Legislature(2003 - 2004)

04/20/2004 08:03 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 520-REGULATORY COMMISSION OF ALASKA                                                                                        
Number 0229                                                                                                                     
CHAIR WEYHRAUCH  announced that  the next  order of  business was                                                               
HOUSE  BILL  NO.  520,  "An  Act  relating  to  the  expenses  of                                                               
investigation, hearing, or public  advocacy before the Regulatory                                                               
Commission  of  Alaska, to  calculation  of  the regulatory  cost                                                               
charge for public utilities and  pipeline carriers to include the                                                               
Department of  Law's costs  of its  public advocacy  function, to                                                               
inspection of certain  books and records by  the attorney general                                                               
when participating as  a party in a matter  before the Regulatory                                                               
Commission of Alaska; and providing for an effective date."                                                                     
Number 0260                                                                                                                     
REPRESENTATIVE HOLM moved to adopt  the committee substitute (CS)                                                               
for  HB 520,  Version 23-LS1785\D,  Craver, 4/20/04,  [as a  work                                                               
draft].  No objection was stated; therefore, it was so ordered.                                                                 
Number 0288                                                                                                                     
DANIEL  PATRICK  O'TIERNEY,  Senior Assistant  Attorney  General,                                                               
Commercial/Fair  Business  Section, Civil  Division  (Anchorage),                                                               
Department of  Law (DOL),  testifying on  behalf of  the attorney                                                               
general, stated  that [HB 520]  is a  "follow on" to  last year's                                                               
Executive Order  111 [EO  111] and gives  the authority  that was                                                               
transferred the  opportunity to be  implemented responsibly.   He                                                               
offered a summary as follows:                                                                                                   
     Last year,  EO 111  transferred the  responsibility for                                                                    
     advocacy  on behalf  of the  public in  utility matters                                                                    
     before the Regulatory Commission  of Alaska [RCA], from                                                                    
     the  RCA to  the attorney  general, and  it established                                                                    
     the public  advocacy function within the  Department of                                                                    
     Law.     As   a   result,  RCA   personnel  that   were                                                                    
     historically  responsible  for  that advocacy  now  act                                                                    
     under the authority and direction  of the Department of                                                                    
     Law.  The attorney general  is, if you will, the public                                                                    
     advocate for the purposes of  utility issues before the                                                                    
     So,  this  bill  completes  the  transfer,  because  it                                                                    
     expressly  provides for  various aspects  of execution,                                                                    
     and it  does the following  four things:   It clarifies                                                                    
     that regulatory  cost charge receipts, and  not general                                                                    
     [funds], will continue  to pay for the  general cost of                                                                    
     public  advocacy that's  now administered  by the  DOL,                                                                    
     just  as those  receipts historically  paid for  public                                                                    
     advocacy costs  when the function was  performed by the                                                                    
     RCA.    Second  of  all, and  related,  the  bill  also                                                                    
     modifies  the regulatory  cost charge  ceiling, and  it                                                                    
     creates two distinct percentages  of that total ceiling                                                                    
     to separately fund the RCA  and the DOL public advocacy                                                                    
     function,  respectively.    That provides  each  entity                                                                    
     with  budgetary  independence,  which  is  appropriate,                                                                    
     because, in this  instance, essentially, the commission                                                                    
     functions as the adjudicator;  it's appropriate, if you                                                                    
     will, [that]  parties before it not  have an appearance                                                                    
     of anything other than  independence, and this provides                                                                    
     ...   This bill  ... provides  the Department  of Law's                                                                    
     public  advocacy  function  with  qualified  access  to                                                                    
     utility  or pipeline  carrier records  similar to  that                                                                    
     afforded the  RCA's former public advocacy  staff.  And                                                                    
     the  purpose is,  of course,  to maintain  an efficient                                                                    
     and  economical access  to information,  and those  are                                                                    
     instances  where  the  RCA   [has]  determined  that  a                                                                    
