Legislature(2007 - 2008)HOUSE FINANCE 519
08/03/2008 01:00 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB4001 | |
| HB4005 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB4001 | TELECONFERENCED | |
| += | HB4005 | TELECONFERENCED | |
| + | TELECONFERENCED |
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 pointed out that all 20 amendments had been
incorporated into the committee substitute.
1:25:57 PM
Vice-Chair Stoltze recommended that the bill be clarified by
Ms. Armstrong.
1:26:37 PM
Vice-Chair Stoltze MOVED to ADOPT work draft version, #25-
LS1757\M, Kane, 8/2/08. There being NO OBJECTION, it was
adopted.
1:27:21 PM
SUZANNE ARMSTRONG, STAFF, REPRESENTATIVE KEVIN MEYER,
provided a sectional analysis.
· Section 1 pertained to the amendments made to the
bulk fuel bridge loan fund increasing the maximum
allowable loan from $500,000 to $750,000.
· Section 2 pertained to the addition of commercial
customers under the current Power Cost Equalization
(PCE) calculations.
· Section 3 reverted to the current formula in statute
that does not allow commercial customers to be under
the PCE calculations.
· Section 4 was the revision to the PCE formula
incorporated in amendment #1, which is a floor of
12.83 cents and a ceiling of 75 cents, and also
allows calculation for residential customers as well
as commercial rate adjustments.
· Section 5 reverted back to the current formula,
effective June 30, 2011 with the floor at 12.83
cents and the ceiling at 52.5 cents, without
commercial customers.
· Section 6 pertained to the addition of commercial
customers.
· Section 7 reverted back to the current formula
effective June 30, 2011, again without commercial
customers.
· Section 8 pertained to the bulk fuel revolving loan
fund and increasing the loan amount from $500,000 to
$750,000.
· Section 9 - There were no changes to this section.
· Section 10 included power cost assistance, in which
those individuals who are not eligible Power Cost
Equalization (PCE) will qualify for five cents per
kWh for the first 500 kWh per month.
· Sections 11 & 12 pertain to the Federal Low Income
Heating and Assistance Program. There were no
changes to these sections.
· Section 13 pertained to the Alaska Resource Rebate
and was without changes, except for an addition of
an "opt out" process for those who wish to refuse
the rebate and changes for certain individuals who
receive federal veteran's benefits.
· Section 14 pertained to the suspension of the motor
fuel tax, with the one change giving the discretion
to the Department of Revenue requesting invoices on
sales and transfers of gasoline, diesel, and
aviation fuel when distributers submit their reports
to the Department of Revenue.
1:30:32 PM
Representative Nelson asked about Section 11, Page 5. She
thought that the program was correctly termed the Federal
Low Income Home Energy Assistance Program, which qualified
for air conditioning in other states. Ms. Armstrong stated
that she would amend this section to accurately reflect the
title of the program.
1:32:38 PM
Representative Gara referenced Page 6, Line 8, regarding the
Low Income Heating Energy Assistance Program (LIHEAP)
program. The point system is done by regulation. It is based
on how much money is allocated by the legislature. He
thought that Line 8 should not be adopted by statute,
because the policy is driven by the appropriation.
Ms. Armstrong explained that the section is in uncodified
law; the dollar figure will not be in statute. In drafting
the bill, the intended direction was to ensure that the
point would double.
1:34:47 PM
Representative Gara reiterated the question.
RON KREHER, CHIEF, FIELD OPERATIONS, DIVISION OF PUBLIC
ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES,
commented that technically the point system is driven by the
amount of funding that is available. The point system stands
alone. Historically, the federal funding amount was used and
the size of the population was estimated. That relationship
drove the dollar value per point.
1:36:30 PM
Representative Gara suggested allocating a different amount
of funding every year. He asked if there was a down-side to
creating a point system. Mr. Kreher responded that there has
never been a statutory reference to the dollar value per
point.
1:37:22 PM
JON SHERWOOD, DIRECTOR, OFFICE OF PROGRAM REVIEW, DEPARTMENT
OF HEALTH AND SOCIAL SERVICES, stated that the purpose of
putting the point in statute came about in discussions with
Legislative Finance. One option was to determine the points
and then putting them into regulation. The other option was
to make an indefinite appropriation adequate to pay a fixed
point value. The Department does not have a preference as to
which approach the legislature takes.
Representative Gara provided a hypothetical situation. Mr.
Sherwood stated that it would fix the point value and if
more individuals applied, LIHEAP could still pay out at that
point value. To raise the point value, a change to the
uncodified law would be required.
