Legislature(2007 - 2008)
08/02/2008 02:16 PM House FIN
| Audio | Topic |
|---|---|
| Start | |
| HB4005 | |
| HB4001 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 4005
An Act amending the power cost equalization program,
repealing the exclusion from eligibility for power cost
equalization for certain power projects that take their
power from hydroelectric facilities, and amending the
definition of 'eligible electric utility' as it applies
to the power cost equalization program and the grant
program for small power projects for utility
improvements; and providing for an effective date.
Co-Chair Meyer MOVED to ADOPT Amendment #1, 25-LS1757\E.28,
Kane, 8/2/08:
Page 1, line 1, following "program;":
Insert "authorizing a temporary power cost
assistance program;"
Page 1, line 9, through page 3, line 6:
Delete all material and insert:
"* Section 1. AS 42.45.110(c) is amended to read:
(c) The amount of power cost equalization
provided for each [PER] kilowatt-hour under
[SUBSECTION] (b) of this section may not exceed 95
percent of the power costs, or the average rate
for each [PER] eligible kilowatt-hour sold,
whichever is less, as determined by the
commission. However,
(1) [DURING THE STATE FISCAL YEAR THAT
BEGAN JULY 1, 1999,] the power costs for which
power cost equalization are [WERE] paid to an
electric utility are [WERE] limited to minimum
power costs of more than 12 cents a [PER]
kilowatt-hour and less than 75 [52.5] cents a
[PER] kilowatt-hour;
(2) each year [DURING EACH FOLLOWING
STATE FISCAL YEAR], the commission shall adjust
the power costs for which power cost equalization
may be paid to an electric utility based on the
weighted average retail residential rate in
Anchorage, Fairbanks, and Juneau; however, the
commission may not adjust the power costs under
this paragraph to reduce the amount below the
lower limit set out in (1) of this subsection; and
(3) the power cost equalization for
each [PER] kilowatt-hour may be determined for a
utility without historical kilowatt-hour sales
data by using kilowatt-hours generated.
* Sec. 2. AS 42.45.110(c), as amended by sec. 1 of
this Act, is amended to read:
(c) The amount of power cost equalization
provided for each kilowatt-hour under (b) of this
section may not exceed 95 percent of the power
costs, or the average rate for each eligible
kilowatt-hour sold, whichever is less, as
determined by the commission. However,
(1) the power costs for which power
cost equalization are paid to an electric utility
are limited to minimum power costs of more than 12
cents a kilowatt-hour and less than 52.5 [75]
cents a kilowatt-hour;
(2) each year, the commission shall
adjust the power costs for which power cost
equalization may be paid to an electric utility
based on the weighted average retail residential
rate in Anchorage, Fairbanks, and Juneau; however,
the commission may not adjust the power costs
under this paragraph to reduce the amount below
the lower limit set out in (1) of this subsection;
and
(3) the power cost equalization for
each kilowatt-hour may be determined for a utility
without historical kilowatt-hour sales data by
using kilowatt-hours generated."
Renumber the following bill sections accordingly.
Page 3, following line 7:
Insert a new bill section to read:
"* Sec. 4. The uncodified law of the State of Alaska
is amended by adding a new section to read:
POWER COST ASSISTANCE. (a) For the period
beginning October 1, 2008, and ending June 30, 2011, an
electric utility that does not receive power cost
equalization under AS 42.45.100 - 42.45.150 is entitled
to receive five cents a kilowatt-hour for actual
consumption for each residential customer of not more
than 500 kilowatt-hours a month or a maximum of 6,000
kilowatt-hours a year.
(b) The assistance provided to the utility under
this section shall be passed along directly to the
residential customer in the form of a credit by the
electric utility.
(c) The assistance provided under this section
may only accrue to a single individual at a single
residence with an individual meter for residential
electric service.
(d) An electric utility that receives the
assistance provided under this section shall comply
with the provisions of AS 42.45.120.
(e) The Regulatory Commission of Alaska shall
modify the tariffs of an electric utility that
maintains a tariff with the commission to reflect the
utility's participation under this section.
(f) The Alaska Energy Authority shall administer
the program established in this section and may adopt
regulations for that purpose.
(g) In this section, "electric utility" means a
public, cooperative, or other corporation, company,
individual, or association of individuals, including
the lessees, trustees, or receivers appointed by a
court, that owns, operates, manages, or controls a
plant or system for the furnishing, by generation,
transmission, or distribution, of electric service to
the public for compensation but does not meet the
requirements of AS 42.45.150(2)(B) and (C)."
Renumber the following bill sections accordingly.
Page 3, line 23:
Delete "$170"
Insert "$127.50"
Page 3, line 31:
Delete "$170"
Insert "$127.50"
Page 4, following line 12:
Insert new subsections to read:
"(d) An individual may elect not to receive the
$1,000 resource rebate authorized under (a) of this
section. An individual who elects not to receive the
$1,000 resource rebate authorized under (a) of this
section may provide notice of the election on a form
provided by the Department of Revenue. Notice must be
postmarked or received by the Department of Revenue not
later than September 2, 2008.
(e) Notwithstanding any contrary provision of
law, an individual who did not apply for the 2008
permanent fund dividend and is eligible for veterans'
benefits under 38 U.S.C. 1315, 1513, 1521, 1541, and
1542 may apply for a $1,000 Alaska resource rebate
payment for 2008. The veteran or the spouse or
dependent of a living or deceased veteran must apply to
the Department of Revenue not later than October 1,
2008, and demonstrate that the individual would have
been eligible to receive a 2008 permanent fund dividend
under AS 43.23, except for not having applied for the
2008 permanent fund dividend previously.
(f) The veteran or the spouse or dependent of a
living or deceased veteran who is denied or receives
reduced payments or reduced health care benefits solely
because the $1,000 payment under this section received
by the individual is counted as income is eligible for
benefits under AS 47.25.120 - 47.25.300.
Notwithstanding the limit in AS 47.25.130, the veteran
or the spouse or dependent of a living or deceased
veteran is entitled to receive the same amount as the
individual would have received under 38 U.S.C. 1315,
1513, 1521, 1541, and 1542 had a $1,000 payment not
been received under this section."
Page 4, following line 29:
Insert a new bill section to read:
"* Sec. 9. Section 4 of this Act is repealed
June 30, 2011."
Renumber the following bill sections accordingly.
Page 4, line 30:
Delete "Sections 1 and 3"
Insert "Sections 1 and 4"
Page 5, line 1:
Delete "Section 9"
Insert "Section 8"
Page 5, line 2:
Delete "Sections 5 - 8"
Insert "Sections 3 and 5 - 7"
Vice-Chair Stoltze OBJECTED.
SUZANNE ARMSTRONG, STAFF, REPRESENTATIVE KEVIN MEYER,
explained the first change in the formula, which would alter
the method for calculating Power Cost Equalization (PCE) and
revert back to the formula currently in statute with the
exception of a higher ceiling rate of 75 cents. The ceiling
would return to 52.5 cents on June 30, 2011. Section 4, Page
2 would insert a new section into uncodified law entitled
the Power Cost Assistance because it is not part of the
equalization program. This exists for the period beginning
October 1, 2008 and ending June 30, 2011. Page 3, Line 17
addressed the dollar value of the community heating cost
point under the Low Income Home Energy Assistance Program
(LIHEAP) program and similarly under the state heating
assistance program $1.27, which would increase the current
value one and one half times. Page 3, Line 25 was a new
section inserted under the resource rebate portion, allowing
individuals to opt out of receiving the resource rebate
through the Department of Revenue. Page 4, Line 1 included
two new provisions. The first would allow individuals who
received certain veteran's benefits under federal law to
apply for the Alaska resource rebate program. The second
provision would allow for these individuals to be held
harmless if they loose their federal benefits.
Representative Crawford referenced Page 3, Line 27, which
states that a person may elect not to receive the $1,000
resource rebate. He suggested amending Amendment #1,
deleting Amendment #16 and divert the money refused to the
Renewable Energy Fund. Co-Chair Meyer suggested addressing
the recommendation as a separate amendment after determining
the cost by the Department of Revenue.
