Legislature(2007 - 2008)CAPITOL 17
05/02/2007 03:00 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB172 | |
| SB84 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 172 | TELECONFERENCED | |
| + | SB 84 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 172 - PUBLIC UTILITY EXEMPTION: REFUSE CHAIR OLSON announced that the first order of business would be HOUSE BILL NO. 172, "An Act exempting certain commercial refuse services from regulation under the Public Utilities Regulatory Act and providing for termination of that exemption." 3:11:17 PM ELEANOR WOLFE, Staff to Representative Kurt Olson, Alaska State Legislature, presented HB 172 on behalf of the sponsor, the House Labor and Commerce Standing Committee, which is chaired by Representative Olson. She began by reading from the sponsor statement [original punctuation provided]: HB 172 will exempt commercial refuse service, the collection and disposal of refuse materials using dumpsters and wheel containers with a capacity of one cubic yard or more, from rate regulation by the Regulator Commission of Alaska (RCA). Removing rate regulation from commercial refuse service will allow flexibility in setting rates which will promote innovation as to rates and services and will reduce costs for commercial customers. Flexibility in setting rates should also assist commercial refuse utilities and commercial customers in developing integrated waste stream recycling, diversion and disposal systems. Removing rate regulation should reduce the cost and administrative burden associated with the generation, review and maintenance of tariffs. This in turn should encourage more entrants into the commercial refuse market, benefiting commercial customers overall. Removal of commercial refuse rate regulation will promote the public good by allowing the RCA to utilize the resources now devoted to commercial rate regulation to more pressing consumer issues. Rate deregulation will not prevent the RCA from continuing to police the commercial refuse market. The RCA will retain the right to modify, suspend or revoke a commercial refuse utility Certificate of Public Convenience and Necessity for good cause shown. The Commission will also retain jurisdiction to address and resolve customer disputes and claims that a particular company is acting improperly. Alaska has a vibrant, knowledgeable commercial community capable of evaluating the services and rates offered by commercial refuse utilities. Rate deregulation will allow market forces to set rates and drive service innovation. MS. WOLFE then stated that the HL&C has introduced HB 172 at the request of "commercial refuse haulers." REPRESENTATIVE GARDNER asked whether there are any communities in Alaska where deregulation of refuse collection will result in no competition. MS. WOLFE said that the deregulation provided for in HB 172 won't apply to areas where there is no competition because without competition, rates would not have been set and thus there would be no need for deregulation. REPRESENTATIVE GARDNER noted that a letter in members' packets from Alaskans for Litter Prevention and Recycling (ALPAR) states that deregulation of commercial rates will encourage and promote recycling. She said she doesn't see the connection between the two. 3:15:21 PM RICHARD GAZAWAY, Hearing Examiner, Common Carrier, Regulatory Commission of Alaska (RCA), Department of Commerce, Community, & Economic Development (DCCED), replied that commercial refuse utilities have the power, under AS 42.05.431(g), to "do a tiered rate structure" that would address recycling efforts. REPRESENTATIVE NEUMAN noted that a letter in members' packets from the Alaska Center for the Environment (ACE) states that an integrated waste and recycling program will require major refuse utilities to have flexibility, creativity, and the ability to structure incentives to make a community-wide recycling effort successful. However, if only one regulated company has control over recycling, then where is the advantage of expanding that company's operation to deal with all the different types of recyclable products, he questioned. REPRESENTATIVE GARDNER said she still doesn't understand how regulation either impedes or promotes recycling. 3:18:41 PM REPRESENTATIVE NEUMAN asked for an explanation of the fiscal note provided by the RCA. MS. WOLFE surmised that the bill would reduce revenue for the RCA because all of its revenue comes through rate regulation fees, and since those fees would no longer be charged to refuse utilities providers, customers wouldn't have to pay those fees either. WILLIAM R. SNELL, Member, Management Committee, Alaska Waste, relayed that Alaska Waste supports HB 172 because it believes the bill will make the company's markets more efficient while ensuring that the regulatory environment provides for public visibility and protection against any type of discriminatory action on pricing and also while eliminating a significant regulatory burden. Alaska Waste also believes that HB 172 will allow the industry greater flexibility in meeting customers' demands, bundling services, and being innovative in a more timely fashion. CHAIR OLSON, after ascertaining that no one else wished to testify, closed public testimony on HB 172. REPRESENTATIVE GARDNER asked whether deregulation would only apply when there is more than one refuse service in a community. MS. WOLFE said that is her understanding. REPRESENTATIVE NEUMAN moved to report HB 172 out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE GARDNER objected to ask where in the bill it says deregulation only applies when there is more than one utility offering service in a community. MS. WOLFE acknowledged that the bill doesn't state that specifically; rather, she surmised, that condition is a function of RCA regulations. MR. GAZAWAY countered that according to his understanding, the RCA doesn't have regulations that would limit the application of a statute to a situation where there is competition. REPRESENTATIVE GARDNER questioned whether passage of the bill would result in deregulation even in communities where there is only one refuse utility providing service, thus effectively stifling competition. MR. GAZAWAY said that is his understanding. REPRESENTATIVE GARDNER asked whether members would be amenable to an amendment that would allow deregulation to occur only when there is more than one refuse utility providing service in a community. REPRESENTATIVE NEUMAN shared his understanding that deregulation would promote competition in the marketplace. 