Representative Gara asked if the legislature could fund a
certain amount without adopting a point system. Mr. Sherwood
affirmed that the point value would be set based on an
estimate of applications.
1:39:41 PM
Representative Crawford wondered if the federal government
changed the amount, would that mean that the state would run
the risk of a surplus or possibly a lack of funds for needy
applicants. He asked if the Department needed flexibility.
Mr. Kreher clarified that the point system does not change
and that the state could be in a situation and the federal
government could restrict what a household is paid. He
assumed that the state could not go above 127 dollars per
point.
Representative Crawford asked if $127.50 was the maximum
restriction. He asked what would happen if the federal
government program was funded at $5 million instead of $10
million. Mr. Kreher informed that the dollar value sets a
maximum amount.
Representative Crawford asked if this meant less money per
household. Mr. Kreher acknowledged that the dilemma was to
either serve fewer households or give each household less
money.
Representative Crawford understood and hoped to serve all
households at a lesser amount.
1:42:59 PM
Representative Nelson asked about the emergency contingency
funds. Mr. Kreher explained that the emergency contingency
fund portion is uncertain. The federal government does
appropriate a fixed amount and this is divided among states.
Typically, Alaska waits until the end of the heating
assistance year and then issues supplemental payments.
1:44:20 PM
Representative Nelson asked if the Department would find it
easier to administer the program without the dollar figure
included. She supposed that the cap might limit the benefit.
She asked if the Department would prefer that the cap be
removed. Mr. Sherwood thought that it could be done either
way and both would have complications depending on the
actions of Congress. He stated that the department has more
experience in managing without a maximum limit, but they can
manage the fund with either approach.
1:46:53 PM
Representative Gara asked about the technical change that
would occur in the CS by deleting the last sentence on Page
6, Line 7. Mr. Kreher affirmed that the change would serve
the intended purpose.
1:47:53 PM
Ms. Armstrong pointed out that the intent of Section 11 and
12 was to address the issue of assisting individuals with
high heating costs and to attempt to design a package, the
PCE changes were made to enhance the home heating program.
This was the way to double the assistance to individuals in
the 0 to 225% poverty guideline. It does apply October 1,
2008 to June 30, 2011.
1:49:14 PM
Representative Crawford commented that if the point system
is set at $127.50 and something does happen to change, it
would be unacceptable to leave some people unassisted. He
thought it should be leveled out so that some aid gets to
everyone in that condition. He did not want to see the
heating cost point set in statute.
Ms. Armstrong clarified that this will be in uncodified law
for 2.5 years; it can be amended. It is to implement home
heating and energy assistance programs. The allocation may
not exceed $127.50. If there were insufficient funds on the
federal level, then the allocation could be brought down and
pro rated. Households will not be cut out because money is
unavailable. The dollar assistance may be smaller.
1:51:40 PM
Representative Crawford heard that there would be
circumstances in which fewer households would be served. Mr.
Kreher mentioned that when funding is restricted, the
choices are to pay fewer homes, or to reduce payments so all
could be served. There is the risk of not having enough
funds to make a payment to every eligible household.
1:53:01 PM
Mr. Sherwood clarified that applications are accepted and
payments are made in November, but individuals can apply
through April. Payments are made prior to knowing the total
amount of eligible individuals. Initially the department may
pay less and then make a supplement payment if there is a
surplus.
1:53:50 PM
Vice-Chair Stoltze was encouraged by the approach. He
thought it would help the state control the budget. Mr.
Kreher offered that the situation is tenuous because now the
President is proposing a 22% cut to LIHEAP funding.
1:55:02 PM
Representative Gara commented that setting the heating cost
point in statute reduces flexibility. The policy would
remain the same. He guessed that a simple regulation may
take a long time. He asked how long it would take to change
the regulation. Mr. Kreher anticipated that the legislation
for emergency regulations were in the works at this time. If
a maximum payment amount were regulated, the change could
happen relatively quickly.
1:57:51 PM
Vice-Chair Stoltze noted an example where Alaska Housing
Finance Corporation (AHFC) prepared for emergency
regulations and made necessary changes quickly.
Co-Chair Chenault commented that the last budget cycle was
the first time that state money was allocated for the LIHEAP
program.
1:59:07 PM
Representative Hawker applauded the fiscal analysis provided
by the department and the complex process that had been
undertaken. Next year, the budget subcommittee can
reevaluate the transaction. He did not feel that it was a
burden to use the benefit level to drive the calculation,
which is evidenced by the adult dental program. He commended
the approach. Mr. Kreher pointed out that there would be a
revised fiscal note coming to members.
2:01:23 PM
Representative Hawker clarified the revision which stated
that 16 new personnel would be necessary to operate the
program when the fiscal note was based on five.
