05/05/2001 04:07 PM House L&C

HCR 9-MATANUSKA ELECTRIC ASSN DEREGULATION                                                                                    
                                                                                                                                
CHAIR  MURKOWSKI  announced  that the  committee  would  consider                                                               
HOUSE  CONCURRENT RESOLUTION  NO.  9,  Encouraging the  Matanuska                                                               
Electric Association to reverse its plan to pursue deregulation.                                                                
                                                                                                                                
REPRESENTATIVE  PETE  KOTT,  sponsor  of  HCR  9,  presented  the                                                               
resolution.    [Opening statements  were  inaudible  due to  tape                                                               
failure.   However, a written  sponsor statement was  provided in                                                               
committee packets.]                                                                                                             
                                                                                                                                
CHAIR MURKOWSKI asked Representative Kott  if it is his intention                                                               
to enforce  the [Matanuska  Electric Association]  board's intent                                                               
to lay this aside.                                                                                                              
                                                                                                                                
REPRESENTATIVE KOTT  responded that she  was correct.   He stated                                                               
that  he  wants to  reinforce  the  position  that the  board  is                                                               
currently  taking,  and  he  believes  it  should  be  put  aside                                                               
indefinitely.   He added that  this is  not supported by  the RCA                                                               
(Regulatory Commission of Alaska).                                                                                              
                                                                                                                                
Number 0108                                                                                                                     
                                                                                                                                
CHAIR MURKOWSKI stated  that in the "resolved" clause  on page 2,                                                               
[the  Alaska State  Legislature]  is  encouraging MEA  (Matanuska                                                               
Electric Association) to reverse its  deregulation plan.  In view                                                               
of the actions of the board,  she asked Representative Kott if he                                                               
feels this language  is still appropriate.  She  remarked that it                                                               
doesn't seem that [MEA] has a deregulation plan at this point.                                                                  
                                                                                                                                
REPRESENTATIVE KOTT  stated that it is  questionable whether that                                                               
plan currently  exists.  He said  he suspects there was  a formal                                                               
plan that [MEA] was working from,  but it has been put [aside] at                                                               
the present time.                                                                                                               
                                                                                                                                
Number 0190                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG  asked   if,  under  the  circumstances,                                                               
Representative Kott  thinks it is  wise to go ahead,  since [MEA]                                                               
has set this issue aside.   He stated that he finds a significant                                                               
amount of  the resolution objectionable  in terms of  its factual                                                               
accuracy, and  thinks it  might "poison the  well" of  any future                                                               
restructuring efforts the state might want to undertake.                                                                        
                                                                                                                                
REPRESENTATIVE KOTT  responded that  he has given  that a  lot of                                                               
thought, and  he does  not think  there is  anything that  is not                                                               
factual.                                                                                                                        
                                                                                                                                
REPRESENTATIVE   ROKEBERG   remarked    that   with   issues   of                                                               
deregulation,   it   should   say  "restructuring,"   since   the                                                               
conclusions of the commission are  premature.  He stated that the                                                               
fact that  there was massive  damage to certain economies  due to                                                               
deregulation is arguable.   For example, California's [situation]                                                               
was  not caused  by deregulation;  he believes  it was  caused by                                                               
legislative meddling in the market system.                                                                                      
                                                                                                                                
REPRESENTATIVE  KOTT  responded  that  he  does  not  think  [the                                                               
blackouts  that  occurred in  California]  were  entirely due  to                                                               
meddling by  the California assembly,  but that  deregulation was                                                               
not well thought out.                                                                                                           
                                                                                                                                
REPRESENTATIVE  ROKEBERG  stated  that   he  would  suggest  that                                                               
California didn't  have the restructuring or  deregulation in the                                                               
more traditional sense.   It may have been labeled  that way, but                                                               
it  was  with  price  caps,   and  some  very  improper  economic                                                               
assumptions  were  made;  as a  result,  California's  system  of                                                               
alleged  deregulation was  doomed to  failure from  the "get-go."                                                               
He stated that he doesn't think it  is accurate to use that as an                                                               
example, whereas  the cases in Pennsylvania  and the mid-Atlantic                                                               
states have  been quite positive.   He asked  Representative Kott                                                               
what the  form of deregulation  was and if [MEA]  was considering                                                               
some kind of acquisition or merger.                                                                                             
                                                                                                                                
REPRESENTATIVE KOTT  responded that he believes  [MEA] was trying                                                               
to get out from under control of the RCA.                                                                                       
                                                                                                                                
REPRESENTATIVE  ROKEBERG   remarked  that   it  is   a  statutory                                                               
provision that the legislature has provided for.                                                                                
                                                                                                                                
Number 0449                                                                                                                     
                                                                                                                                
TUCKERMAN  BABCOCK, Manager,  Government  and Strategic  Affairs,                                                               
Matanuska  Electric  Association, testified  via  teleconference.                                                               
He stated that it sounds as  if there is some misunderstanding of                                                               
what  MEA  has  offered  to  its membership  as  a  choice.    He                                                               
explained  that it  was already  provided for  in state  statute,                                                               
which  is  a  deregulation  with respect  to  setting  rates  and                                                               
setting service  rules.   He stated that  even if  the membership                                                               
had  voted to  approve  this form  of  deregulation, the  service                                                               
territory  and  the certificate  that  allows  [MEA] to  serve  a                                                               
particular  area  would  still  be  regulated by  the  RCA.    He                                                               
remarked that had [MEA] pursued  it, [MEA] would be doing nothing                                                               
different  from  65 percent  of  all  the electric  utilities  in                                                               
Alaska, which are already deregulated.   These sorts of elections                                                               
have  been  successfully  held by  Copper  Valley,  Cordova,  and                                                               
Kotzebue,  all in  the last  few years.   On  the other  hand, he                                                               
said,  the   MEA  board  of  directors,   particularly  with  the                                                               
confusion  around  the word  "deregulation,"  and  with the  news                                                               
about  California  back  in January,  voted  unanimously  not  to                                                               
initiate  the  deregulation election.    He  stated that  if  the                                                               
legislature  has   considered  the   state  statute   that  gives                                                               
cooperatives this  option and wishes  to recommend to  the co-ops                                                               
not to pursue this option, then  it makes no more sense to direct                                                               
it at  MEA than it would  at Chugach, Golden Valley,  or Homer at                                                               
this point.                                                                                                                     
                                                                                                                                
Number 0637                                                                                                                     
                                                                                                                                
CHAIR MURKOWSKI stated  that she had asked the  sponsor about the                                                               
wording in the "resolved" section  encouraging MEA to reverse its                                                               
deregulation  plan, and  asked Mr.  Babcock if,  in his  opinion,                                                               
that has been accomplished by the recent actions.                                                                               
                                                                                                                                
MR.  BABCOCK  responded  that  in   January,  MEA's  board  voted                                                               
unanimously not to  initiate the election.  He  stated that there                                                               
are no plans to pursue this  option or present it to the members.                                                               
Even  if  the  board  wanted  to  pursue  this  limited  kind  of                                                               
deregulation, a  majority of  the members would  have to  vote in                                                               
favor of it before it would be implemented.                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG asked if the  sponsor is going to redraft                                                               
this.                                                                                                                           
                                                                                                                                
REPRESENTATIVE KOTT stated that he would.                                                                                       
                                                                                                                                
[HCR 9 was held over.]