Legislature(2001 - 2002)
04/06/2001 03:20 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
HB 175-APPROP: POWER PROJECTS Number 1401 CHAIR MURKOWSKI announced that the committee would take up HOUSE BILL NO. 175, "An Act making an appropriation to the Alaska Industrial Development and Export Authority for power projects; and providing for an effective date." [In packets was a new proposed committee substitute (CS), version 22-LS075\P, Cramer, 4/5/01.] GLEN MARUNDE testified via teleconference. A 40-year resident from the Tok area, he said there is a strong possibility that the natural gas pipeline will come through Tok; the fuel may be advantageous to "feed" the Tok-to-Chistochina tie-in line, which would be ideal. KEN GATES, Cordova Electric Company, testified via teleconference, encouraging committee to endorse the proposed CS [Version P]. He thanked the committee, and thanked Representatives Lancaster [sponsor] and Harris [cosponsor] for sponsoring the bill. Number 1484 JOE HICKS testified via teleconference and expressed that Chistochina is in full support of the transmission line, which is needed for emergency purposes and which will help the community a lot. The community is growing quickly, and the village is in the process of relocation. Safety issues need to be addressed. The present system is not adequate, and there are [power] surges. He said 80 percent of the community has electricity, and there is concern for the cost of [doing the rest]. If the transmission line goes through, it would meet all the community's needs. He noted that an airfield and fire station [are being built]; seven road projects [are planned] in the near future; and there are tourism and National Park Service projects coming up. He pointed out that the transmission line also would assist the communities of Slana and Mentasta Lake. Number 1600 SUSAN HECKS, Mayor, City of Seldovia, testified via teleconference that the City of Seldovia urges the committee to support HB 175, in particular, the portion for the Homer Electric Association regarding the Seldovia-Port Graham/Nanwalek power project. The project is vital to the public safety and economic viability of the 900 residents and the 25,000-plus visitors to the south side of Kachemak Bay. The current underwater cable is past its designed life, she emphasized, and could fail at any time. MS. HECKS asked members to consider that if this money is not a grant and has to be repaid, it will be passed on to residents, which would be difficult for the consumers, [in light] of the economic status on that side of the bay. She mentioned that with the spruce-bark-beetle infestation, power outages will only increase. MS. HECKS noted that the portion of the legislation that addresses the generation plant is another vital aspect for [the community]; currently, the generation plant in Seldovia has aging generators. She said the plant is capable of sending power all the way back to Homer Spit as well as tying to Nanwalek and Port Graham when power outages occur. She urged the committee's support. Number 1706 ERIC YOULD, Alaska Rural Electric Cooperative Association (ARECA), testified via teleconference. He informed members that he had spoken with Jean Bjornstaff (ph), General Manager, Chugiak Electric Association, who wanted to convey strong support for at least the Anchorage-Fairbanks upgrade. He also had spoke with Mike Scott, General Manager, Anchorage Municipal Light and Power, who conveyed his support for the project. Number 1772 CHAIR MURKOWSKI closed public testimony on HB 175. REPRESENTATIVE KOTT made a motion to adopt the proposed CS, Version P [22-LS0705\P, Cramer, 4/5/01], as the work draft. Number 1786 REPRESENTATIVE HALCRO objected. REPRESENTATIVE KOTT explained that "we" met with the sponsor and came up with this particular form to fund these projects; it is a more viable approach, based on some of the comments that he has heard. Representative Kott urged members to support it and move the bill onward, and suggested that projects could be "stripped out" and included in a capital budget. He pointed out that for the person in Homer or Seldovia, it is important to at least [draw] attention; without this legislation, [those communities] won't have that opportunity. REPRESENTATIVE HALCRO commented that if [Version P] is adopted, the bill packet might as well be used as a doorstop, because the bill wouldn't go anywhere and the projects wouldn't be discussed once [the bill leaves] this committee. Number 1934 REPRESENTATIVE CRAWFORD concurred with Representative Halcro, explaining that he has a problem with the funding source. He supports the original bill, and believes the suggestion that maybe the Railbelt Energy Fund could be used to do zero-percent or low-interest loans is a good one. He remarked that if the constitutional budget reserve (CBR) is used, this won't pass. REPRESENTATIVE MEYER asked the sponsor to comment, since he sits on the House Finance Committee. Number 1912 REPRESENTATIVE KEN LANCASTER, Alaska State Legislature, sponsor of HB 175, stated that he isn't "enamored" with the funding source, but if the consensus were to move these projects forward, he would be amenable. The one change he'd heard over the past couple of days, he noted, would be to change the repayment period to 25 versus 15 [years]; it would soften the rate charges for the people in Seldovia if they go up. He expressed willingness to try to make this work any way possible. REPRESENTATIVE HALCRO asked why the money taken out of the CBR would be repaid to the Railbelt Energy Fund. REPRESENTATIVE LANCASTER offered that this helps build the fund for other things such as a gas line or other energy projects down the road. This could be a source of funding to enlarge the Railbelt Energy Fund for future projects. Number 