Representative Kelly asked if the personnel positions were
to implement what was done last year. Mr. Kreher responded
that it would be to manage the additional staff. He
estimated that the department would be serving more than
anticipated. He stated that he was addressing the
equivalents of those positions, because the plan is to
contract with Tribal organizations. Some administrative
funds would be transferred to those tribal entities. The
total staff would be eight or nine staff.
Representative Kelly questioned the contract with tribal
organizations. Mr. Kreher responded that the intent is to
contract with tribal organizations that have been approved
by the federal government to operate tribal assistance
heating programs.
Representative Kelly reiterated that the contract comports
with the requirement that was passed, but it does not
involve contracting with new entities. Mr. Kreher affirmed.
LUKE HOPKINS, MEMBER, NORTH STAR BOROUGH ASSEMBLY, FAIRBANKS
testified via teleconference. He indicated support for the
additional funding for the Alaska Gasoline Inducement Act
(AGIA) and transportation projects in the Fairbanks area. He
noted concern that construction might not be facilitated. He
urged extra funding to HB 4001 for Fairbanks to prepare bids
for necessary road projects.
2:07:08 PM
Vice-Chair Stoltze asked if Fairbanks had an Interstate
Maintenance (IM) program. Mr. Hopkins replied that they do
and the program is being submitted through the Department of
Environmental Conservation (DEC). He hoped that it would be
a low level maintenance plan if the Environmental Protection
Agency (EPA) accepts the plan.
RECESS: 2:08:36 PM
Reconvened: 3:09:08 PM
DENNIS WHEELER, COMMISSIONER, REGULATORY COMMISSION OF
ALASKA testified via teleconference. He addressed concerns
with the current M version of the bill and two areas where
the addition of commercial customers will have an impact on
the Regulatory Commission of Alaska (RCA.)
· The first concern was in respect to calculating the
actual rate located on Page 2, Line 13. When
calculating consumption the customer rate will be
factored in. Many utilities have a tiered rate
system where the commercial cost is broken down into
small and large customers, which will provide some
additional work. He did not think this would prove
too difficult.
· The second concern was located on Page 3, Lines 5 &
6, where the base rate calculations were done. He
interpreted the structure of the sentence and stated
that a base rate calculation was preformed
separately from a base rate calculation for
retail/commercial customers. The second base rate
would involve averaging to account for small and
large commercial users and industrial users. He did
not know how to average it.
Mr. Wheeler thought that the issues could be worked out but
stst
not by October 1. He recommended that January 1be the
effective date for that aspect of the bill.
3:12:36 PM
Co-Chair Meyer anticipated that the effective date could be
st
changed to January 1. Representative Thomas agreed.
Representative Hawker recommended that the change be adopted
as a formal amendment.
3:13:23 PM
Representative Thomas MOVED to CHANGE the effective date of
st
commercial PCE portion be January 1, 2009. There being NO
OBJECTION, it was adopted.
3:14:11 PM
Co-Chair Meyer asked how the changes would be overseen. Mr.
Wheeler responded that it would be a challenge to implement
changes, which has been addressed in a fiscal note. With the
intent of passing a credit to customers, rate regulated
utilities can be adequately monitored. For utilities that
are not regulated, RCA does not have control of what will be
passed on to the customers.
3:16:11 PM
Vice-Chair Stoltze asked if there was a reduction in the
natural gas subsidy, would approval through Regulatory
Commission of Alaska be required. Mr. Wheeler answered that
RCA regulates Enstar but not Fairbanks Natural Gas. If the
program was similar to PCE, the expectation would be to have
Enstar file a tariff sheet with RCA.
3:17:26 PM
Co-Chair Meyer asked how many people in Fairbanks use
natural gas. Representative Kelly responded 1,100.
Representative Gara asked if PCE would extend to the new
entrants in the commercial portion. Co-Chair Meyer replied
that there would be no commercial in the non PCE. He
reiterated "no commercial in the non PCE."
3:18:46 PM
Co-Chair Meyer requested Mr. Wheeler address the fiscal
note. Mr. Wheeler explained that regulatory cost charges
for the utilities are regulated. He informed that PCE has 70
utilities that are not regulated. The regulated utilities
subsidize the work done for the PCE program. He recommended
that General Fund money be used to support the positions.
Co-Chair Chenault asked for the number of charges to
administer the PCE program in current form. Mr. Wheeler
hesitated to guess. He stated that the Regulatory Commission
of Alaska has two positions that work in the PCE program. He
offered to provide specifics in the future.