2:25:03 PM
Representative Nelson noted two issues that were also
included in her amendment. Amendment #10 would increase the
Power Cost Equalization (PCE) cap from 75 cents per kWh to
$1.15 per kWh. She referenced information by Mr. Teal
regarding anticipated FY09 rates before PCE in which 70
utilities would pay more than 75 cents per kWh hour. She
requested that the amendment be amended. Co-Chair Meyer
stated that he preferred Representative Nelson's amendment
be addressed separately.
Representative Nelson felt that leaving the cap at 75 cents
per kWh and then lowering the amount to 6 cents per kWh for
Anchorage consumers does not support the philosophy of the
PCE program.
2:28:32 PM
Representative Gara requested the PCE cap amount for CS
draft version E. He asked if it was the actual cost minus a
certain amount. Ms. Armstrong responded that the ceiling was
$.75 per kWh and the established floor was 120 percent of
the urban average calculated under the bill. The state would
pay the difference between 15.4 cents and 75 cents; the
state would cover 100% of the cost if the actual cost was
lower.
Representative Gara asked about the power cost portion. Ms.
Armstrong referenced the handout: "FY09 Costs under Various
Assumptions" (copy on file). She noted the House proposal
predicted a cost of $54,667,204 for payments to currently
qualified utilities.
Representative Gara thought that subsidizing power costs for
individuals in Anchorage who have the lowest electricity
costs in the state would not be equitable. Rural costs would
remain high despite PCE assistance. He asked how Anchorage
could pay six cents per kWh when Lime Village would pay 40
cents per kWh. He discussed extending the equity of the
proposal to rural Alaska. He thought that it would not be
expensive to reduce those rural utility costs by decreasing
the amount of money allocated to Anchorage. He agreed with
the proposal made by Representative Nelson.
2:32:58 PM
Co-Chair Meyer asserted that the maximum benefit for non PCE
recipients in Anchorage and Southeast areas is a maximum
amount of $25 dollars per month. He admitted that it moved
from $.52 to $.75 per kWh based on public testimony. He
wanted to see a balanced package. Other assistance would be
available from LIHEAP and the resource rebate program.
Representative Gara asked the amount needed to extend full
PCE coverage to $1.17 per kWh for rural communities.
Representative Nelson stated that at $1.15 per kWh, it would
be $63.9 million.
2:35:15 PM
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION, informed
that the numbers mentioned by Representative Nelson were
provided by the Senate. He pointed out that the Senate bill
is not currently before the House Finance Committee. Raising
the ceiling to $1.15 would instead cost about $3 million.
Representative Gara thought that was reasonable. He proposed
a friendly amendment, to fully cover rural Alaska. He asked
how much money would subsidize the cost for individuals
currently charged less than 11 cents per kWh. Co-Chair Meyer
answered that the bill's proposed floor was 12.8 cents per
kWh and five cents per kWh would be allocated for
individuals below the floor.
2:37:46 PM
Representative Kelly commented that the .52 cent cap has
been in effect for over a decade. The reason that cap is not
at the maximum is because if it was removed in the future,
the shock would be significant. He stressed that structural
changes within the PCE program should be handled carefully.
Representative Nelson pointed out that there were 70
utilities anticipating the 75 cent cap in FY09. They are not
dying villages and school construction is at 210 percent
capacity. She listed the amount many villages will pay. She
maintained that in two years, there will be many individuals
issuing a human cry to retain this program.
2:40:32 PM
Representative Crawford agreed with Representative Kelly
that it could be a shock, but the bill attempts to get
"people over the hump" while seeking other alternatives. He
hoped to see many structural changes.
2:41:43 PM
Representative Hawker commented that the policy created must
be efficient, equitable, and effective. When providing rate
based indemnity, the incentive to reduce the cost of
operations is removed. He thought that Amendment #1 was
reasonable.
2:44:28 PM
Representative Gara proposed an easy fix that would cost the
state only $3 million dollars. If a change to Page 2, Line
26, from the urban subsidy of 5 cents per kWh to 4.75 cents
per kWh was made, then a $3 million dollar savings would be
seen. Anchorage would continue to get a subsidy, but it
would allow the dollars to extend full coverage to the
higher cost areas. The renewable energy fund provides
incentive. He respected the comments regarding the incentive
of choosing alternative energy sources in the future. He
reiterated that the amount necessary is only $3 million
dollars.
2:47:01 PM
Representative Nelson emphasized that the village residents
are efficient. She compared electricity use in villages at
an average of 300 kWh per month to Anchorage's use of 750
kWh per month. It is impossible to have a healthy economy
without clinics and schools, which are not covered by PCE.
The villages will be paying twice as much as Anchorage at
six cents.
Co-Chair Chenault pointed to the $20 million dollars
allocated for school's energy costs. He added that the
municipal revenue sharing plan had been reinstituted for
community facilities. He stressed that the legislature has
moved forward in addressing those needs.
2:49:15 PM
Representative Nelson voiced appreciation for the latitude
provided by the Chair for the committee to discuss the
issue. She read a letter from the Yupiit School District
regarding district cuts of nearly $900 thousand from the
operating budget because of fuel delivery costs. She
asserted that preparation for rates rising so drastically
would have been impossible. She appreciated the discussion
in light of the crisis. Co-Chair Meyer advised that
Amendment #1 should not be amended but proposed that changes
be inserted into Amendment #10.
2:51:09 PM
Representative Gara asked for an explanation of Line 17,
Page 3. Ms. Armstrong explained that the dollar amount of
the community heating cost points in the LIHEAP program was
changed from $170 dollars to $127.50 dollars.
Representative Gara clarified that the legislature is
increasing the individual's potential LIHEAP payment. Co-
Chair Meyer responded that the additional $10 million added
to LIHEAP will now include eligible recipients in up to 225
percent of the poverty level.
Representative Gara asked if this would increase or decrease
the individual potential payment. Ms. Armstrong stated that
the change would increase from the current value by one and
one half times.
Representative Gara asked what the additional appropriation
for LIHEAP would be with this change. Co-Chair Meyer
responded $10 million dollars.
Representative Gara clarified that the $40 million dollars
discussed in prior meetings was for the former proposal.
Ms. Armstrong agreed.
2:56:56 PM
Representative Gara directed comments on the appropriate
amount of the rebate. Co-Chair Meyer noted that a family of
four at 225 percent poverty level had a $60 thousand per
year income.
Representative Nelson asked if a LIHEAP household, under
this proposal, with an average of ten points, would get
$1270 dollars per year. Ms. Armstrong replied that
Representative Nelson was correct; the benefit is awarded on
an annual basis. Representative Nelson estimated that this
amount would pay for only 200 gallons of fuel. Co-Chair
Meyer wanted to see the "right package". He listed available
benefits, which included PCE, LIHEAP, and the resource
rebate.
Representative Nelson commented that home heating is the
most expensive utility. For low income families, 40 percent
of their budget is spent on home heating. She liked LIHEAP
because it addresses the poorest of the poor and ensures
that they do not fall through the cracks. She emphasized
that LIHEAP applicants are some of the poorest individuals
in the state.
Co-Chair Meyer disagreed because he felt the amendment would
increase the amount significantly.
3:00:50 PM
Representative Gara opined that there was no doubt that the
amendment was inequitable. The bill allocates $65 million
dollars to Anchorage. He proposed that instead of 5 cents
per kWh change to 4 cents per kWh, which saves $13 million.
This proposal would provide little change for those in
Anchorage while providing a big change rural Alaska. He
urged the change as it would have very little effect on
Anchorage and he encouraged full PCE cap at $1.17 per kWh.
Co-Chair Meyer interjected that Anchorage is a large area
and that one cent does add up to a considerable amount of
money. Ms. Armstrong added that the allocation would not be
limited to the Anchorage area; Fairbanks, Juneau, Homer,
Mat-Su, Kodiak, Seward, Petersburg, Wrangell, and Ketchikan
would also be included. The population density increases the
number. Co-Chair Meyer agreed.
3:04:50 PM
Vice-Chair Stoltze observed the number of municipalities and
noted that one half million people fell under the 5 cent per
kWh. This would constitute 80 percent of the population. He
understood equitable to mean that each legislative district
would receive equal benefits. The goal was to allow 80
percent of the people to receive some of the benefit. Co-
Chair Meyer was sympathetic to rural Alaska and wanted to
see the package reflect equity.
3:06:38 PM
Vice-Chair Stoltze WITHDREW the OBJECTION. Representative
Nelson OBJECTED.
