Legislature(1995 - 1996)

02/07/1995 08:05 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HSTA - 02/07/95                                                               
 HB  17 - OFFICERS OF UTILITY COOPERATIVES                                 
 JEFF LOGAN, Legislative Assistant for Representative Green, sponsor           
 of HB 17, testified on the CS for HB 17, Version C, dated February            
 1, 1995.  This is the version of the bill that he and                         
 Representative Green are asking the committee to adopt and pass out           
 of the committee.  The proposed version of HB 17 is different than            
 the originals.  As the sponsors did research on HB 17, working with           
 the Electrical Utilities and their representatives, they discovered           
 they had other needs that weren't addressed in the original bill.             
 Some of the needs are a result of federal legislation that passed             
 last fall.  They are addressed in sections 1 and 2 of the bill.  In           
 section 3 or 4 there are housekeeping clarifications.  Mr. Logan              
 said that Mr. Dave Hutchens was there from the Rural Utility                  
 Cooperative to testify and to answer questions.   The rest of the             
 bill is a new tack on what was the original language of HB 17.  The           
 change in federal statutes is a consolidation of some of the                  
 financing agencies in the federal government that finance low                 
 interest loans to utilities.  For Alaskan Cooperative Utilities to            
 take advantage of those changes, they need a major change in                  
 statute.  Mr. Logan said that previously, the Rural Electric                  
 Administration (REA) provided low interest loans to electric                  
 cooperatives, to finance very expensive generation transmission               
 equipment, which was necessary to do the work that these people do.           
 The REA has now been combined with a number of other agencies that            
 provided loans for other utilities, and this co-op is called the              
 RUS, or the Rural Utilities Service.                                          
 MR. LOGAN had with him the CS for HB 17.   At the bottom of page 2            
 is the crux of the CS; it is a major change.  It reads:  "Electric            
 cooperatives may now offer services other than electricity, and               
 those services are direct satellite television, sewer and water and           
 gas."   Section 3 of the proposed CS was the crux of the original             
 HB 17, which is AS 10.25.200.  Last year the prime sponsors of this           
 bill also sponsored HB 497, which passed the House, but it did not            
 make it through the Senate.   HB 497 addressed this statute which             
 says, essentially, that the state requires that officers of a                 
 utility board be titled a president, a vice president, a secretary            
 and a treasurer.   The problem is, in business, the presiding offer           
 of the board is not always given the title of president.  A large             
 utility in the state found this problematic, and this bill takes a            
 new tack on it, saying that the state has no business telling a               
 utility what to call their officers.  It simply says "those                   
 officers authorized by the bylaws."   Essentially, what the bill is           
 doing is getting out of telling utilities what to call their                  
 officers.  That is what section 3 states.  The rest of the bill               
 except for section 4 is housekeeping clarifications.  One                     
 housekeeping clarification is to make sure the statute is clear               
 that the bylaws can be changed by a two-thirds vote of those                  
 members present, or voting by mail when it is appropriate, as                 
 opposed to requiring two-thirds of the members of the co-op, which            
 could be a rather unruly election process.                                    
 Number 517                                                                    
 REPRESENTATIVE PORTER said that from the way the amendment is                 
 written, in terms of the voting for the co-op, he would interpret             
 it to mean the election has to be one or the other; either the                
 election by vote at a meeting or an election by mail. It could not            
 be both and he wondered if that is what the bill intended.                    
 MR. LOGAN said he did not think that was the sponsor's intention.             
 Number 527                                                                    
 REPRESENTATIVE GREEN, prime sponsor of HB 17, concurred that it was           
 not the intent.  The wording was taken from an article provided by            
 the co-op itself, that a vote counts whether it is by mail or voted           
 at the meeting, and that is what they meant.  He said they would              
 modify the CS to keep with the intent.                                        
 Number 550                                                                    
 CHAIR JAMES asked Representative Porter if the wording were changed           
 to "and/or by mail" if it would fit his criteria.                             
 REPRESENTATIVE PORTER thought it would be more prudent to run this            
 by persons who know these things than tinker with it at this                  
 committee table.                                                              
 Number 571                                                                    
 REPRESENTATIVE PORTER moved that the committee adopt CS for HB 17,            
 version C, dated 2/1/95 as a working draft.   There being no                  
 objection, it was so ordered.                                                 
 CHAIR JAMES asked if anyone on the committee wanted to make a                 
 conceptual amendment to CS HB 17.                                             
 Number 576                                                                    
 REPRESENTATIVE PORTER moved that the committee adopt a conceptual             
 amendment to request the drafter to reconsider the language of page           
 3, line 22 and other places where this language appears, where is             
 says: "at a meeting or by mail."   The drafter should consider if             
 "at a meeting or by mail" allows a vote of both simultaneously, and           
 if not, to make the appropriate changes.  There being no objection,           
 it was so ordered.                                                            
 REPRESENTATIVE PORTER asked, referring to the original HB 17, if              
 the Alaska Public Utilities Commission (APUC) has direct satellite            
 television within its jurisdiction.  Mr. Logan said that Dave                 
 Hutchens could answer that question.                                          
 REPRESENTATIVE OGAN asked if it is a new form of business for these           
 co-ops, adding these new services:  Sewer, water, satellite                   
 television and gas services.                                                  
 CHAIR JAMES said that it is a federal change to allow and encourage           
 these companies to do that.                                                   
 Number 610                                                                    
 REPRESENTATIVE GREEN brought up that some of the utilities,                   
 especially in smaller communities, are being more streamlined.                