3:21:37 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, addressed the fiscal notes associated
with the Alaska Energy Authority. She stated that the
estimated capitalization of the PCE fund for the changes in
this program is $130 million dollars. She added the
commercial estimates will adjust that number downward. For
the PCE staff, two new employees will be required to process
invoices for the addition of commercial customers and the
power cost assistance program. The personnel costs of the
Alaska Energy Authority's (AEA) fiscal note show up as two
new positions for interagency receipt funded positions.
3:23:54 PM
Co-Chair Meyer summarized that $130 million would cover the
PCE proposal that was passed. Ms. Fisher-Goad concurred, but
pointed out that there is already $28 million in the program
for FY09. In January 2009, the rate increases and new PCE
levels will be known.
3:25:12 PM
Representative Kelly referenced the note and asked if it
reflected the increase in the program only, or did it
include the endowment? Ms. Fisher-Goad informed that the
note included money to capitalize the program but not the
endowment.
Representative Kelly requested the current annual cost of
the program. Ms. Fisher-Goad responded that the annual cost
for the program is $37 million. Representative Kelly asked
how many households would be served in the PCE program. Ms.
Fisher-Goad replied 25,797 households.
Representative Kelly requested the number of businesses that
might apply. Ms. Fisher-Goad estimated that 6,400 would be
the largest expectation. She indicated that the information
regarding commercial customers was over 10 years old.
3:27:36 PM
Co-Chair Meyer imagined that the $130 million would decrease
slightly because the commercial aspect would not go into
effect until later. Ms. Fisher-Goad commented that it could
be divided in half. The number will change with the average
PCE level.
3:28:22 PM
Representative Thomas indicated that the fiscal note covered
both PCE and non PCE. Ms. Fisher-Goad agreed; she
recommended that the fiscal notes be refined. The House
approach is different from the Senate; $67 million would be
allocated for the non PCE portion of the power cost
assistance and $91 million dollars allocated for the
traditional PCE communities which will be adjusted when
there is more information regarding commercial customers.
3:29:23 PM
Representative Kelly asked if the current program would be
the $37 million, if the supplemental passed, moving to $67
million dollars. Ms. Fisher-Goad noted Page 2 of the fiscal
note which indicates the breakdown of the $158 million
dollars for PCE classic and the new program which includes
commercial applicants.
3:30:20 PM
Vice-Chair Stoltze did not understand the mechanics
regarding separate meters for home businesses. Ms. Fisher-
Goad understood that there would be separate meters and the
utilities do distinguish between those customers. Typically,
there would be two meters, one for commercial and the other
for residential. Home businesses in PCE eligible communities
are considered residential, up to 500 kWh.
3:32:26 PM
Representative Kelly asked direction to the $158 million
dollar reference in the fiscal note. Ms. Fisher-Goad stated
that she had provided the information and would ensure that
it got to the committee.
3:34:09 PM
Mr. Sherwood addressed three fiscal notes prepared by the
Department of Health and Social Services. The first is for
LIHEAP and the Alaska Heating Assistance Programs. The total
cost is just over $10 million dollars which will pay
$9,772,000 including $300,000 for administration. The
programs using the maximums in the bill would cost $30
million, with $20.7 million already appropriated for the two
programs. The average benefit under LIHEAP using 13 points
would be $1,657 per person and Alaska Heating Assistance
with five points per household would be $637.50.
3:36:45 PM
Mr. Sherwood explained that the next fiscal note addresses
the permanent fund hold harmless program, which is affected
by the increased Permanent Fund Dividend (PFD) component.
This hold harmless program amounts to $400,000. Additional
funds have been received in anticipation of a larger hold
harmless program.
Representative Hawker understood that the administration
level is adequate. Lost benefits are sourced out of the PFD
hold harmless category. He asked if that was correct or
would additional General Funds be needed to charge the fund
first. Mr. Sherwood requested that Ms. Fitzgerald testify.
ALLIE FITZJARRALD, ACTING DIRECTOR, DIVISION OF PUBLIC
ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES,
addressed the query.
3:40:28 PM
Mr. Sherwood addressed a hold harmless benefit for
veterans'. The estimate is $1.2 million required to provide
these hold harmless benefits. Additional staff would be
necessary with funds to support them. Some veterans receive
their benefit based on a priority level. The pension benefit
is estimated at about $1000 per person and $831,000 is the
estimated cost of providing medical benefits for the 500
veterans receiving medical assistance.
3:42:44 PM
Representative Thomas asked if the Senate version of the
bill would involve the same expense to the state. Mr.
Sherwood responded that the other proposal involves paying
both a dividend and fuel assistance and the Veterans'
Administration would count the fuel assistance as income.