3:07:07 PM
Representative Gara MOVED to AMEND Amendment 1 on Page 1,
Line 14:
Delete 75 cents per kWh
Insert 1.17 per kWh
Page 2, Line 26;
Delete 5 cents per kWh
Insert 4 cents per kWh
Delete Page 3, Line 17-23.
Co-Chair Meyer OBJECTED to the amendment to the amendment.
Representative Gara clarified that the original intent of
Special Session was to help people in crisis. Co-Chair Meyer
countered that there are people in Anchorage who are
struggling to pay their electric bills.
Representative Hawker discussed the argument to redistribute
the wealth from the customer of non PCE utilities to PCE
utilities. He spoke to the poverty and wealth in his own
community.
3:14:59 PM
Vice-Chair Stoltze asked how the amendment would reduce
utilities for the non PCE applicants. Ms. Armstrong offered
to run the numbers; she thought it would reduce the
assistance around $13 million dollars per kWh. Mr. Teal
informed that on Page 6 of the spreadsheet the utilities
that are not currently eligible for PCE are listed. For
every penny reduction, each consumer's bill would be reduced
by $5. Every consumer would have a $25 reduction in their
monthly bill. If the reduction was dropped to 4 cents there
would be a $20 reduction in a monthly bill.
Representative Gara clarified that each penny per kWh would
equal $13 million dollars. He conceded that there should be
a component of this program that benefits individuals
regardless of their wealth. Co-Chair Meyer reiterated that
the total benefit with the change proposed by Representative
Gara would be $240 per year versus $300 per year.
3:19:46 PM
Representative Thomas stated that he would vote against the
amendment. He thought that the bill would provide more
advantages to all communities.
Representative Gara WITHDREW the change.
Representative Nelson maintained her OBJECTION.
A roll call vote was taken on the motion to adopt Amendment
1.
IN FAVOR: Foster, Hawker, Kelly, Stoltze, Thomas, Meyer,
Chenault.
OPPOSED: Gara, Nelson, Crawford
Representative Joule was not present for the vote.
The MOTION PASSED (7-3).
3:22:22 PM
Co-Chair Meyer MOVED to ADOPT Amendment #2:
Page 4, following line 27:
Insert:
"(c) A retail dealer located in a
municipality or community of 1,000 or fewer residents
that purchases or receives a transfer of gasoline,
diesel, or aviation fuel from a person that would have
been subject to AS 43~4OMl0(c) except for the
suspension established in (a) of this section, shall
pass on to the end user 100 percent of the tax savings
realized from the tax suspension provided under (a) of
this section.
(d) While the suspension of the state motor fuel tax
is in effect, a retail dealer described under (c) of
this section shall annually submit a signed statement,
under penalty of unsworn falsification, on a form or in
a format prescribed by the Department of Revenue
stating that
(1) the retail dealer will pass on to end
users 100 percent of the tax savings while
the suspension under (a) of this section
is in effect;
(2) the retail dealer will not increase its
price for motor fuel based solely in
response to the suspension of the state
motor fuel tax; and
Representative Hawker OBJECTED.
3:22:41 PM
RANDALL RUARO, SPECIAL ASSISTANT, OFFICE OF THE GOVERNOR,
Mr. Ruaro explained that Amendment #2 is an attempt to
ensure that gas retailers will pass on the eight cent fuel
tax suspension savings.
Representative Hawker noted that this amendment is an
attempt to address concerns that the tax suspension savings
would be a benefit to the consumer, but he sees no evidence
that it will be effective.
Co-Chair Meyer asked how many retailers this suspension
would impact. Mr. Ruaro said the amendment would impact
retailers operating in communities with a population of 1000
or less. He expected that it would have a positive effect.
3:25:53 PM
Representative Gara noted that not all the benefit can be
expected to go to consumers. He is concerned about sending
someone to jail for inadvertently failing to pass along the
savings. He asked how to determine that a retailer was
passing on the savings with variables like market forces,
competition, etc.
Mr. Ruaro cited the case in Florida where failure to pass
along the savings was a crime. There, the state reviewed the
gross receipts of the suppliers. Subsequent analysis showed
even greater savings passed along to consumers.
Representative Gara maintained that in two different
situations in Alaska, different market conditions would
cause suppliers to behave differently.
Mr. Ruaro explained his thinking. Competition in the urban
market will pass the savings on to the consumers. Fuel
stations that refrain from passing the saving will not sell
as much gas. The amendment addresses the rural concerns by
providing incentives to pass on the savings.
3:30:05 PM
Representative Gara appreciated the effort to encourage
people to be more honest, but felt that there was not a sure
method of enforcing the law. It is difficult to determine
whether or not the law has been broken.
CLYDE (ED) SNIFFEN JR., ASSISTANT ATTORNEY GENERAL,
DEPARTMENT OF LAW testified via teleconference, that there
are some mechanisms in place that could help determine that
the savings are being passed along. There is a provision in
the Amendment that allows the Department of Revenue to audit
books.
3:32:12 PM
Representative Thomas commented on the constituents he
served who live primarily in areas with populations less
than 1000. These individuals are routinely checking the
barge as the fuel arrives, to note the cost of gas. He
asserted that these constituents would know immediately if
the savings had not been passed along.
Representative Hawker believed that while the vendors in the
smaller towns may be well observed they are also the least
equipped to implement the detailed provisions listed here.
He asked about the fiscal note associated with auditing the
retailers' fuel books.
3:34:01 PM
JERRY BURNETT, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF REVENUE, responded that audits would
not occur unless complaints are issued from consumers. He
thought that any complaints would be resolved easily.
Representative Hawker agreed that the need to enforce this
penalty is not anticipated. What is the point of putting it
in statute if there is no anticipation of complaints and
audits? The weight of evidence falls against this amendment.
3:36:20 PM
Representative Crawford voiced concern with Amendment #2. He
disagreed with this amendment because he did not think it
was a good use of the state's resources. The simplest way to
get the $40 million to Alaskans would be to issue a direct
payment.
3:39:26 PM
Mr. Ruaro disagreed and pointed out the Unfair Trade
Practices currently written on the books. The amendment is
consistent with those statutes where a business is regulated
and the government is allowed to check and make sure it is
followed. A retailer would have to intentionally defraud to
be found guilty under the bill.
Representative Kelly admitted that the administration has
attempted to address the situation. He testified to the
liability of the state. He did not want to give the
impression that a person should call the state if they
suspect that they are not benefiting from the gas tax
suspension. Sending the message that the state is liable is
the wrong message to send. The effort of the administration
was good but the result was not.
3:43:14 PM
Representative Hawker maintained his OBJECTION.
A roll call vote was taken on the motion to adopt Amendment
2.
IN FAVOR: Meyer
OPPOSED: Gara, Hawker, Kelly, Nelson, Stoltze, Thomas,
Crawford, Foster, Chenault
Representative Joule was not present for the vote.
The MOTION FAILED (1-9).
3:44:31 PM
Representative Hawker MOVED to ADOPT Amendment #3, 25-
LS1757\E.1, Kane, 7/31/08:
Page 1, lines 5 - 7:
Delete "relating to Alaska resource rebates, and
increasing the amount of the 2008 permanent fund
dividend by the amount of the rebate"
Page 4, lines 1 - 12:
Delete all material.
Renumber the following bill sections accordingly.
Page 5, line 1:
Delete "Section 9"
Insert "Section 8"
Page 5, line 2:
Delete "Sections 5 - 8"
Insert "Sections 5 - 7"
Vice-Chair Stoltze OBJECTED.
Page 1, Lines 5-7, delete: "relating to the Alaska
resource rebates and increasing the amount of the 2008
permanent fund dividend by the amount of the rebate"
Delete all material on Page 4, Lines 1-12. Renumbering
the following bill sections accordingly, Page 5, Line
1, delete "Section 9" and insert "Section 8". Page 5,
Line 2, delete "Sections 5-8" and insert "Sections 5-
7".
Representative Hawker explained Amendment #3. He discussed
the three "E's":
· efficient
· equitable
· effective
There is nothing written in this bill that would encourage
people to switch to renewable energy. Once the oil wealth is
gone, it's gone for good. If the money were spent with a
policy and a plan, then much good could be done. There is a
billion dollars worth of deferred maintenance on roofs of
state buildings alone. There are a tremendous amount of
state infrastructure improvements that could be done.