1973 REPRESENTATIVE HAYES asked why there is discussion about changing the funding source. REPRESENTATIVE LANCASTER mentioned nine years of history with the Railbelt energy funds and where the funds were envisioned to go, adding that he may be attempting to spread them outside of the Railbelt. A roll call vote was taken. Representatives Meyer, Kott, Rokeberg, and Murkowski voted in favor of adopting Version P as the work draft. Representatives Halcro, Crawford, and Hayes voted against it. Therefore, Version P was adopted as the work draft by a vote of 4-3. Number 2031 REPRESENTATIVE KOTT made a motion to adopt conceptual Amendment 1, changing page 2, line 21, from 15 to 25 years. REPRESENTATIVE ROKEBERG objected. He asked whether interest would be applied or if it would be a straight repayment. REPRESENTATIVE KOTT replied that it would just be a straight repayment. REPRESENTATIVE LANCASTER commented that $25 million goes to the Alaska Industrial Development and Export Authority (AIDEA) through the Alaska Energy Authority (AEA) to build their own project. Only a small portion would be of concern for repayment anyway, he added. REPRESENTATIVE KOTT said when the Glennallen-Susitna project was [built] it was a 35-year, no-interest loan; this comports more closely with procedures in the past. Number 2111 REPRESENTATIVE ROKEBERG withdrew his objection. CHAIR MURKOWSKI announced that with no further objection, conceptual Amendment 1 was adopted. REPRESENTATIVE HALCRO made a motion to adopt conceptual Amendment 2, on page 2, line 23, to replace "Railbelt Energy Fund" with "constitutional budget reserve fund." CHAIR MURKOWSKI objected for the purpose of discussion. REPRESENTATIVE HALCRO expressed that if [the legislature] is going to take money out of the CBR, [the money] ought to go back into the CBR. It is clear that the Railbelt Energy Fund has become political, he emphasized; the original intent was to take money from the Railbelt Energy Fund to do energy-related programs. He doesn't believe [the legislature] should "rob" the CBR to increase the Railbelt Energy Fund, he added, especially with the "precious" dollars that remain in there. REPRESENTATIVE KOTT said if the committee adopts conceptual Amendment 2, none of the language on lines 22 to 24 would be necessary, because every time money is withdrawn from the CBR, the legislature is obligated to repay it. However, there are some provisions. All of this money will go into the general fund first, and then will be put in the CBR if that is how [the legislature] approaches it. Based on previous withdrawals, Representative Kott said, he didn't think [the legislature] ever put anything back in the CBR. It goes into the general fund and will probably stay there, rather than into the CBR, unless [the legislature] indicates it is to go into another fund already created within the general fund, which would be the REF (Railbelt Energy Fund). Number 2216 REPRESENTATIVE MEYER remarked that initially there was some talk about keeping the money in the Railbelt Energy Fund in case [the legislature] wanted to have part ownership of the pipeline, to expedite the process. The money that is paid back goes into the Railbelt Energy Fund to build it up. He asked for clarification that repaying the CBR would not even be possible. REPRESENTATIVE KOTT commented that that is his understanding. It goes into the general fund and would have to be appropriated out from there. Number 2264 REPRESENTATIVE HALCRO said [the state] has $71 million in the Railbelt Energy Fund for energy-related projects. So what is being said is: No, no, no, we're not going to use "that" money because some people don't like it, so ... we're going to ... take money from the constitutional budget reserve, $62 million, and ... spend that on energy- projects. ... Then when it's repaid, or, in the case that some of these projects aren't completed and the money lapses, we're going to stick that back into the Railbelt Energy Fund. So, [it's] completely possible that at some point in time, we could have over $100 million in the Railbelt Energy Fund, and still not be able to access ... [it] for viable, needed energy projects, because of the political history and the opposition. REPRESENTATIVE HALCRO emphasized that this makes absolutely no sense to him, taking from one pot of money and giving it to another. He asked: Why not just do a $62 million straight appropriation into the Railbelt Energy Fund if that is [desired]? This is purely based on politics, he added, not sound reasoning, and is certainly not to the benefit of the people in these areas that need these projects. REPRESENTATIVE HAYES sought verification that when [the bill] gets to the House floor it needs a three-quarters' vote to tap into the CBR. [There was an indication of affirmation.] REPRESENTATIVE KOTT commented that there are projects on this list that everybody can support, and he thought the three- quarters' vote could be obtained unless some people just don't want to increase general fund spending. It is an increase of $60 million from "our" bottom line. There is a taskforce that will be looking at energy needs around the state, he pointed out, which would be back to report that there are opportunities to spend money from the Railbelt Energy Fund on Railbelt energy projects. Representative Kott also mentioned that the Denali Commission is looking into this, and said there is no shortage of projects to fund there. CHAIR MURKOWSKI said if [the legislature] has the CBR draw to fund these [projects] and the repayments go into the Railbelt Energy Fund, an overall savings account has been taken from, which would be available for spending anywhere in the state. [Those monies are being] funneled into a fund that is now dedicated for only Railbelt energy