 The federal attitude was that the REA or electric co-ops have been            
 so successful that it would be more streamlined and successful if             
 they could allow the local communities to piggyback some other                
 utilities with the structure that they have with the electrical               
 Number 625                                                                    
 DAVE HUTCHENS, Executive Director, Alaska Electric Cooperative                
 Association, said that the association is composed of 18 electric             
 co-ops scattered around the state, and it serves about two-thirds             
 of the people.  Three of those co-ops have celebrated their 50th              
 anniversary.  In late 1986 or 1987, the legislature passed a re-              
 codification of the Electric and Telephone Cooperative Act, AS                
 10.25, and that has served the people well.  In regards to the U.S.           
 Department of Agriculture where changes occurred, the cooperative             
 thought it was time for some modest revisions to this Act.                    
 Regarding the issue of voting that was raised, on page 3, line 22,            
 about voting by mail or at the meeting, he suggested the language             
 could be clarified if they simply reverse the order and put "by               
 mail or at the meeting."                                                      
 Number 653                                                                    
 REPRESENTATIVE IVAN said he saw the original bill without the CS              
 and had some concerns to clear up.  He explained that he has                  
 concerns with section 2: "expanding the utilities to other services           
 besides electric or telephone."    His concern is that small                  
 business would have to compete with big business.                             
 MR. HUTCHENS assured Representative Ivan that this is not cable               
 television, but direct satellite broadcasts.  Someone had                     
 questioned if this was something that presently came through the              
 APUC and the answer he gave was "no."  The satellite that brings              
 the service to people across the Lower 48 is not positioned where             
 Alaska can receive data from it.  He mentioned ads on direct                  
 television with a little 18-inch disk:  This is what he has been              
 talking about.  We in Alaska cannot get that service.                         
 TAPE 95-10, SIDE B                                                            
 Number 000                                                                    
 MR. HUTCHENS continued to say that there would be someone selling             
 the direct programming and someone else selling the hardware.  The            
 market for this would not be in the villages where people live                
 compactly to where they could be reached by cable televisions.  The           
 market would be rural parts of the Kenai Peninsula, the Matanuska             
 Valley, the rural areas outside of Fairbanks, and through the                 
 Copper River Valley.                                                          
 REPRESENTATIVE GREEN asked him to address that small villages might           
 want to form their own small co-op.  The point in section 1 is that           
 they have no intention of going into competition with businesses              
 already established in an area.                                               
 Number 087                                                                    
 MR. HUTCHENS assured Representative Ivan that this is not mandatory           
 at all, and the Rural Utilities Service (RUS) does loan money                 
 directly to small municipalities in rural areas.  The reason they             
 want the electric cooperatives to become prepared to be available             
 as backups for the sewer and water business is that the predecessor           
 agencies to RUS have loaned money to a number of small communities            
 that did not have the management system to satisfactorily operate             
 sewer and water systems over the long haul, so they failed or are             
 failing.   They want somebody to be able to step in and provide the           
 management service to keep those systems operating.                           
 Number 127                                                                    
 REPRESENTATIVE IVAN said that speaking of past history, we did not            
 have people in management or people capable of financial planning             
 and organizing for business, but now, after 20 years, there is the            
 expertise and capabilities in small communities.  He said it is not           
 just satellite, but gas and services, and those are some of the               
 things they will be looking at to make lives better.                          
 CHAIR JAMES asked how we can address these things when we are                 
 trying to encourage people to do more for themselves, and to make             
 their small businesses work, then we allow big business to come in            
 to do the same things.  Little businesses cannot always compete               
 with big businesses.  This is not a mandate, it is an allowance,              
 but she understands the threat felt by small business, that big               
 businesses will come in and push them out.                                    
 MR. HUTCHENS pointed out that the electric coops are not big                  
 business.   Those serving in the larger communities have become               
 large, but those in the rural areas are quite small, such as                  
 Naknek, King Salmon and North Naknek.  They think there is a local            
 gas supply in the immediate area that is not large enough to                  
 attract oil companies to come in to develop it for export, but                
 would be available for local furnishing of service.  About how to             
 protect people who were there first, to keep other people from                
 coming in on top of them, that is why they made a point in section            
 1, the legislative intent section, to say it is not intended that             
 the cooperative would go into competition with anyone that is                 
 already there.                                                                
 CHAIR JAMES called for a motion to move the bill out of committee.            
 Number 138                                                                    
 REPRESENTATIVE PORTER moved that the committee pass the CS for HB             
 17 as conceptually amended with individual recommendations.  There            
 being no objection, it was so ordered.                                        

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