"Throwing cash at people is not good policy but it is what
politicians do when they don't have policy." Giving away
money does not encourage any incentive to invest in changes
that will benefit communities for the long term.
3:51:24 PM
Representative Thomas spoke to the other side of the
amendment. His communities pay for electricity at 22 to 58
cents per kWh. Home heating fuel is being used throughout
Southeast Alaska, unlike the natural gas available on the
railbelt. This is the only part of the bill where everyone
is treated equally no matter where they live. The villages
in Southeast are shrinking due to high energy costs. The
people deserve to benefit from the wealth of the state.
3:54:27 PM
Representative Gara agreed with most everything that
Representative Hawker said but disagreed with him on the
vote. There are other important needs in the state. The
expense will be $800 million. He announced that $200 million
of this resource rebate will go to families with incomes
over $100 thousand per year. He believed that there was a
better use for that $200 million. He tried to shave this
proposal down to get money to the people who do need it but
not to those who don't need it. But he couldn't find a way
to get the committee to go along with his idea. Therefore he
was supporting it in order to get the funds to those who
really need it.
3:57:22 PM
Vice-Chair Stoltze told a story about Wally Hickel and his
admiration of him.
Representative Kelly agreed that many people are not asking
for the support check. The opinion most expressed by his
constituents is that they would take the check if it was
passed out, but it is a poor way to do business. The cost
would be at least one billion dollars. He would rather see
the money spent on a road to Western Alaska, which he had
been hearing about since he was young. The road would make a
difference for energy costs. He would also prefer to build
the Susitna Dam, or to build an electric intertie to Tok.
These projects would provide long term impacts on energy. He
was concerned about the loss of self-reliance in Alaska.
Some people are helping themselves by installing wood pellet
stoves and others efficient wood burning devices. Helping
the poorest of the poor often turns into helping people with
high income levels. He is worried about handing a check to
his grandchildren - what kind of a message does this send to
them? At statehood, the founders didn't have in mind using
our resources to pay electric or fuel bills. The
constitution was not set up for people to get the natural
resource proceeds themselves, but to allow the state to
build the infrastructure necessary to build the economy. He
is unsure what his position is on the final bill, but he
will support this amendment because he would rather have the
money pay for infrastructure.
4:05:38 PM
Representative Crawford felt trepidation about this bill. He
opposed Representative Thomas' bill offered earlier. The
vast majority of his constituents have expressed opposition
to this bill, but there are some who really need it. He is
going to oppose this amendment for now, but he may not be
able to support the final bill unless there are other
changes made.
4:08:33 PM
Representative Hawker explained that this policy call was a
classic dilemma, the choice between two unacceptable
alternatives. He decided he would like to have a vote on the
issue because he wanted to encourage a thorough debate about
the state's policy. He advocated for a frugal government. He
did not want to face the issue of comparing this expenditure
with the many other projects that are truly a higher
priority. He believed that the $800 million expended here
did not rise to the level of building schools or alternative
energy projects.
4:12:27 PM
A roll call vote was taken on the motion to adopt Amendment
3.
IN FAVOR: Hawker, Kelly, Foster
OPPOSED: Nelson, Stoltze, Thomas, Crawford, Gara,
Meyer, Chenault
Representative Joule was not present for the vote.
The MOTION FAILED (3-7).
4:14:41 PM
Representative Thomas WITHDREW Amendment #4.
4:15:07 PM
Representative Thomas WITHDREW Amendment #5.
4:15:28 PM
Representative Thomas MOVED to ADOPT Amendment #6, #25-
LS1757\E.13, Mischel & Kane, 8/1/08:
Page 1, following line 8:
Insert a new bill section to read:
"* Section 1. AS 42.45.110(b) is amended to read:
(b) An eligible electric utility is entitled
to receive power cost equalization
(1) for sales of power to local
community facilities, calculated in the aggregate
for each community served by the electric utility,
for actual consumption of not more than 70
kilowatt-hours a month for each resident of the
community; the number of community residents shall
be determined annually by the latest figures of
the United States Bureau of the Census or other
population data that the Department of Commerce,
Community, and Economic Development determines is
reliable; and
(2) for actual consumption of not more
than 500 kilowatt-hours a month sold to each
residential and business customer."
Page 1, line 9:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill sections accordingly.
Page 1, line 13, following "rate":
Insert "for a residential customer, and the retail
commercial power rate, for a business customer,"
Page 2, line 19, following "rate":
Insert "for a residential customer, and the retail
commercial power rate, for a business customer,"
Page 2, following line 21:
Insert a new bill section to read:
"* Sec. 4. AS 42.45.110(d) is amended to read:
(d) An electric utility whose customers
receive power cost equalization under AS 42.45.100
- 42.45.150 shall set out in its tariff the rates
without the power cost equalization and the amount
of power cost equalization for each [PER]
kilowatt-hour sold. The rate charged to the
customer shall be the difference between the two
amounts. Power cost equalization paid under
AS 42.45.100 - 42.45.150 shall be used to reduce
the cost of all power sold to local community
facilities, in the aggregate, to the extent of 70
kilowatt-hours a [PER] month for each [PER]
resident of the community, and to reduce the cost
of the first 500 kilowatt-hours for each business
and each [PER] residential customer a [PER]
month."
Renumber the following bill sections accordingly.
Page 2, line 24, following "residential":
Insert "and business"
Page 4, line 30:
Delete "Sections 1 and 3"
Insert "Sections 1, 2, 4, and 5"
Page 4, line 31:
Delete "Section 2"
Insert "Section 3"
Page 5, line 1:
Delete "Section 9"
Insert "Section 11"
Page 5, line 2:
Delete "Sections 5 - 8"
Insert "Sections 7 - 10"
Vice-Chair Stoltze OBJECTED.
Representative Thomas explained that Amendment #6 would
allow businesses to qualify for the benefits of PCE for
consumption of not more than 500 kWh per month.
Representative Meyer asked for history as to why businesses
were not included. Representative Nelson answered that
businesses and schools were included for many years. They
were excluded in the late 1990's, when the legislature
lowered the ceiling and raised the floor for allowable
residential PCE.
4:17:24 PM
Representative Kelly stated that this amendment would be a
structural change to a temporary solution. The PCE program
was meant to be temporary, until the problems of roads and
transmission lines were fixed. The proposed structural
change would best be handled during regular session with
more time to think about it. He opposed the amendment.
4:18:46 PM
Representative Hawker argued that the amendment does result
in a policy call that is more efficient, equitable and
effective. He supported the amendment.
Co-Chair Meyer asked the cost associated with implementing
the amendment.
4:20:16 PM
Vice-Chair Stoltze asked if Department of Commerce,
Community and Economic Development could testify to the
precise definition of technicalities regarding the term
"business."
Representative Gara questioned if the sponsor would accept
businesses from communities of 10,000 or less.
Representative Thomas understood that when PCE was
initiated, the businesses in Anchorage were not considered.
It was easier to cut the rural without the votes than it was
to cut the businesses from Anchorage. He wanted to
reintroduce fairness.
4:23:47 PM
TARA JOLLIE, DIRECTOR, COMMUNITY AND REGIONAL AFFAIRS,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT
testified via teleconference that the language is commercial
as opposed to non residential. She offered to do some
research on the language and report later.
4:24:38 PM
SARAH FISHER-GOAD, DEPUTY DIRECTOR OF OPERATIONS, ALASKA
INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY AND ALASKA
ENERGY AUTHORITY, DEPARTMENT OF COMMERCE, COMMUNITY AND
ECONOMIC DEVELOPMENT, commented on potential costs for all
commercial customers in PCE eligible communities. She stated
that those customers have not been in the program since
FY99. If they came back into the program, with a ceiling of
72.5 cents; the estimated cost would be $18 million dollars.
The state has not had commercial customers in this program
for about ten years.
4:26:31 PM
Co-Chair Meyer questioned changing PCE to include non PCE
members. Ms. Fisher-Goad offered to run estimates on those
numbers.
Representative Kelly clarified the legislature is not adding
a single utility or community to the PCE program.
Additionally, he clarified that the subsidy was allocated
for 500 kWh; the maximum benefit available to a residential
consumer in a non PCE community is $25 dollars. In a PCE
community, the 75 cent ceiling results in $115 dollar
subsidy increase. Ms. Fisher-Goad clarified that the maximum
was $295 per month. Typically the PCE eligible communities
are not reaching 500 kWh.
