AS 42.05 is amended by adding a new section to read:
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1Sec. 42.05.435. Contracts for large energy use facilities. (a) An electric
2utility or gas utility that furnishes service to a customer with a large energy use facility
3shall enter into a contract with the customer for the service. The utility shall submit the
4proposed contract to the commission. The commission shall review the contract terms
5and approve the contract if the commission determines that the contract meets the
6requirements of this section. Notwithstanding AS 42.05.371, the terms of an approved
7contract govern the terms and conditions under which the utility offers its services and
8facilities to the large energy use facility.
9(b) A contract must
10(1) specify the duration of the contract and be for a duration of at least
1112 years, with an optional initial ramp-up period of up to five additional years when
12the large energy use facility may purchase less electricity or gas than the full
13contracted amount for the remainder of the contract period;
14(2) state the expected purchase amounts during the contract period and
15the ramp-up period, if any;
16(3) after any ramp-up period, require the large energy use facility to
17pay at least 80 percent of the contracted amount each year, regardless of actual
18purchases; and
19(4) require the large energy use facility to pay a fee to the utility if the
20facility exits the contract before the end of the contract term in the amount of the total
21minimum payments for the remainder of the contract term or the amount necessary to
22cover all costs to the utility, whichever is greater, and provide for collateral equal to
23the potential exit fee.
24(c) A large energy use facility and a utility may agree to modify the contracted
25purchase amount if the commission determines that the modification will not increase
26costs to other customers. The utility shall submit the proposed modification to the
27commission. A modification may not take effect until the modification is approved by
28the commission and at least 12 months have elapsed since the modification was
29submitted to the commission.
30(d) A contract may not increase the risk of inadequate fuel supplies for any
31public utility in the state, including utilities not party to the contract.
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1(e)   The terms of a contract must include an accounting of all costs for
2infrastructure primarily used by an electric utility or gas utility to furnish service to a
3large energy use facility and directly assign those costs to the facility for the duration
4of the contract. If an infrastructure component is primarily used to furnish service to
5both the large energy use facility and other customers, the contract must specify the
6portion of infrastructure costs to serve the large energy use facility and assign that
7portion to the facility. If, during the contract period, an infrastructure component is no
8longer primarily used to furnish service to the large energy use facility, the utility may
9submit a proposed contract modification to the commission that includes evidence to
10support the modification. Infrastructure costs may be recovered from the large energy
11use facility by the facility constructing its own infrastructure, contributions in aid of
12construction, or utility rates.
13(f) Transmission infrastructure built specifically to serve a large energy use
14facility may not initially be considered part of a backbone transmission system for the
15purpose of allocating backbone transmission system costs under a nondiscriminatory
16open access transmission tariff. If a review at the end of the contract term finds that
17the transmission infrastructure is also used for other customers, the infrastructure may
18be evaluated for consideration as part of a backbone transmission system. In this
19subsection, "backbone transmission system" has the meaning given in AS 44.83.720.
20(g) A contract must include a detailed analysis of all variable costs that will
21change when an electric utility or gas utility furnishes service to a large energy use
22facility and assign those costs directly to the large energy use facility using a separate
23customer-specific cost of power adjustment or gas cost adjustment methodology. A
24contract must ensure that furnishing service to a large energy use facility does not
25increase the cost of power adjustment or gas cost adjustment for other customers.
26Variable costs include
27(1) new fuel contracts;
28(2) changes in purchased power amounts or prices;
29(3) changes in dispatch order that modify system heat rates;
30(4) changes in losses;
31(5)   changes in fuel storage requirements, including amounts and
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1deliverability;
2(6) increased use of less efficient generating units to meet increased
3load;
4(7) use of more expensive fuels to meet increased load;
5(8) changes to meet increased reliability requirements for a larger load;
6and
7(9) changes in variable operations and maintenance.
8(h) Rates in a contract may be based on a utility's existing rate schedule or
9negotiated for a specific customer, as long as the rates satisfy the requirements in this
10section, fully compensate the utility for all costs to serve the large energy use facility,
11including generation, transmission, distribution, and ancillary service costs, and do not
12cause the utility to shift costs to other customers. The contract may include rate
13reductions or credits reflecting verifiable system benefits provided by the large energy
14use facility, including peak shaving, demand response, curtailment, and load
15flexibility, as long as the reductions or credits are not greater than the measurable
16benefits provided to other customers and the costs attributable to the large energy use
17facility are assigned before applying any benefit-related reductions or credits. During
18any rate proceeding, the portion of the utility's revenue requirement associated with
19the costs to serve the large energy use facility must be assigned to the facility.
20(i) An electric utility or natural gas utility shall uniquely identify the costs and
21revenue for each large energy use facility served by the utility within the utility's
22books and records to support periodic reporting as ordered by the commission.
23(j) If geographically dispersed buildings, equipment, structures, and other
24stationary infrastructure are used for the same purpose and owned or operated by the
25same person or by any person who controls, is controlled by, or is under common
26control with the person, the commission may determine that the infrastructure is a
27single facility for the purposes of this section.
28(k) A municipality shall enter into a community benefit agreement with a large
29energy use facility within the municipality before the commission approves the
30contract between an electric utility or gas utility and the large energy use facility. The
31municipality may address any community benefits related to the large energy use
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1facility in the agreement based on the municipality's unique needs, including
2emergency response, local hire, use of waste heat, decommissioning, and any other
3concerns and priorities of the municipality. If the large energy use facility has not
4entered into a community benefit agreement with the municipality before construction
5of the large energy use facility begins, a municipality may obtain
6(1) an injunction to stop construction of the large energy facility or to
7prevent the large energy facility from operating; and
8(2) any other appropriate relief.
9(l) This section does not apply to an electric utility or gas utility when the
10utility is furnishing service to another public utility.
11(m) In this section,
12(1) "contract" means a contract between an electric utility or gas utility
13and a customer with a large energy use facility for the utility to furnish service to the
14large energy use facility;
15(2) "electric utility" means a public utility that furnishes electrical
16service;
17(3) "facility" means all buildings, equipment, structures, and other
18stationary infrastructure that are owned or operated by the same person or by any
19person who controls, is controlled by, or is under common control with the person and
20that are
21(A) located on a single site or on contiguous or adjacent sites,
22including sites with multiple metering points; or
23(B) geographically dispersed, if the commission determines the
24sites should be considered a single facility under (j) of this section;
25(4)   "gas utility" means a public utility that furnishes natural or
26manufactured gas by transmission or distribution;
27(5) "large energy use facility" means a facility that will consume
28(A) 20 megawatts or more of peak power demand from an
29electric utility or 20 percent of the total kilowatt-hours of electricity sold by the
30utility in the previous year; or
31(B) 2,000,000,000 or more standard cubic feet of gas annually
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1from a gas utility or 20 percent of the total gas sold by the utility in the
2previous year, whichever is smaller;
3(6) "municipality" has the meaning given in AS 29.71.800.
4    * Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to
5  read:
6APPLICABILITY. (a) This Act applies to an electric utility or gas utility when the
7  utility furnishes service to a customer with
8(1) a large energy use facility that obtains service from an electric utility or
9  gas utility for the first time on or after the effective date of this Act; or
10(2) a facility that becomes a large energy use facility on or after the effective
11 date of this Act.
12(b) In this section, "electric utility," "facility," "gas utility," and "large energy use
13 facility" have the meanings given in AS 42.05.435, enacted by sec. 2 of this Act.
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