projects; however, there hasn't been consistency ensuring that [the funds] go to Railbelt energy projects [only]. Number 2408 REPRESENTATIVE MEYER asked: If the money is being paid back and goes into the general fund, and then an appropriation [is required] to get it back into the CBR - which doesn't sound as though it happens - what good does it do to make this amendment> REPRESENTATIVE KOTT asked Representative Rokeberg whether he recalls [that the legislature] has appropriated money back into the CBR. REPRESENTATIVE ROKEBERG responded that [the legislature] tries every year, but the "front part of the budget causes the sweep to go away." There is a "sweep" provision in the CBR that requires all money expended to be paid back that is part of the CBR. He supports the amendment, he added, because if [the money] is taken out, it needs to be put back. He expressed his understanding that the amendment before the committee is to revert to the CBR, rather than to the Railbelt Energy Fund. REPRESENTATIVE KOTT said he understood it was going to have to go to the general fund first. He added, "You've either got ... the amount ... left in the general fund or in the Railbelt Energy Fund." TAPE 01-49, SIDE B Number 2465 REPRESENTATIVE HALCRO asked: Since it is going to go back into the general fund and be "swept" into the Railbelt Energy Fund, why isn't the $62 million put into the Railbelt Energy Fund, thus eliminating the need for a three-quarters' vote? A roll call vote was taken. Representatives Hayes, Halcro, Meyer, Rokeberg, Crawford, and Murkowski voted in favor of conceptual Amendment 2. Representative Kott voted against it. Therefore, conceptual Amendment 2 was adopted by a vote of 6-1. REPRESENTATIVE HALCRO directed attention to page 2, Section 4, lines 27 to 28. He said it brings up the possibility of conceptual Amendment 3, because it talks about funds that have lapsed back into the Railbelt Energy Fund. He said he wasn't sure if there needs to be a corresponding amendment to ensure that the money doesn't go back into the Railbelt Energy Fund, or whether the section can be eliminated. CHAIR MURKOWSKI suggested that the drafters could make the conforming amendments. Number 2384 REPRESENTATIVE HAYES said the bill will pass out of this committee, will go to the House Finance Committee, then to the floor, and will become a "Christmas present." He asked what will stop every needed project from being added to [this bill]. REPRESENTATIVE LANCASTER replied that Representative Hayes is probably right, but hopefully there will be consensus moving forward. He deferred to Representative Kott. REPRESENTATIVE KOTT replied that he would control his "side of the aisle" from "hanging" anything on the bill if Representative Hayes would do the same. REPRESENTATIVE HALCRO commented that with $2.5 billion in the CBR, there is no ceiling; this is in contrast to taking the money directly from the Railbelt Energy Fund, where there is a finite $71 million. REPRESENTATIVE KOTT pointed out that there is $2.4 billion in the CBR; if it were all used up this year, the fiscal policy taskforce would be much happier and [the legislature] would have to implement a revenue-spending plan much earlier than most would like. Number 2257 CHAIR MURKOWSKI commented that the answer is really very simple: Take it from the Railbelt Energy Fund and use it for the purpose for which it was designed. It is a concern, she emphasized, that the energy fund has been just sitting there, and hasn't been used for its intended purpose. REPRESENTATIVE CRAWFORD indicated his belief that the sponsor had a good bill, but it would "die" if the proposed CS was moved from committee. REPRESENTATIVE ROKEBERG stated that he is not going to support the bill, because it is not a fair and judicious use of the fund. This state has a significant need for better production and distribution of energy, he exclaimed, and [the legislature] needs to look at the money that is left to see how it can be leveraged for all areas of the state, and to look primarily at the requirement of the Railbelt area. He said he wouldn't object to a bill that takes that money and leverages it for a better and more efficient use of energy. Number 2144 REPRESENTATIVE ROKEBERG said the restructuring committee that existed in the 21st legislature had substantial hearings on different alternative energy forms and what could be done around the state. This bill takes that last bit of "seed money" and gives it to a few small projects that just happen to get to the "Christmas tree" first. There are other projects that need to be considered as well, in a broader picture. REPRESENTATIVE ROKEBERG said he wouldn't support this bill because it is not properly crafted to help [Alaska's] energy needs. He clarified that there isn't one project in [the bill] that he wouldn't support on its own merits, and he believes [the projects] need the money. However, this isn't the time or place to do that, and [the legislature] needs to help these areas find monies through other funding sources. REPRESENTATIVE KOTT said he doesn't believe this bill is "dead," and doesn't believe that it can be determined how another member will vote once it reaches the full House. Number 2076 REPRESENTATIVE KOTT made a motion to move the CS for HB 175, version 22-LS0705/P, Cramer, 4/5/01, as amended, out of committee with individual recommendations. [It was later determined that there were no fiscal notes.] REPRESENTATIVE ROKEBERG objected. A roll call vote was taken. Representatives Crawford, Hayes, Halcro, Meyer, Kott, and Murkowski voted in favor of moving the bill. Representative Rokeberg voted against it. Therefore, CSHB 175(L&C) moved from the House Labor and Commerce Standing Committee by a vote of 6-1.
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