4:32:47 PM
Co-Chair Meyer addressed the issues and questions regarding
Amendment #6. He asked if mining would qualify for PCE. Ms.
Fisher-Goad responded that most of the high users self
generate. Golden Valley Electric has four commercial
customers.
4:34:24 PM
Representative Thomas WITHDREW Amendment #6.
4:34:36 PM
Vice-Chair Stoltze MOVED to ADOPT conceptual Amendment #7,
#25-GH4060\C.3, Bullock, 8/1/08:
Page 1, line 1:
Delete "motor fuel tax"
Insert "state motor fuel tax and municipal taxes
on the sale of motor fuel"
Page 1, following line 2:
Insert a new bill section to read:
"* Section 1. The uncodified law of the State of
Alaska is amended by adding a new section to read:
LEGISLATIVE INTENT. (a) It is the intent of the
legislature that
(1) secs. 2 and 3 of this Act will result in
a decrease in the cost of motor fuel to the people of
the state by reducing the taxes applicable to the sale
or transfer of motor fuel; and
(2) during the suspension period described
in secs. 2 and 3 of this Act, no new tax be imposed by
the state or a municipality on the sale or transfer of
motor fuel.
(b) For the purposes of (a) of this section, "new
tax" means a tax on the sale or transfer of motor fuel
that would be applicable after the effective date of
this Act and that was not levied or collected before
the effective date of this Act."
Page1, line 3:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill sections accordingly.
Page 2, following line 5:
Insert a new bill section to read:
"* Sec. 3. The uncodified law of the State of Alaska
is amended by adding a new section to read:
SUSPENSION OF MUNICIPAL TAXES ON THE SALE OF MOTOR
FUEL. Notwithstanding any other provision of law, a
municipality may not levy and collect a tax on the sale
of gasoline, diesel, or aviation motor fuel for the 12
consecutive calendar months immediately following the
month of the effective date of this Act."
Renumber the following bill section accordingly.
Representative Gara OBJECTED.
Vice-Chair Stoltze explained the amendment which is directed
at a large segment of energy users and identifies motor fuel
sales tax. The sales tax is the most regressive tax. The
attempt of the amendment is to suspend sales tax. This is a
policy mandate. He pointed out that individuals in his
district spend the largest portion of their income on motor
fuels. The amendment had been written to a different version
of the bill. Originally, he wanted to see this amendment
attached to coincide with the suspension period. The other
intent was to have this amendment apply to home heating
fuel. The amendment would also impact marine and aviation
fuel costs.
4:39:01 PM
Representative Gara asked which communities have a motor
fuel tax. Vice-Chair Stoltze replied that it is rolled into
sales tax statewide and has a large effect on the per gallon
price.
Representative Gara thought that many communities already
have policy and he would prefer not to interfere. Co-Chair
Chenault stated that he was "caught in the middle". The
Borough sales tax is three cents.
4:41:41 PM
Co-Chair Chenault commented that while he could appreciate
the intent of the amendment, he knew that the sales tax in
his borough was used for education. This method helps
minimize property taxes. In Kenai the 3.5 cent tax is used
to fund their government. He spoke in favor of the idea
because he saw the need with the price of gas so high. The
majority of complaints that he heard from his constituents
included the high price of gas and the need to commute for
work. He would not support the amendment but he agreed with
the concept of limiting the amount of sales tax that cities
charge.
4:43:49 PM
Representative Hawker reported that he also represents an
area that has a large sales tax and is dedicated to
education. He agreed in theory, but could not support the
amendment because it would shift the burden of the energy
cost to the schools or property tax payers.
4:45:29 PM
Representative Thomas explained that the amendment appears
to be an unfunded mandate. He thought that communities were
going to issue a cap on the amount of tax they are able to
collect with the rising prices. He said he cannot support
the amendment.
Vice-Chair Stoltze disagreed that the amendment would punish
communities. The high costs of fuel were unexpected. He
maintained that the excess money was not budgeted in for
schools. He termed it a significant step toward lowering gas
prices. He shared a personal story of high gas prices. He
emphasized that this would be a significant way to lower gas
prices.
4:51:06 PM
Representative Gara maintained his OBJECTION.
A roll call vote was taken on the motion to adopt Amendment
7.
IN FAVOR: Stoltze, Meyer
OPPOSED: Kelly, Nelson, Thomas, Crawford, Foster, Gara,
Hawker, Chenault
The MOTION FAILED (2-8).
4:52:34 PM
Representative Kelly MOVED to ADOPT Amendment #8, #25-
LS1757\E.6, Kane, 8/1/08:
Page 1, line 1, following "Act":
Insert "establishing the Alaska energy efficient
home heating loan fund and a loan program using the
loan fund balance;"
Page 1, following line 8:
Insert a new bill section to read:
"* Section 1. AS 18.56 is amended by adding a new
section to read:
Sec. 18.56.415. Alaska energy efficient home
heating loan fund. (a) There is established in the
corporation the Alaska energy efficient home
heating loan fund consisting of money appropriated
to it by the legislature and deposited in it by
the corporation.
(b) Subject to appropriation, the
corporation may provide to qualified residents
zero-interest loans from the Alaska energy
efficient home heating loan fund to assist in
installing in dwellings wood, wood-pellet, or
barley-fired stoves, or other energy efficient
heating systems that meet criteria adopted by the
corporation.
(c) The corporation shall
(1) administer the Alaska energy
efficient home heating loan fund; and
(2) adopt guidelines and procedures for
the fund and for administering the loan program,
both as established under the provisions of this
section."
Page 1, line 9:
Delete "Section 1"
Insert "Sec. 2
Renumber the following bill sections accordingly.
Page 4, line 30:
Delete "Sections 1 and 3"
Insert "Sections 2 and 4"
Page 4, line 31:
Delete "Section 2"
Insert "Section 3"
Page 5, line 1:
Delete "Section 9"
Insert "Section 10"
Page 5, line 2:
Delete "Sections 5 - 8"
Insert "Sections 1 and 6 - 9"
Co-Chair Meyer objected.
Representative Kelly explained that the amendment was to
provide an alternative home heating loan fund. It is an
attempt to help those who are trying to help themselves.
Time did not permit the inclusion of this within the
existing program.
Representative Kelly WITHDREW Amendment 8.
Co-Chair Meyer said he would like address this during
regular session.
Representative Kelly realized how difficult it was to
include it in a regular program.
4:56:10 PM
Representative Kelly WITHDREW Amendment 9.
4:57:12 PM
Representative Crawford spoke strongly in favor of
Amendments 8 and 9 and requested that they be brought up
again. Representative Kelly agreed.
4:58:35 PM
Representative Gara agreed with Amendment 9. He thought
Amendment 8 could be introduced. The policy could be
established, even though it would not be effective until the
Alaska Housing Finance Corporation (AHFC) could determine
the amount of money needed and the legislature made a
decision to fund it. He thought that it was a good idea to
help individuals help themselves.
Co-Chair Meyer explained that the amendment should remain
withdrawn due to the absence of AHFC.
5:00:37 PM
Representative Nelson MOVED to ADOPT Amendment #10, #25-
LS1757\E.11, Luckhaupt & Kane, 8/1/08:
Page 1, line 1, following "Act":
Insert "establishing the Alaska energy efficient
home heating grant fund and a grant program using the
grant fund balance;"
Page 1, following line 8:
Insert a new bill section to read:
"* Section 1. AS 18.56 is amended by adding a new
section to read:
Sec. 18.56.415. Alaska energy efficient home
heating grant fund. (a) There is established in
the corporation the Alaska energy efficient home
heating grant fund consisting of money
appropriated to it by the legislature and
deposited in it by the corporation.
(b) Subject to appropriation, the
corporation may provide to qualified residents
grants of up to $1,000 from the Alaska energy
efficient home heating grant fund to assist in
installing in dwellings wood, wood-pellet, or
barley-fired stoves, or other energy efficient
heating systems that meet criteria adopted by the
corporation.
(c) The corporation shall
(1) administer the Alaska energy
efficient home heating grant fund; and
(2) adopt guidelines and procedures for
the fund and for administering the grant program,
both as established under the provisions of this
section."