     comprehensive  review and  hearing  is appropriate,  in                                                                    
     those instances only - adjudicatory matters.                                                                               
     And  then,   finally,  the  bill  clarifies,   for  the                                                                    
     purposes of  the RCA,  ... the  Department of  Law, and                                                                    
     other state  agencies, that  state agencies  are exempt                                                                    
     from  paying the  allocated costs  of RCA  proceedings.                                                                    
     And the purpose  for that is:  Because there  is no net                                                                    
     fiscal benefit to the state  in doing so, currently the                                                                    
     statute  is  unclear.   The  RCA,  in its  wisdom,  has                                                                    
     actually allocated  the state  in an instance,  but not                                                                    
     required payment  until after the  legislative session,                                                                    
     in order to allow the  Department of Law to come before                                                                    
     the  legislature to  have the  law  clarified, so  that                                                                    
     they have more specific guidance.                                                                                          
MR. O'TIERNEY stated  that the benefits of Version D  are that it                                                               
would:  complete  the consolidation of public  advocacy; give the                                                               
advocacy function  budgetary independence  from the  RCA; provide                                                               
the Department  of Law  qualified access  to utility  records, to                                                               
facilitate   efficient    investigation;   and    eliminate   the                                                               
inefficiency  involved  with  state  agencies  being  subject  to                                                               
paying allocated costs for RCA proceedings.                                                                                     
Number 0565                                                                                                                     
CHAIR  WEYHRAUCH described  a scenario  where one  of the  highly                                                               
competitive telecommunications  companies is  involved in  a rate                                                               
proceeding.  The cost of the  public advocacy that is incurred by                                                               
the  State of  Alaska and  its  consultants and  experts is  then                                                               
passed through  the industry  to the  consumer.   Chair Weyhrauch                                                               
stated that  some of the  telecommunication companies may  not be                                                               
involved  in that  particular rate  hearing and  the concern  has                                                               
been voiced  that the cost will  be passed through to  all of the                                                               
companies, as  opposed to  the one company  that was  involved in                                                               
the rate proceeding.   He indicated it is a  question of fairness                                                               
and asked Mr. O'Tierney how this issue is addressed in the bill.                                                                
MR. O'TIERNEY  replied that  the bill doesn't  change the  way in                                                               
which the  regulatory cost  charge receipt  mechanism works.   He                                                               
said, "The  workload that goes  on in the  course of the  year is                                                               
tracked  and assigned  to various  sectors of  the industry,  and                                                               
that's how their  portion of regulatory cost  charge receipts are                                                               
determined.   That's  the way  the statute  works ...  since it's                                                               
been established  by the legislature.   This bill  doesn't change                                                               
that, whatsoever."   He clarified  that [HB 520]  recognizes that                                                               
the  same costs  that  historically  have been  paid  for out  of                                                               
regulatory cost charge receipts will  continue to be so paid, now                                                               
that the function has moved to [the Department of Law].                                                                         
CHAIR WEYHRAUCH surmised  that if he were to hear  from a company                                                               
that's complaining  about the aforementioned scenario,  then that                                                               
company is talking about the process, as opposed to the bill.                                                                   
MR. O'TIERNEY  answered that's correct.   He indicated  that that                                                               
company would be talking about  the entire regulatory cost charge                                                               
mechanism and the way it's enshrined in statute "as we speak."                                                                  
Number 0723                                                                                                                     
PAT LUBY, Advocacy  Director, AARP in Alaska,  told the committee                                                               
that  AARP  has  76,000  members  in Alaska,  all  of  whom  [are                                                               
consumers].  He stated that the  RCA is often viewed as a referee                                                               
between  competing utility  companies  in the  battle for  market                                                               
shares; however, AARP views the  RCA as its voice, consumer watch                                                               
dog, and public advocate in the  utility market place.  He stated                                                               
that the  responsibilities for  the RCA  for public  advocacy are                                                               