3:24:09 PM MR. GAZAWAY relayed that existing AS 42.05.711 has a subsection that exempts refuse utilities that annually gross $300,000 or less; thus smaller competitors are currently exempt under that existing provision. REPRESENTATIVE GARDNER indicated that that response satisfies her concern. CHAIR OLSON surmised that when a community is large enough to generate more than $300,000 of income for refuse service, there will be more than one company providing that service. MR. GAZAWAY, in response to a question, explained that typically, refuse utilities have a two-tier rate structure wherein the size of the receptacle distinguishes whether the service being provided is a commercial service or a residential service. Therefore, if a customer remodeling his/her home arranged for the use of a dumpster for a month, for example, he/she would probably qualify as a commercial customer for that time period. In response to another question, he said that one aspect of deregulation as proposed by the bill is that utilities would be exempt from the requirement that they not discriminate in rates or services. One of the classic regulatory protections afforded by rate regulation is that all similarly situated customers are treated equally, but that protection would no longer exist if HB 172 were adopted. REPRESENTATIVE GATTO expressed concern with that point, that under the bill, utilities would be allowed to discriminate. MR. GAZAWAY replied that discrimination per se is already allowed and current statute merely prohibits unreasonable discrimination; in other words, a refuse utility is allowed to distinguish between customer classes as long as all within a customer class are treated alike. Passage of HB 172 would exempt refuse utilities from all provisions of AS 42.05 except AS 42.05.221 - 42.05.281. Under the bill, refuse utilities would no longer be subject to AS 42.05.391 - which addresses discrimination in rates - and AS 42.05.301 - which addresses discrimination in service. In response to another question, he said that [under the bill], one circumstance a refuse utility would probably find desirable would be that when securing contracts with larger commercial customers, it would not have to make a particular rate available to all of its commercial customers; instead, the refuse utility would be able to negotiate a deal with a commercial customer without first going through the RCA as is currently required. He then detailed the current process a refuse utility must go through when it wants to offer a commercial customer a special contract. 3:30:49 PM CHAIR OLSON asked whether passage of HB 172 will result in rates going down. MR. GAZAWAY declined to speculate on that point. REPRESENTATIVE BUCH asked whether passage of HB 172 will result in a significant loss of revenue for the RCA. MR. GAZAWAY replied that the RCA, based on the previous year's collections, would lose essentially $205,000 towards its overall operating budget because commercial refuse providers would no longer be paying an annual regulatory cost charge (RCC). CHAIR OLSON surmised that some of the RCA's expenses would also be off-set. MR. GAZAWAY acknowledged that there could be a reduced workload for the RCA with regard to reviewing tariffs. REPRESENTATIVE BUCH questioned whether the reduction in revenue would be completely offset by a reduction in the expenses the RCA currently incurs in regulating the refuse utility industry. MR. GAZAWAY said he couldn't answer that question at this time but would be willing to research the issue further. He added that RCA staff members allocate their time based on industry needs, and that figure is kept in a spreadsheet that determines the ultimate charge that industry is assessed through RCCs. For example, if the RCA is regulating two industries and one industry takes up 75 percent of the RCA's time, then that industry contributes 75 percent of the RCA's total RCCs. He reiterated that he is not able to verify that the estimated loss of revenue will be offset by a reduction in costs. REPRESENTATIVE NEUMAN asked whether the RCA, as a state agency, is required to be revenue neutral. MR. GAZAWAY said it is. REPRESENTATIVE NEUMAN surmised, then, that the estimated reduction in revenue would be offset by a like reduction in expenses. MR. GAZAWAY concurred, but pointed out that the RCC amount is based on historical factors, and from year to year a different amount of time is spent on refuse issues. He reiterated that the RCA is supposed to be revenue neutral. REPRESENTATIVE NEUMAN again moved to report HB 172 out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE GARDNER said she doesn't understand what effect the bill will have on consumers, and so will be conducting further research. CHAIR OLSON, after determining that there were no objections to the motion, announced that HB 172 was reported from the House Labor and Commerce Standing Committee.
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