03/28/2000 02:05 PM House FIN

HOUSE BILL NO. 290                                                                                                              
                                                                                                                                
An Act relating to stranded gas pipeline carriers and                                                                           
to the intrastate regulation by the Regulatory                                                                                  
Commission of Alaska of pipelines and pipeline                                                                                  
facilities of stranded gas pipeline carriers.                                                                                   
                                                                                                                                
Co-Chair Therriault spoke to Amendment #1, 1-LS1269\K.1,                                                                        
Chenoweth, 3/23/00.  [Copy on File].  He noted that the                                                                         
amendment addressed the rate setting methodology.  Previous                                                                     
testimony from Alaska Regulatory Commission (RCA) explained                                                                     
the State user position. Co-Chair Therriault did not believe                                                                    
that establishing a tariff rate would endanger the product.                                                                     
                                                                                                                                
Co-Chair Therriault WITHDREW Amendment #2, 1-LS1269\K.2.                                                                        
                                                                                                                                
Co-Chair Therriault MOVED to adopt Amendment #1.                                                                                
Representative Phillips OBJECTED.  She noted that there had                                                                     
been serious discussion regarding the concern in the House                                                                      
Oil and Gas Committee.  Representative J. Davies emphasized                                                                     
that the amendment would place the rate making structure                                                                        
under utilities only.                                                                                                           
                                                                                                                                
JIM EASON, REPRESENTATIVE OF ANS LNG SPONSOR GROUP,                                                                             
ANCHORAGE, stated that there are a number of issues that the                                                                    
Committee should consider.  He suggested to amend the bill                                                                      
would be premature and counter productive.  The issue of a                                                                      
proposed tariff would be best considered when the facts are                                                                     
available.  Under existing law, both the Pipeline Act and                                                                       
the Public Utilities Act give the Regulatory Commission the                                                                     
authority to require what is "reasonable and just".  Mr.                                                                        
Eason argued that the State is three to four years away from                                                                    
having enough information to determine what it will cost.                                                                       
That decision is not critical at this time.  He pointed out                                                                     
that this would be the first time in the State's history                                                                        
that a pipeline project would be required to file a tariff                                                                      
under the Utility Act even though it would be regulated                                                                         
under the Alaska Pipeline Act.  He recommended there be                                                                         
further discussion on the matter.                                                                                               
                                                                                                                                
Co-Chair Therriault asked if the language had been included                                                                     
in the Oil and Gas Committee version of the legislation and                                                                     
the House Resources Committee removed if it was then.  Mr.                                                                      
Eason acknowledged that was correct.                                                                                            
                                                                                                                                
NAN THOMPSON, (TESTIFIED VIA TELECONFERENCE), ALASKA                                                                            
REGULATORY COMMISSION, ANCHORAGE, referenced the memo                                                                           
included in member's packets which outlines the excluded                                                                        
items from the rate:                                                                                                            
                                                                                                                                
? Public relations costs;                                                                                                       
? Lobbying expenses;                                                                                                            
? Charitable contributions;                                                                                                     
? Association dues;                                                                                                             
? Extraordinary management compensation;                                                                                        
? Research and development costs;                                                                                               
? Acquisition adjustments; and                                                                                                  
? Pensions and employee benefits.                                                                                               
                                                                                                                                
She understood that the ANG LNG sponsor group would not want                                                                    
to limit their options in reserving space.  She suggested                                                                       
that the Committee remember the small percentage of the coal                                                                    
product which will go to the user.  The pipeline is being                                                                       
constructed mainly for export.  Only a very small percentage                                                                    
of the product will be used in the State. There also exists                                                                     
a timing question.  The issue is what potential can predict                                                                     
when they could make the decision.  The proposed methodology                                                                    
encourages more in-State use providing a clearer idea of                                                                        
what the costs will be.                                                                                                         
                                                                                                                                
A roll call vote was taken on the motion to adopt Amendment                                                                     
                                                                                                                                
IN FAVOR: Austerman, J. Davies, Grussendorf, Moses,                                                                             
Therriault                                                                                                                      
OPPOSED:  Williams, G. Davis, Foster, Phillips                                                                                  
                                                                                                                                
Representative Bunde and Co-Chair Mulder were not present                                                                       
for the vote.                                                                                                                   
                                                                                                                                
The MOTION PASSED (5-4).                                                                                                        
                                                                                                                                
Representative Foster MOVED to report CS HB 290 (FIN) out of                                                                    
Committee with individual recommendations and with the                                                                          
accompanying fiscal notes.  There being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CS HB 290 (FIN) was reported out of Committee with "no                                                                          
recommendation" and with a fiscal note by Department of                                                                         
Community and Regional Affairs and two zero notes by                                                                            
Department of Natural Resources and Department of Revenue                                                                       
dated 2/21/00.