now  placed  in   the  Office  of  the   Attorney  General  (AG).                                                               
Consumers depend on  the AG and the RCA public  advocacy staff to                                                               
look  after   its  interest  on  issues   before  the  regulatory                                                               
commission.  Mr.  Luby stated that the budget of  the AG's office                                                               
is limited.   He noted that  one of the AARP's  favorite sections                                                               
of [Version D]  is that it would allow the  AG's office to recoup                                                               
its  expenses   involved  in   regulatory  investigations.     He                                                               
concluded that,  from a consumer  perspective, that  makes sense.                                                               
Mr. Luby stated that AARP supports [Version D].                                                                                 
Number 0817                                                                                                                     
REPRESENTATIVE HOLM  noted that  the consultants  in many  of the                                                               
cases are  "hugely expensive."  He  asked who is present  to keep                                                               
the pricing down.                                                                                                               
MR.  LUBY responded  that  this area  of  government is  complex,                                                               
expensive,  and requires  experts.   He noted  that AARP  has two                                                               
attorneys who  deal solely  with utility issues.   He  stated his                                                               
belief  that [Version  D] has  "some of  those controls  built in                                                               
there."  In response to  a follow-up question from Representative                                                               
Holm, he stated that the AARP  is satisfied with [the language as                                                               
it appears in Version D].                                                                                                       
Number 0928                                                                                                                     
JIM  ROWE,  Executive   Director,  Alaska  Telephone  Association                                                               
(ATA), noted  his support of  the committee substitute (CS).   In                                                               
response to  a question from  Chair Weyhrauch, he stated  that he                                                               
did not have the  current [Version D] in front of  him, but had a                                                               
working draft that "we've worked  with the Department of Law on."                                                               
He added,  "The testimony I've  heard, so  far, seems to  go very                                                               
much with what I  have here, sir."  He said ATA  is in support of                                                               
"this" and appreciates having worked  with the Department of Law.                                                               
He noted that  "the initial 520" exhibited  tendencies that would                                                               
have caused customer  costs to accelerate dramatically.   He said                                                               
the version he  holds specifies a budget that "will  be there for                                                               
the advocacy section."  Mr. Rowe continued as follows:                                                                          
     We appreciate  that it has a  specified budget, because                                                                    
     we've  pushed  the  Alaska  Telephone  Association  for                                                                    
     quite awhile  for separation  between the  advocacy and                                                                    
     advisory parts of the  regulatory commission of Alaska.                                                                    
     And  I  think this  committee  substitute  goes far  to                                                                    
     making that separation so that  we can have an advocacy                                                                    
     group that will  be on record in  opposition or perhaps                                                                    
     in   concert  with   the  utility   in  front   of  the                                                                    
     adjudicatory body.  We think that's very important.                                                                        
CHAIR WEYHRAUCH asked what the  distinction is between "advocacy"                                                               
and  "advisory,"   in  regard  to   recouping  expenses   by  the                                                               
Department of Law.                                                                                                              
MR.  ROWE  answered that  the  advisory  works directly  for  the                                                               
commission.  The  advisory staff helps the  adjudicatory body and                                                               
cannot  be cross-examined,  whereas  the advocacy  staff goes  on                                                               
record  and  can  be  cross-examined.     He  said,  "We've  been                                                               
frustrated  in the  past when  it was  unclear that  there was  a                                                               
party  on record  representing the  public, other  than just  the                                                               
commissioners  who were  making  the decisions.    And with  just                                                               
commissioners and their advisory  staff doing research and coming                                                               
up with positions,  there's no opportunity for  a record; there's                                                               
no opportunity to cross-examine ....   So, we're pleased with the                                                               
separation that this bill is giving us."                                                                                        
Number 1159                                                                                                                     
MARK K.  JOHNSON, Chair, Regulatory  Commission of  Alaska (RCA),                                                               
stated  his belief  that that  Mr.  O'Tierney's "description"  is                                                               