Page 1, line 9:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill sections accordingly.
Page 4, line 30:
Delete "Sections 1 and 3"
Insert "Sections 2 and 4"
Page 4, line 31:
Delete "Section 2"
Insert "Section 3"
Page 5, line 1:
Delete "Section 9"
Insert "Section 10"
Page 5, line 2:
Delete "Sections 5 - 8"
Insert "Sections 1 and 6 - 9"
Vice-Chair Stoltze OBJECTED.
Representative Nelson explained that this amendment deletes
75 cents as the cap for PCE eligible communities and
increases it to $1.15. More than seventy communities have
electricity costs well over the cap of 75 cents.
5:02:48 PM
Representative Nelson WITHDREW Amendment 10.
5:03:10 PM
Representative Nelson MOVED to ADOPT Amendment #11, #25-
LS1757\E.10, Kane, 8/1/08:
Page 2, line 5:
Delete "75 cents"
Insert "$1.15"
Co-Chair Meyer OBJECTED.
Representative Nelson explained that amendment #11 changes
the calculation of PCE floor to take into account the
proposed 5 cent reduction in electric rates for the non PCE
users. If the floor is tied to the weighted average of urban
utilities, then the floor should reflect the rate actually
paid by the consumers in the PCE communities. Co-Chair Meyer
summarized the intent as spreading the floor and the ceiling
to the amount before the non PCE was added. Representative
Nelson concurred.
Ms. Armstrong explained how the formula is structured. She
noted that it does not apply to the current formula. She
explained the lower limit is 12 cents according to the way
the statute is written.
5:05:53 PM
Co-Chair Meyer asked if this is in conflict with a previous
amendment. Ms. Armstrong explained that there is no
equalization that occurs after the formula is calculated.
There is no potential for equalization after the calculation
occurs.
Representative Nelson said her intent was to bring the rate
down 5 cents for PCE and non PCE users.
Co-Chair Meyer clarified that the intention is to lower the
floor from 12.8 down to 7.8. He said there would be a cost
associated with lowering the floor. Representative Nelson
spoke to the intent of PCE program. She felt that the
program was helping rural Alaskans but not addressing the
disparity. Having made her point, she chose to withdraw the
amendment because it was confusing.
Representative Nelson WITHDREW Amendment 11.
5:07:59 PM
Representative Nelson MOVED to ADOPT Amendment 10, which
would delete "75 cents" and insert "$1.15.". Co-Chair Meyer
OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Nelson, Crawford, Foster, Gara
OPPOSED: Kelly, Stoltze, Thomas, Hawker, Meyer, Chenault
The MOTION FAILED (4-6).
5:09:45 PM
Representative Nelson MOVED to ADOPT Amendment #12. Co-Chair
Meyer OBJECTED.
The proposed changes were:
Page 3, line 23:
Delete "$170"
Insert "$300"
Page 3, Line 31:
Delete "$170"
Insert "$300"
Representative Nelson explained that the figures are related
to LIHEAP. She noted she was attempting to increase the
number for possible future need.
Representative Kelly referred to the debate on Amendment 1.
He said his reasons against the amendment are the same as
stated during the discussion on Amendment 1.
Representative Gara MOVED to ADOPT conceptual amendment to
Amendment 12 -increasing the point system to $170 as written
in the CS. Vice-Chair Stoltze OBJECTED.
Representative Gara explained his reasoning. He suggested
raising the amount of the cap and argued for it. The money
would only be available for those in serious need. Heating
costs for some Alaskans will be substantial.
5:14:50 PM
Vice-Chair Stoltze spoke to his objection. He commented on
$2000 a month for fuel heating and felt that this number
might reflect inefficient heating. He questioned the
accuracy of the $2000 per month heating bill.
Representative Nelson said that $11 per gallon is accurate.
Vice-Chair Stoltze thought the number was too high and
irrelevant.
Representative Nelson stated that the rates were accurate
before the weatherization program was implemented.
5:16:33 PM
Co-Chair Chenault observed that the dollar amount being
discussed is "per point." The legislature cannot address
every need, but the best package will be developed.
Co-Chair Meyer commented that most rural homes would qualify
for the full 35 points. He maintained that those individuals
who need energy assistance would get help.
Representative Nelson argued that raising the cap would keep
it from being written in statute. The cap has never been
written in statute. The intention of the amendment is to
help the poorest people if the price of oil continues to
rise.
Co-Chair Meyer said that if the price of oil continues to
rise, then this issue will be visited next session.
A roll call vote was taken on the motion to amend Amendment
12.
IN FAVOR: Nelson, Crawford, Foster, Gara, Hawker
OPPOSED: Stoltze, Thomas, Kelly, Chenault, Meyer
The MOTION FAILED (5-5.)
5:21:26 PM
Representative Nelson WITHDREW Amendment 12.
5:21:57 PM
Representative Nelson MOVED to ADOPT Amendment #13, #25-
LS1757\E.5, Mischel & Kane, 7/31/08:
Page 1, line 1, following "Act":
Insert "amending the bulk fuel bridge loan fund;"
Page 1, following line 8:
Insert a new bill section to read:
"* Section 1. AS 29.60.660(c) is amended to read:
(c) Loans made from the bulk fuel bridge
loan fund to one borrower in a fiscal year
(1) may not exceed $750,000 [$500,000];
and
(2) shall be repaid within one year
after the date of the award."
Page 1, line 9:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill sections accordingly.
Page 3, following line 5:
Insert a new bill section to read:
"* Sec. 5. AS 42.45.250(e) is amended to read:
(e) Loans made from the bulk fuel revolving
loan fund to one borrower in any fiscal year
(1) may not exceed $750,000 [$500,000],
or, if the borrower is a cooperative corporation
organized under AS 10.15 or an electric
cooperative organized under AS 10.25 and uses the
loan to purchase bulk fuel on behalf of more than
one community, may not exceed the lesser of
$750,000 [$500,000] multiplied by the number of
communities on whose behalf the bulk fuel is to be
purchased, or $1,800,000;
(2) shall be repaid in one year or
less; and
(3) may not exceed 90 percent of the
wholesale price of the fuel purchased."
Renumber the following bill sections accordingly.
Page 4, line 30:
Delete "Sections 1 and 3"
Insert "Sections 2 and 4"
Page 4, line 31:
Delete "Section 2"
Insert "Section 3"
Page 5, line 1:
Delete "Section 9"
Insert "Section 11"
Page 5, line 2:
Delete "Sections 5 - 8"
Insert "Sections 7 - 10"
Vice-Chair Stoltze objected.
Representative Nelson explained that the amendment amends
the bulk fuel bridge loan fund. The loan amount would be
increased from $500.000 to $750.000.
5:23:13 PM
Co-Chair Chenault requested the administration's opinion
regarding the increased loan and the appropriate amount.
5:23:59 PM
AMANDA RYDER, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,
explained that the loan cap increase would cost the state
more money. The bulk fuel bridge fund would need about $2.5
million more and the bulk fuel revolving loan fund would
require an additional $5.5 million. As the cap rises and
larger loan are obtained, increased funds will be necessary
for both funds.
Co-Chair Chenault asked about potential increase in
administrative costs.
Ms. Ryder said that there would be an anticipated increase
estimated at $200 thousand to operate a $5 million program.
She did not have definitive numbers, but would get those to
the committee as soon as possible.
Co-Chair Chenault asked about administrative costs and
whether they would be recouped through the revolving loan
fund.
Ms. Ryder explained how administrative costs are
appropriated from the fund. Without an appropriation the
Department of Community and Regional Affairs (DCRA) will
have to absorb the administrative expenses.
Co-Chair Chenault restated his question. Ms. Ryder reported
that the bulk fuel bridge loan fund is a zero interest fund,
and is designed as a last resort. It differs from a
revolving loan fund which, earns interest and supports
itself.
Ms. Ryder said that the administration had requested about
four percent from the fund for administrative costs.
5:28:14 PM
Representative Hawker had difficulty accepting the
administration's need for an increase in administrative
costs. The amount of borrowers has not increased, only the
amount available to loan. He encouraged attention to the
fiscal note.
5:30:19 PM
Representative Hawker took issue with the amount the
increased administration needs would cost. He thought
"implement" would be a better choice of words than "cost."
