Legislature(1995 - 1996)
02/07/1995 08:05 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 utilities. 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.