accurate, and he said he  doesn't need to correct anything that's                                                               
been said so far.  He offered to answer questions.                                                                              
Number 1174                                                                                                                     
MR.  O'TIERNEY   responded  to  Representative   Holm's  previous                                                               
question  regarding what  "sideboards" are  on the  Department of                                                               
Law's public advocacy expenditure.  He continued as follows:                                                                    
     The  original bill  had a  provision  which would  have                                                                    
     "costed"  utilities directly  for expenditures  related                                                                    
     to  the  Department of  Law's  consultants  in a  given                                                                    
     case.   That provision is ...  no longer a part  of the                                                                    
     bill  ....   And what  has  substituted [it]  ... is  a                                                                    
     provision which  simply amends existing  statute, which                                                                    
     ...  has a  ... cap  on the  amount of  funds available                                                                    
     from  regulatory  costs  charge for  RCA  and  advocacy                                                                    
     purposes.    That's  still in  the  statute,  and  that                                                                    
     exists as a matter of law now.                                                                                             
REPRESENTATIVE HOLM asked  if the language on page  2, lines 2-5,                                                               
addressed that.                                                                                                                 
MR. O'TIERNEY  answered that's  correct.   He clarified  that the                                                               
committee  substitute  provides the  RCA  and  the advocacy  with                                                               
"subcomponent caps."   He noted  that the budget will  be carried                                                               
by the  Department of Law,  before the legislature, on  an annual                                                               
basis,  subject to  the cap  and subject  to [the  legislature's]                                                               
review and approval.                                                                                                            
Number 1269                                                                                                                     
REPRESENTATIVE  GRUENBERG  noted  that  the  phrase,  "reasonable                                                               
access" is on page 3, line 15, and  on page 5, line 10.  He asked                                                               
who determines what's reasonable.                                                                                               
MR.  O'TIERNEY answered  that, ultimately,  if there's  a dispute                                                               
about  what's  reasonable, the  RCA  will  make  that call.    He                                                               
pointed  to the  sentence on  page  3, lines  21-22, which  read:                                                               
"This access is subject to  reasonable notice to all parties with                                                               
an opportunity to object before the commission."                                                                                
REPRESENTATIVE GRUENBERG said the purpose  of his question was to                                                               
establish a record that that's what the legislative intent is.                                                                  
MR.  O'TIERNEY  stated, "In  fact,  this  was  a point  that  was                                                               
negotiated between  all the parties  to make sure that  there was                                                               
an opportunity to  object."  In response to  a follow-up question                                                               
from  Representative   Gruenberg,  he  confirmed  that,   to  his                                                               
knowledge, "it was agreeable with the parties."                                                                                 
REPRESENTATIVE GRUENBERG asked what  the scope of judicial review                                                               
is in regard to abuse of discretion.                                                                                            
MR. O'TIERNEY  responded that, for  the purposes of  a commission                                                               
decision  as to  whether  or  not a  certain  form  of access  is                                                               
reasonable,  it   would  be  subject   first  to  a   motion  for                                                               
reconsideration before  the commission.   In further  response to                                                               
Representative  Gruenberg,   he  confirmed   that  there   is  no                                                               
requirement of a reconsideration motion.                                                                                        
REPRESENTATIVE  GRUENBERG asked,  "Is  the  scope, generally,  of                                                               
judicial  review in  this  area  an abuse  of  discretion by  the                                                               
commission?  Is that the standard of review?"                                                                                   
REPRESENTATIVE  GRUENBERG directed  attention  to  a sentence  on                                                               
page 5, lines 19-22, which read as follows:                                                                                     
     Costs incurred  in complying with  a request  to review                                                                    
     the  records  referred  to in  this  subsection  or  to                                                                    
     maintain  those records  in such  a manner  as to  make                                                                    
     them conveniently  available for review shall  be borne                                                                    
     by the party controlling the records.                                                                                      
REPRESENTATIVE  GRUENBERG  noted  that  that  language  does  not                                                               