The Senate proposal would cost more money to replace the
lost Veterans' benefits.
Co-Chair Meyer understood that the other proposal was fluid.
Ms. Fitzjarrald commented on the other version and the
Veterans' piece possibly making up the high end of the cost.
There is not enough information to accurately gage the cost.
3:44:46 PM
Representative Gara mentioned the hold harmless provisions
and the classes of people affected. The payment should not
be counted as income, meaning they might lose eligibility
for public housing. He asked if all of the individuals
currently protected by the hold harmless provision were
still protected. Ms. Fitzjarrald responded that the programs
operated by HESS are still protected. Representative Gara
understood that because the resource rebate was a one year
payment, it would not count as income.
Representative Gara questioned whether individuals with
subsidized payments at the Pioneer Home would be allowed to
keep their payments. Ms. Fitzjarrald said yes.
3:47:29 PM
AMANDA RYDER, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,
addressed the two fiscal notes provided by the Department
for the bulk fuel bridge loan fund. The first note
capitalizes the fund at $2,518,000. The appropriation from
the fund for administrative costs is $18,000. The $2,518,000
is due to the raised cap of $500,000 to $750,000.
Representative Hawker expressed agreement with the fiscal
note. He clarified that the money would increase the bulk
fuel bridge loan fund. He had not seen a fiscal note for the
bulk fuel revolving loan fund which is submitted by the
Alaska Energy Authority (AEA.) Co-Chair Meyer asked if the
Committee was expecting a fiscal note from AEA.
Representative Hawker reiterated that the committee had
raised both Bulk Fuel Bridge loan fund and the Bulk Fuel
Revolving Loan Fund and he expected a comparable fiscal note
from AEA. He asked if AEA had adequate funding authority.
Ms. Ryder stated that an additional $3 million dollars would
be required for the fiscal note. It is being worked on in an
appropriation bill. She had not signed a fiscal note for the
Bulk Fuel Revolving Loan Fund.
3:51:44 PM
JERRY BURNETT, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF REVENUE, referenced two fiscal
notes. The first note concerned the Resource Rebate or $1000
per PFD eligible individual at an amount of $620 million
dollars, with $100,000 for administrative expenses.
Mr. Burnett did not anticipate putting the General Fund
through the Department of Revenue for the hold harmless
provision. The payment would be identified separately, even
though it is on the same check. If a college student were to
request financial aid, then a request to the financial aid
advisor must be made so that the one time payment is not
considered income.
3:54:24 PM
Representative Hawker asked if the cash distribution stream
was taken into consideration for needs based programs. If
there is another big cash distribution next year, will money
be collected then? Mr. Burnett did not expect that to
happen. Representative Hawker asked if it was the
administration's position that this is a one-time only
payment. Mr. Jerry Burnett affirmed that this is a one-time
only payment.
3:56:17 PM
Representative Gara asked why the student was responsible to
communicate to the financial aid advisor when hold harmless
was automatic. Mr. Burnett explained that federal law
requires that with a one-time payment, the student must
request that the university not consider it income, which is
true of any kind of federal payment.
Representative Gara did not think that it would be simple to
notify students about this federal law. The only way to do
it would be to have Universities flag applications for
financial aid.
Mr. Burnett reported that in Juneau, where his wife is the
director of financial aid, applications will be handled
appropriately.
Representative Gara asked if intent language would be
helpful to ensure that Universities address this need on
financial aid applications.
Mr. Burnett did not know, because many of these students
will be attending schools throughout the United States.
Representative Gara planned to talk to Legislative Legal or
the University about that. Representative Nelson suggested
the Alaska Post Secondary Commission be contacted on this
note.
3:58:36 PM
Mr. Burnett said the second fiscal note is for the motor
fuel tax suspension. This includes a reduction in revenue of
$33,250,000 in FY09 and $39 million in FY10 and FY11. The
appropriation bill included $150,000 for shared taxes which
was noted in the fiscal note for municipalities.
Co-Chair Meyer was given the fiscal note prepared by Sarah
Fisher-Goad regarding the Bulk Fuel Revolving Loan Fund.
Representative Thomas stated that she had explained the note
to the committee earlier.
Co-Chair Meyer stated that the total of all the fiscal notes
was $750 million.
Co-Chair Meyer suggested that since the Senate was farther
along with their bill, House Finance could hold this bill
for now until the Senate bill passes.
4:02:54 PM
HB 4005 was HELD in Committee for further consideration.
#
ADJOURNMENT
The meeting was adjourned at 4:03 PM
| Document Name | Date/Time | Subjects |
|---|