Legislature(2001 - 2002)
03/20/2002 01:44 PM Senate JUD
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 324-MUNICIPAL PUB.UTIL.COMPETING W/TELECOM
MR. JIM VOTEBERG, assistant city manager of the City of Ketchikan
and the assistant general manager of Ketchikan Public Utilities
(KPU), stated support for SB 324. He provided the following
highlights of the written testimony he submitted to committee
members.
The City of Ketchikan, and the City of Ketchikan doing
business as Ketchikan Public Utilities, owns and
operates several utilities including
telecommunications, electric, water, wastewater
collection and treatment, and solid waste collection
and disposal. This legislation is a local issue and
important to the city because it allows the city to
operate its utilities in a cost-effective manner, as it
has for over 50 years and it provides local leaders
with an important tool for the economic development of
our community. Should the city become regulated under
the RCA, the cost to the ratepayers in Ketchikan is
estimated at around $700,000 annually, which does not
include the cost of a rate study that, for each
utility, could be in the range of $250,000. These costs
include annual fees, [indisc.], additional staff time
to perform the increased workload of a fully regulated
utility, and costs associated with changes in the
city's existing accounting system. These costs would be
directly passed on to our consumers resulting in a
higher utilities bill. Given the economic situation in
Ketchikan, this is not the time to increase costs to
its residents and businesses.
The city is aware that AP&T opposes this legislation
and has questioned its need by pointing out that the
RCA currently has regulations in place to grant a
waiver to Ketchikan. Although a procedure may exist,
the procedure can be time consuming and expensive,
particularly when a company opposes the waiver and
there's no guarantee that a request will be granted.
Given that AP&T testified before the Senate Labor &
Commerce Committee that it would oppose any request by
KPU for a waiver from the RCA. The cost to file a
waiver will be high, it will take a long time and,
again, there's no guarantee of the outcome.
Through correspondence dated March 5, 2002, RCA
Chairperson Nan Thompson addresses SB 324 by stating,
'The RCA has not taken a position in support or in
opposition to this legislation. We believe it presents
policy issues that are within the legislators'
province.' The city agrees that this legislation is a
policy issue within the legislative jurisdiction and is
seeking resolution through the legislative process.
Given the advancement of telecommunication technology
and varying levels of regulations placed on
telecommunications companies, the proposed legislation
creates a level playing field. Without this
legislation, for example, should a cable company such
as GCI use its cable plants to provide telephone
service in Ketchikan, GCI would be non-regulated while
Ketchikan would be fully regulated. If a wireless
company, such as AP&T, were to compete in Ketchikan,
AP&T would be lightly regulated while Ketchikan would
be fully regulated. In any case, an uneven playing
field is created by Ketchikan becoming fully rate-
regulated and trying to compete against a non-regulated
or a lightly regulated entity. Maintaining its non-
regulated status allows Ketchikan to compete on a level
surface.
In closing, I'd like to stress the importance of this
relatively small change to AS 42.05.711(b)(2) in the
community of Ketchikan. This is a local issue. SB 324
has been narrowly crafted to simply address the uneven
playing field facing the City of Ketchikan and point
out that it does not affect other municipalities
throughout the state. The city looks to the state to
preserve local control over its utility as it has had
for over 50 years and ensure that local government
retains the tool it needs to better serve our community
and assist in turning Ketchikan's economy around. Thank
you and that's all I have.
VICE-CHAIR DONLEY asked Mr. Voteberg to explain why SB 324 will
not apply to other communities with a municipally owned utility
in competition with a privately owned utility.
MR. VOTEBERG said that Ketchikan has the only municipally-owned
telephone company in the state therefore it is the only
municipally-owned company that would be in competition with
another telephone company.
VICE-CHAIR DONLEY noted SB 324 applies to both electric operating
entities and telephone companies.
MR. VOTEBERG deferred to Heather Graham, counsel for the City of
Ketchikan.
MR. VAN ABBOTT, Ketchikan Public Utilities, said one answer he
would pose to Senator Donley's question is that, hypothetically,
if an electric company wanted to get into the telephone business
and compete with a telephone company, it would have to get a
certificate of public convenience, which involves a lengthy
process. Whether it would be regulated or not would be in the
bounds of the due diligence the RCA would take before issuing the
certificate.
VICE-CHAIR DONLEY asked Ms. Graham if the answer to his question
is that although language on page 2 covers a utility or an
electric operating entity, it only applies if that entity is
competing with a telecommunications utility and not with another
electric operating entity.
MS. HEATHER GRAHAM, counsel to the City of Ketchikan, said that
is exactly right. She noted she would be available to answer any
future questions should they arise.
MR. JIMMY JACKSON, attorney for GCI, clarified the earlier
statement by a representative from Ketchikan that GCI would be
unregulated if it was to compete with KPU in the local phone
business is incorrect, and that GCI takes no position on the
bill.
MR. PHILLIP TREUER, RCA staff, stated the RCA neither opposes nor
supports SB 324.
MR. MIKE GARRETT, President of AP&T Wireless, a subsidiary of
Alaska Power and Telephone, said that AP&T Wireless opposes SB
324 and is uncertain why it is before the committee. He believes
it is special interest legislation for KPU that provides relief
for that one entity and addresses an issue for which an
administrative solution exists. KPU could file a waiver with the
RCA and, in doing so, have to prove that the facts behind its
estimates are true and correct and in the public's interest. If
so, the waiver would be approved. He said it is strange to AP&T
that KPU would take legislative action rather than administrative
action.
In response to Mr. Voteberg's statement that AP&T would oppose a
waiver application by KPU, MR. GARRETT said AP&T would not oppose
an application that is in the public interest. AP&T would reserve
the right to comment if KPU filed a waiver. He noted that the
law, as written now, adheres to the Telecom Act of 1996,
particularly Section 254(k). AP&T's interpretation of that
section is that unregulated services cannot be subsidized with
regulated services. AP&T has regulated utility operations. As a
wireless carrier providing services in Ketchikan, it would not
necessarily be rate regulated, but it would have to provide
[indisc.] to the Commission just like any other competitive local
telephone company. Its regulated services, power, telephone and
hydroelectric, are regulated: AP&T provides the information
requested by the RCA and does not find it to be burdensome.
MR. GARRETT said the existing law has worked well in the past.
The law was put in place when Anchorage and Fairbanks had city-
owned utilities. They were able to get waivers from this rule as
they were able to prove that waivers were appropriate. He noted
that AP&T is uncertain how SB 324 will affect other city-owned
electric utilities that may want to compete in telecommunication
services.
2:30 p.m.
There being no further testimony, VICE-CHAIR DONLEY noted the
committee did not have a quorum at this time. He then announced a
short recess.
TAPE 02-10, SIDE B
VICE-CHAIR DONLEY called the meeting back to order and announced
the committee would take up HB 362. Senator Therriault had
arrived.
| Document Name | Date/Time | Subjects |
|---|