Legislature(1993 - 1994)
04/06/1993 01:30 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 216 An Act relating to power cost equalization; and providing for an effective date. HB 216 was held in Committee for further discussion. HOUSE BILL 216 "An Act relating to power cost equalization; and 1 providing for an effective date." Co-Chair Larson explained the changes made in preparing the work draft #8-LS0010\J, Cramer, dated 4/06/93 to HB 216. BRENT PETRIE, ALASKA ENERGY AUTHORITY, ANCHORAGE, ALASKA, (testified via teleconference) noted that 9.82 cents per kilowatt-hour cost is based on the 1991 calendar year residential sales for utilities in Anchorage, Fairbanks and Juneau. This is the weighted average retail cost for the first 500 kilowatt-hours per month which rate payers paid for utilities. Representative Brown questioned the information source used to determine those figures. Mr. Petrie advised the information was provided from the Alaska Energy Authority electric power statistic report directly originating from the utilities. Representative Brown said the figures had not been reviewed by the Alaska Public Utilities Commission (APUC). Mr. Petrie commented that the cost includes monthly cost and charges that a customer needs to have service. Representative Hoffman asked how much additional money would be needed to fully fund the program. Mr. Petrie noted that $403 thousand additional dollars would be needed to fund both the state offices and facilities. To include schools, costs would increase by an additional $566 thousand dollars. Representative Brown asked how the average cost per kilowatt hour differed from the retail residential rate. Mr. Petrie replied that the consumers cost has no change, whereas, the cost to the utility allows for fund reserves. He suggested using the rate would be a more precise figure for calculation determination. ROBERT MARTIN, JR., GENERAL MANAGER, TLINGIT-HAIDA RETAIL ELECTRIC AUTHORITY (THREA), JUNEAU, ALASKA, noted that he represented seven rural communities in South East Alaska. He pointed out that his company has been participating in the Power Cost Equalization Program since it originated noted that he did not support reducing the kilowatt hour to "650" per month. He pointed out that the average consumption for his company is less than 500 kilowatt hours per month, year round and those averages do not reflect the differences between the winter and summer month's consumption. The proposed change will affect the consumers ability to pay their electric bills. Mr. Martin urged raising the floor in order to create a more balanced system. Representative Brown thought the impact of raising the floor would penalize the more efficient utilities. She suggested the most equitable system would be 2 to lower the ceiling. Mr. Martin argued the most fair change would be to lower the floor. Co-Chair Larson asked if the utility has the authority to average the usage cost during the course of the year. Mr. Martin stated that they could offer that service. He recommended that the floor be set at 9.5 cents per kilowatt hour. He felt this would provide savings. The average consumption is going down as people are becoming more conservation minded. Representative Hoffman reminded the Committee that in the colder sections of the state utility rates are much higher. He provided the Committee with handouts. [Attachment #1]. Representative Hoffman encouraged using the "700" kilowatt hours per month cost sold. Mr. Petrie commented that Attachment #1 did not include the community facilities. The chart indicates only residential and commercial spaces and excludes the state and federal facilities. Representative Grussendorf MOVED to adopt work draft #8- LS0010\J as the version before the Committee. There being NO OBJECTIONS, it was so ordered. Representative Hoffman asked the cost savings in refunding the program. Mr. Petrie replied it would cost $1.1 million dollars. Representative Hoffman recommended including "state" facilities to Page 1, Lines 10 & 11. Representative Brown asked the amount saved if the consumption limit was dropped to 650 kilowatt hours per month. Mr. Petrie replied the saving would be $260 thousand dollars if the cap was dropped. Representative Hoffman MOVED adding "700" as the cap on Page 1, Line 9. Representative Brown questioned the impact of the change. (Tape Change, HFC 93-95, Side 2). Mr. Petrie explained the proposed change would create an estimated savings of $260 thousand dollars. A further reduction could affect more residential customers. Representative Brown asked if the shortfall experienced by the utility would be passed on to all incremental users. DAVE HUTCHENS, EXECUTIVE DIRECTOR, ALASKA RURAL ELECTRIC COOP ASSOCIATION (ARECA), ANCHORAGE, ALASKA, stated that the legislation is not a subsidy to the utility and it is passed through to the consumer on a dollar to dollar basis. When consumption goes above a level being assisted, the consumer will pay the price. 3 Representative Parnell asked ARECA's position on the change proposed by Representative Hoffman. Mr. Hutchens stated that the Association would not be handicapped by the "650" figure. The primary effect of the change would be to consumers in the regional trade centers where consumption is higher. He recommended using "700" kilowatt hour level which will not reduce the cost, although will cap the program to prohibit future growth. He added, ARECA would recommend that "state facilities" be included in the legislation. Representative Martin OBJECTED to the motion of changing the cap figure. A roll call was taken on the MOTION. IN FAVOR: Hoffman, Navarre, Brown, Foster, Grussendorf. OPPOSED: Martin, Parnell, Therriault, Larson. Representatives Hanley and MacLean were not present for the vote. The MOTION PASSED, (5-4). Representative Hoffman MOVED a change on Page 1, Lines 10 & 11, and to Page 2, Lines 21 & 22, to add "state or". Representative Hoffman explained the effect of the change. Co-Chair Larson felt that removing the word "state" would shift a reduction to the PCE program; if "state" is left in the legislation, there would be an additional $600 thousand dollars in the PCE program which would not have to be prorated. Representative Hoffman advised that if "state facilities" are removed then "federal facilities" should also be excluded. Representative Martin OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Navarre, Parnell, Brown, Foster, Grussendorf, Hoffman. OPPOSED: Martin, Therriault, Larson. Representatives Hanley and MacLean were not present for the vote. The MOTION PASSED, (6-3). Representative Brown MOVED changing Page 2, Line 9, to read "based on the weighted average cost per kilowatt hour for residential consumers in Anchorage". Mr. Hutchens suggested 4 that the amendment would be contrary to Representative Brown's intent. The "cost" refers to the cost to the utility, not the cost to the consumer. "Rate" determines what the consumer pays. Mr. Petrie explained the "rate" versus the "cost". He offered alternative language to Page 2, Line 7, suggesting to insert the words "rate above" after the word "power" and delete the language "costs for". Representative Brown referenced a letter from the Alaska Energy Authority dated 3/31/93. [Attachment #2]. Mr. Hutchens advised that the language being deleted is the language that APUC identified as "nonsensible". Representative Larson OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Brown. OPPOSED: Navarre, Parnell, Therriault, Foster, Grussendorf, Hoffman, Martin, Larson. Representative Hanley and Representative MacLean were not present for the vote. The MOTION FAILED, (1-8). Representative Parnell asked what "retail residential" meant. Mr. Petrie said it was a customer class which utilities use to determine rates. Co-Chair Larson HELD the bill in Committee for further discussion.
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