5:31:11 PM
Ms. Ryder agreed that better terminology would be to
anticipate additional "needs" resulting from the proposed
increase in loan funds.
Representative Hawker observed that the amendment would
affect the title of the bill and the drafters of the bill
should be notified.
Representative Nelson suggested changing the title now.
5:32:39 PM
Representative Hawker moved to adopt a conceptual amendment
to Amendment 13 to amend the language on Line 2 to reflect
both components of the bill. This amends the bulk fuel
bridge loan fund and the bulk fuel revolving loan fund.
There being NO OBJECTION, it was so ordered.
5:33:50 PM
Representative Kelly asked if the administration supported
this.
Ms. Fisher-Goad stated that the Alaska Energy Authority
(AEA) agrees with amending the bulk fuel revolving loan fund
to increase the cap. Ms. Ryder commented that DCRA has no
objection to raising the cap, but they request additional
funding.
There being NO OBJECTION, Amendment 13 was adopted.
AT-EASE: 5:35:34 PM
RECONVENE:6:53:12 PM
Representative Gara MOVED to ADOPT new Amendment #14, #25-
LS1757\E.7, Bullock & Kane, 8/1/08:
Page 1, line 7, following "tax":
Insert "during certain months based on the average
price per barrel for Alaska North Slope crude oil for
sale on the United States West Coast"
Page 3, following line 5:
Insert new bill sections to read:
"* Sec. 4. AS 43.40.010(c) is amended to read:
(c) Except as provided in AS 43.40.013,
[EVERY] dealer who sells or otherwise transfers
motor fuel in the state shall collect the tax at
the time of sale, and remit the total tax
collected during each calendar month of each year
to the department by the last day of each
succeeding month. Every user shall likewise remit
the tax accrued on motor fuel actually used by the
user during each month. If the monthly tax return
is timely filed, one percent of the total monthly
tax due, limited to a maximum of $100, may be
deducted and retained to cover the expense of
accounting and filing the monthly tax return. At
the time the remittance is made, each dealer or
user shall submit a statement to the department
showing all fuel that [WHICH] the dealer or user
has distributed or used during the month.
* Sec. 5. AS 43.40 is amended by adding a new
section to read:
Sec. 43.40.013. Temporary suspension of tax
collection. (a) The collection of the tax required
to be collected under AS 43.40.010(c) is suspended
for the calendar month immediately following the
end of a 30-day period during which the average
price per barrel for Alaska North Slope crude oil
for sale on the United States West Coast is more
than $80.
(b) The department shall adjust the average
price per barrel in (a) of this section based on
the percentage increase in the Consumer Price
Index for urban wage earners and clerical workers
for Anchorage, Alaska, during the previous
calendar year, as determined by the United States
Department of Labor, Bureau of Labor Statistics.
(c) The department shall adopt regulations
necessary to implement this section and a
procedure for notifying persons responsible for
the collection of the tax levied and collected
under this chapter."
Renumber the following bill sections accordingly.
Page 4, lines 13 - 29:
Delete all material.
Renumber the following bill sections accordingly.
Page 5, line 1:
Delete all material.
Renumber the following bill section accordingly.
Page 5, line 2:
Delete "Sections 5 - 8"
Insert "Sections 4, 5, and 7 - 10"
Co-Chair Meyer OBJECTED.
Representative Gara explained the amendment. The budget is
roughly balanced at $70 dollars per barrel. When the price
of oil is over $80 per barrel, the gas tax is applied to all
sales and when the price of oil is less than $80 per barrel
then the gas tax is suspended.
6:56:58 PM
Representative Crawford disagreed that the suspension of the
gas tax makes sense at any price. He did not see that the
consumer would benefit from a suspension. He did not support
the amendment.
Co-Chair Meyer clarified that Representative Gara was not in
support of the gas tax suspension either, but a variable
means of implementing it instead.
Vice-Chair Stoltze wanted the clean and simple version of
the gas tax. He reiterated that the motorists are in need of
help. He opposed the amendment.
6:59:41 PM
Mr. Burnett voiced concern with administering the tax under
the proposed amendment. It could potentially be as volatile
as oil prices are. The larger issue is the confusion for the
consumers. He noted the competitive disadvantage to the
merchants who buy a large inventory and sell it over time. A
smaller player is likely to have a competitive disadvantage.
It is an administrative problem.
Representative Gara WITHDREW Amendment #14 (new). He
commented that his intention was not to over charge
consumers. "To most effectively relieve consumers' burdens,
take the $40 million and give it to the gas retailers
instead of the refiners." That is the way to get $40 million
to consumers.
Co-Chair Meyer noted that he liked the amendment because it
is only in effect when necessary.
7:02:46 PM
Representative Crawford MOVED to ADOPT Amendment #15:
Page 4, before Line 1 add Sec. 8. The uncodified law of
the state of Alaska is amended by adding a new section
to read:
MOTOR FUEL REBATE. (a) To provide residents of the
state with a rebate equivalent to the state motor fuels
tax, the amount of the 2008 permanent fund dividend
shall be increased. (b) Subject to appropriation, sum
of $40,000,000 to increase 2008 permanent fund
dividends under (a) of this section shall be
transferred from the general fund to the dividend fund
(AS 43.23.045).
Page 4, line 12
"The resource and motor fuel rebates are [is] a one
time payment to qualified Alaskans."
Page 4, line 13 through 29
Delete all information
Page 5, line 1
Delete all information
Vice-Chair Stoltze OBJECTED.
Representative Crawford explained that this amendment does
not suspend the motor fuel tax; instead it takes the revenue
and gives it to Alaskans via the permanent dividend fund.
7:03:49 PM
Vice-Chair Stoltze clarified the intent to collect the tax
from Alaskan motorists and redistribute the revenue
statewide. He wanted to see the fuel customers receive the
actual benefit.
7:04:57 PM
Vice-Chair Stoltze expressed familiarity with the
redistribution principle. Co-Chair Meyer commented that the
legislature did not know what the actual benefit of a gas
tax suspension would be to the consumer. He wanted to keep
the eight cent suspension.
Representative Crawford advised that the money be placed
into the PFD payment, which would provide another $40
million for the Alaskan consumer.
Representative Gara commented that the proposed amendment
was more efficient than the gas tax. Roughly 30 percent of
the gas tax will be eaten up by the commercial sector. This
is the more efficient way to give the money back to
Alaskans. There is no evidence that the eight cents will be
distributed back to consumers in the rural areas.
Co-Chair Meyer asked how much money would be allocated per
person under this amendment. Representative Crawford
answered $59 per person.
7:08:24 PM
Vice-Chair Stoltze stated that the legislature cannot give
the money to the people unless it is taken away first. He
preferred not charging it in the first place.
Representative Gara noted the similarities in the
redistribution of $1200 as a resource rebate.
Representative Crawford stated that all sales would have
records from the Highway Trust Funds; good reason to leave
gas tax in place. To get the money back to the people, this
proposal is the best.
7:11:09 PM
A roll call vote was taken on the motion to adopt Amendment
15.
IN FAVOR: Crawford, Gara, Foster
OPPOSED: Stoltze, Thomas, Hawker, Kelly, Meyer, Chenault
Representative Joule and Representative Nelson were not
present for the vote.
The MOTION FAILED (3-6).
7:12:06 PM
Representative Crawford MOVED to ADOPT Amendment #16:
Page 4, following line 12 Insert a subsection to read
"(d) Notwithstanding AS 43.23.015, and other provisions
of law, an individual may elect to contribute from that
individual's 2008 permanent fund dividend to the
renewable energy grant fund established under AS
4245.045 an amount equal to one half of the Alaska
Resource Rebate described in this section. An election
to contribute under this subsection may be made only on
a form provided by the Department of Revenue that is
received by the department on or before September 2,
2008. An agency or individual who applied for the 2008
permanent fund dividend on behalf of another individual
may not elect to contribute form that dividend.
Notwithstanding an election to contribute under this
subsection, the Department of Revenue may not pay any
money form a 2008 permanent fund dividend to the
renewable energy grant fund if the dividend has been
claimed or assigned, in whole or part, under AS
43,23,065-43.23.073."
Co-Chair Meyer OBJECTED.
Representative Crawford explained that this voluntary
reallocation of the resource rebate would go to renewable
resource fund.
7:13:13 PM
Co-Chair Meyer pointed out that this was discussed in
Amendment #1. He asked for testimony from Department of
Revenue.
