Legislature(1995 - 1996)
02/02/1995 01:35 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 99
"An Act extending the Alaska Public Utilities
Commission; and relating to regulatory cost charges."
GEORGE DOZIER, STAFF, REPRESENTATIVE KOTT testified in
support of HB 99. He explained that the Alaska Public
Utilities Commission (APUC) is in its sunset year and will
terminate without legislative action. He emphasized that
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the APUC has been effected by the its uncertain future. He
observed that HB 99 would extend the APUC until June 30,
1999. Regulatory cost charges would be enacted for pipeline
carriers and traditional utilities. The regulatory cost
charge would be capped at .8 percent of the gross revenues
of the utility being regulated. The legislation directs the
APUC to make periodic adjustments if collections surpass the
amount needed to operate the APUC. Charges would be
collected by the Department of Revenue on a quarterly basis.
If funds lapse the legislation would have the option to
reappropriate the amount to the APUC. He noted that
Representative Kott supports the addition of an immediate
effective date.
Representative Brown asked the reason for the increase from
.61 to .8 percent. Mr. Dozier explained that the increase
was added in response to the provision which would permit
electrical utilities to deduct the cost of power generation
or purchase from their gross revenues. He explained that
the change was a response to the perception that the APUC
was spending a disproportionate amount time and expense on
non-electric utilities.
In response to a question by Representative Brown, Mr.
Dozier indicated that it is difficult to ascertain the
amount of time spent by the Commission on each utility
served.
Co-Chair Hanley disclosed that his mother is a member of the
APUC. Representative Foster disclosed that her husband,
Mark Foster, is working under contract for Anchorage
Telephone Company.
ROBERT LOHR, EXECUTIVE DIRECTOR, ALASKA PUBLIC UTILITIES
COMMISSION testified in support of HB 99. He reiterated
that absent legislation the Commission will terminate June
30, 1995. He stressed that the consequences of the
termination of the Commission would be dramatic. He noted
that no provisions for the transfer of responsibilities
provided under AS 42.05 and AS 42.06 to another entity. He
stressed that the statutes are not self executing.
Mr. Lohr emphasized that an audit by the Legislative Auditor
found that the Commission is meeting its public purpose and
recommended an extension of ten years. He reiterated that
HB 99 extends the Commission until 1999 and reenacts the
regulatory cost charge. He recalled that the regulatory
cost charge was repealed effective December 31, 1994. He
observed that the FY 95 appropriation to the Commission was
$3.6 million dollars. General fund program receipts raised
from the regulatory cost charge was identified as the
funding source. However, the regulatory cost charge expired
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half way through the fiscal year. The Commission elected to
double the collection of fees from utilities during the
first half of the year by amendment of regulations. Fees to
utility costumers were kept at the same level. Fees to
utility costumers continued since they are pursuant to the
Commission's general powers and duties.
Mr. Lohr noted that another area of concern was the
Commission's legal authority during its wind down year. The
Attorney General advised that despite differences in
language between Title 8 and 44, that the Commission could
continue its legal authority.
Mr. Lohr pointed out that the Commissions ability to recruit
employees has been inhibited.
Mr. Lohr stressed that there has been minimal costumer
complaint in regards to the regulatory cost charge.
In response to a question by Representative Brown, Mr. Lohr
explained that the Commission has not tract allocation of
time by utility type. He noted that significant costs would
be involved in order to implement tracking mechanisms. He
questioned assumptions used by the Legislative Auditor to
assess the Commission's workload. The auditor concluded
that electric utilities had less activity before the
Commission than other utilities, such as telephone
utilities. He emphasized that variations exist over time.
In response to a question by Representative Brown, Mr. Lohr
explained that the new provisions on page 2, line 7 - 11
would not add to the Commission's administration expense.
He added that the cost of power exclusion is subject to
varied interpretation and could be the subject of
contention.
Mr. Lohr estimated that the reduction in regulatory cost
charge payments by electric utilities would be approximately
45 percent. He observed that costs would be shifted to all
other regulated utilities. The change would reflect the
perception that electric are over paying for the amount of
regulatory services that they currently receive. Mr. Lohr
did not believe that the electric utilities are over paying.
In response to a question by Co-Chair Foster, Mr. Lohr
explained that the rates do not vary by area.
Representative Kelly questioned if other utilities will make
the case that new criteria should be used to adjust their
rates. Mr. Lohr agreed that the Commission is concerned
that if rates are itemized for one utility, or measure
regulatory services against payment, that it would be
appropriate for all regulated utilities. He noted that
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previous debate proposed that pipelines be itemized
separately from utilities. The Senate rejected the
separation of pipelines from utilities. The Commission was
directed to consolidate pipelines and utilities and limit
its collection to the total amount needed to match its
operating budget.
In response to a question by Representative Kohring, Mr.
Lohr reiterated that the Commission doubled its first year
charge.
Representative Kohring questioned if urban areas containing
competitors should be allowed to regulate themselves, in
terms of maintaining competitive rates. Mr. Lohr emphasized
that competition would not necessarily breakdown on a rural
urban bases. He noted that competition is viable in long
distance calling. He emphasized that where competition is
viable there is less need for regulation. He recognized
that where there is a dominate carrier involved with a
significant market share that there may be some necessarily
of regulation. He stressed that industry competition is
preferred to Commission regulation. He acknowledged that
Commission regulation is to be a proxy, or substitute for
competition.
Representative Therriault questioned the substitution of
"may" for "shall" on page 3, line 16. Mr. Lohr explained
that the language would restore the status quo of the last
two years. He noted that the language would allow an
intervener to be apportioned their fair share cost by the
Commission.
Representative Therriault provided members with Amendment 1,
9-LS0454\C.4 by Representative Kott (Attachment 1). He
explained that the amendment would add an immediate
effective date. Representative Therriault MOVED to adopt
Amendment 1. There being NO OBJECTION, it was so ordered.
Representative Brown MOVED to delete (3), page 2, lines 9 -
11. Representative Mulder OBJECTED. Mr. Lohr noted that
the ceiling was raised from .61 to .81 in response to the
inclusion of (3) to accommodate the shift in funding.
Representative Brown noted that ".81" should be deleted and
".61" added on page 1, line 2 and page 4, line 2. Mr. Lohr
noted that the amendment to the amendment would reduce the
cap to the amount the Commission previously operated under.
He observed that the Commission has found the amount
sufficient.
Representative MOVED to AMEND her amendment to delete ".81"
and add ".61" on page 1, line 2 and page 4, line 2.
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In response to a question by Representative Therriault, Mr.
Lohr identified the direction to identify the amount of
carryover balance and authorizes the legislature to
appropriate the balance back to the Commission and reduce
the subsequent year rate as the only changes from the status
quo.
Representative Mulder WITHDREW his OBJECTION. There being
NO OBJECTION, (3), page 2, lines 9 - 11 was deleted and
".81" was deleted and ".61" added on page 1, line 2 and page
4, line 2.
Representative Navarre clarified that page 2, line 5 applies
to power sold among utilities. Mr. Lohr stated that the
language protects the double charging the same dollar of
gross revenue. Power sold to a commercial or industrial
customer is gross revenue subject to the regulatory cost
charge.
Representative Kohring MOVED to report CSHB 99 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CSHB 99 (FIN) was reported out of Committee with a "do pass"
recommendation and with two zero fiscal notes by the
Department of Administration and the Department of Revenue,
dated 2/1/95; and with a fiscal impact note by the
Department of Commerce and Economic Development, dated
2/1/95.
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