Co-Chair Meyer asked if there was currently a way to check
off for this fund. Mr. Burnett replied there is not
currently a check off on the Permanent Dividend Fund for
this fund.
7:14:20 PM
Co-Chair Chenault asked if there was a reason why a person
could not write their own check if their preference was to
donate the money. Mr. Burnett advised that there was no
difference. It would be a tax deductable donation. The issue
is that it is late in the administrative process and the
checks would have to be manually processed. The Department
does have a check off for charitable donations. The change
would be difficult to implement for FY08.
7:16:16 PM
Representative Hawker had his questions about the practical
mechanics of the proposal answered by Mr. Burnett. Mr.
Burnett explained the manual process of each of the payments
received.
Vice-Chair Stoltze asked whether this was the mechanism
included in Representative Thomas' bill. Representative
Thomas clarified that the legislation would go into effect
next year. Mr. Burnett informed that the legislation passed
during the last session allows for check offs for qualified
charitable organizations. This amendment would not
automatically be added to that check-off list, because it
was for non profits that meet certain criteria. The addition
would not be a problem for future dividends, yet at this
late date the change would be difficult.
Vice-Chair Stoltze asked if this amendment would qualify.
Mr. Burnett did not think it would qualify.
Representative Hawker asked why the limit was one half of
the rebate rather than the entire amount. He felt that if an
individual was interested in donating their rebate check
they may as well donate the whole check. Co-Chair Meyer
agreed and recommended removing it.
7:20:15 PM
Vice-Chair Stoltze WITHDREW the OBJECTION. Representative
Hawker OBJECTED.
A roll call vote was taken on the motion to adopt Amendment
16.
IN FAVOR: Thomas, Crawford, Gara
OPPOSED: Foster, Hawker, Kelly, Stoltze, Chenault, Meyer
Representative Nelson and Representative Joule were not
present for the vote.
The MOTION FAILED (3-6).
7:21:20 PM
Representative Thomas MOVED to ADOPT new Amendment #6:
Page 1, following line 8:
Insert a new bill section to read:
"* Section 1. AS 42.45.110(b) is amended to read:
(b) An eligible electric utility is entitled
to receive power cost equalization
(1) for sales of power to local
community facilities, calculated in the aggregate
for each community served by the electric utility,
for actual consumption of not more than 70
kilowatt-hours a month for each resident of the
community; the number of community residents shall
be determined annually by the latest figures of
the United States Bureau of the Census or other
population data that the Department of Commerce,
Community, and Economic Development determines is
reliable; and
(2) for actual consumption of not more
than 500 kilowatt-hours a month sold to each
residential and commercial customer."
Page 1, line 9:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill sections accordingly.
Page 1, line 13, following "rate":
Insert "for a residential customer, and the retail
commercial power rate, for a commercial customer,"
Page 2, line 19, following "rate":
Insert "for a residential customer, and the retail
commercial power rate, for a commercial customer,"
Page 2, following line 21:
Insert a new bill section to read:
"* Sec. 4. AS 42.45.110(d) is amended to read:
(d) An electric utility whose customers
receive power cost equalization under AS 42.45.100
- 42.45.150 shall set out in its tariff the rates
without the power cost equalization and the amount
of power cost equalization for each [PER]
kilowatt-hour sold. The rate charged to the
customer shall be the difference between the two
amounts. Power cost equalization paid under
AS 42.45.100 - 42.45.150 shall be used to reduce
the cost of all power sold to local community
facilities, in the aggregate, to the extent of 70
kilowatt-hours a [PER] month for each [PER]
resident of the community, and to reduce the cost
of the first 500 kilowatt-hours for each
commercial and each [PER] residential customer a
[PER] month."
Renumber the following bill sections accordingly.
Page 2, line 24, following "residential":
Insert "and commercial"
Page 4, line 30:
Delete "Sections 1 and 3"
Insert "Sections 1, 2, 4, and 5"
Page 4, line 31:
Delete "Section 2"
Insert "Section 3"
Page 5, line 1:
Delete "Section 9"
Insert "Section 11"
Page 5, line 2:
Delete "Sections 5 - 8"
Insert "Sections 7 - 10"
Vice-Chair Stoltze OBJECTED.
7:22:56 PM
Ms. Fisher-Goad elaborated that the term "commercial" is the
term most often used when discussing utilities rather that
the before stated "business." This amendment would allow
these commercial customers eligibility to PCE.
Representative Hawker understood that the amendment would
only extend the PCE program for commercial customers in
those communities under 10,000 people, while communities
over 10,000 would not be eligible for PCE benefits.
Representative Thomas thought that the communities above
10,000 have been eligible for the discounted rate. He would
like to see more equity. Representative Hawker reiterated
the concern.
Co-Chair Meyer asked if the amendment was written correctly.
Representative Hawker replied that it was written correctly.
7:26:26 PM
Representative Kelly clarified that for more than a decade
these customers were excluded, in times when oil was high
and low and adding in the commercial class. Ms. Fisher-Goad
did not think that there was a community larger than 10,000
that was eligible for PCE.
Co-Chair Meyer asked if this fell under the section of PCE
up for review in two years. Ms. Fisher-Goad believed that it
would not be subject to Amendment#1; she believed that it
would be a permanent change and not subject to any sunset.
Co-Chair Meyer supposed that the legislature could always
review this amendment again.
7:28:40 PM
Representative Crawford asked if this amendment would have
any effect for non PCE recipients. Ms. Fisher-Goad replied
yes. Co-Chair Meyer followed-up that the seafood processors
in Dutch Harbor would qualify. Ms. Fisher-Goad stated that
any PCE communities through Page 5 would be eligible. The
Legislature has funded PCE at 100 percent for FY2008, with
the intent of funding PCE at 100 percent going forward. If
in the future PCE was again prorated, the commercial
customers would be prorated along with the residential
customers.
7:30:34 PM
Representative Hawker supported the amendment. He asked for
consideration of other PCE changes that do have sunset. He
urged consideration of a sunset. Representative Thomas
supported the language. Ms. Fisher-Goad suggested a
conceptual amendment allowing for sunset on June 30 2011,
which is consistent with other PCE policy.
Representative Thomas commented on the conceptual amendment.
7:31:53 PM
Representative Hawker MOVED To ADOPT conceptual amendment to
New Amendment 6, to apply a sunset provision on June 30
2011, which is consistent with other PCE policy. There being
NO OBJECTION, it was so ordered.
A roll call vote was taken on the motion to adopt New
Amendment #6 as amended.
IN FAVOR: Crawford, Foster, Gara, Hawker, Nelson, Thomas
OPPOSED: Kelly, Stoltze, Chenault, Meyer
The MOTION PASSED (6-4)
7:33:46 PM
Representative Thomas WITHDREW Amendment #17.
Co-Chair Chenault MOVED to ADOPT Amendment #18, #25-
LS1757\E.30, Kane, 8/2/08:
Page 2, line 31, following "that":
Insert "(1)"
Page 3, line 3, following "AS 42.45.150(2)(B) - (C)":
Insert "; and
(2) the executive director of the
Alaska Industrial Development and Export Authority
certifies to the legislature is not engaged in
litigation regarding any contractual obligation to
the Alaska Industrial Development and Export
Authority with respect to a power generation
project owned by the Alaska Industrial Development
and Export Authority"
Vice-Chair Stoltze OBJECTED.
7:34:16 PM
Co-Chair Chenault explained that the amendment grew out of
frustration. The goal was to create less expensive power for
Alaskans. He WITHDREW Amendment #18.
7:37:35 PM
Co-Chair Meyer MOVED to ADOPT Amendment #19:
Page 4, line 21
After "month."
Delete "Sales invoices must be attached"
Insert "The department may require that invoices be
attached"
Vice-Chair Stoltze OBJECTED.
Ms. Armstrong directed comments to the amendment.
7:39:03 PM
Vice-Chair Stoltze clarified the intent. He WITHDREW his
OBJECTION. The amendment was adopted.
7:39:42 PM
Representative Gara MOVED TO ADOPT Amendment #20. Vice-Chair
Stoltze OBJECTED.
Representative Gara commented on the amendment. He WITHDREW
the amendment.
HB 4005 was HELD in Committee for further consideration.
7:42:15 PM
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