appear in Section 5.  He asked why.                                                                                             
Number 1438                                                                                                                     
MR.  O'TIERNEY  explained that  the  [Section  5] relates  to  AS                                                               
42.05, which  is related to  utility matters, while  [Section 11]                                                               
relates  to  AS 42.06,  which  is  "the  pipeline statute."    He                                                               
stated, "The  omission or the existence  of that phrase is  not a                                                               
function of this amendment before you in the CS."                                                                               
REPRESENTATIVE GRUENBERG  asked if there is  an historical reason                                                               
or a policy reason "for one and not the other."                                                                                 
MR. O'TIERNEY said he is not aware of any such reason.                                                                          
REPRESENTATIVE  GRUENBERG   turned  to  [Sections  14   and  15],                                                               
regarding  retroactivity and  applicability.   He asked  what the                                                               
reason is  "for making those  things retroactive  or applicable."                                                               
He noted that  the retroactivity on page 6, line  13, was set for                                                               
"May 30, 2003."  He asked why that date was chosen.                                                                             
MR. O'TIERNEY  explained that the  language speaks to  Sections 6                                                               
and 13, which are provisions that  indicate that there will be no                                                               
payment of  cost allocations by state  agencies to the RCA.   The                                                               
provisions that Representative Gruenberg  had previously noted in                                                               
Sections  14  and   15  were  meant  to   capture  previous  cost                                                               
allocations  by the  RCA  of the  state;  therefore, having  them                                                               
apply retroactively  means that "those cost  allocations will not                                                               
need to  be paid on  a going-forward  basis."  He  explained that                                                               
the reason  for that  is that the  commission has  indicated that                                                               
it's cost allocating, but it's  not requiring payment until after                                                               
the legislative session, which would  provide the opportunity for                                                               
the legislature  to address the  lack of clarity in  the statute.                                                               
He  concluded,  "And  so, these  provisions  would  retroactively                                                               
apply to the prior cost allocations that have occurred."                                                                        
MR.   O'TIERNEY,  in   response   to  Representative   Gruenberg,                                                               
explained  that the  applicability  and retroactivity  provisions                                                               
really only  cover the state,  because utilities are  not subject                                                               
to  cost allocation.    The  reason for  that,  he explained,  is                                                               
because the commission  does not cost allocate  entities that are                                                               
already  paying the  regulatory cost  charge into  the regulatory                                                               
cost charge receipt mechanism.                                                                                                  
REPRESENTATIVE GRUENBERG asked, "So,  the commission itself would                                                               
absorb the cost?"                                                                                                               
MR. O'TIERNEY answered that's correct.                                                                                          
Number 1649                                                                                                                     
REPRESENTATIVE HOLM asked if there  would be an additional fiscal                                                               
note to accompany Version D.                                                                                                    
MR.  O'TIERNEY  answered that  there  could  be, but  stated  his                                                               
belief  that it  would be  a zero  fiscal note,  once again.   He                                                               
added,  "What we're  talking about  is, basically,  a non-general                                                               
fund, off-budget set of numbers ...."                                                                                           
Number 1699                                                                                                                     
MR. JOHNSON stated the following:                                                                                               
     There was a question there  at the end about the fiscal                                                                    
     note,  and I'm  not quite  sure  if that's  the way  we                                                                    
     would have it reflected.   I don't anticipate a problem                                                                    
     here, but  I believe I  want to have  my administrative                                                                    
     people and my  fiscal people take a look at  that.  I'm                                                                    
     not sure if  that's the way we reflect the  [RCA].  I'm                                                                    
     not saying that Mr.  O'Tierney's wrong; I'm just saying                                                                    
     I'm  just  not certain.    So,  we  might be  making  a                                                                    
     I do agree with him that  the long and short of this is                                                                    
     that it  is not  a general  fund impact.   But  just in                                                                    
     terms of  some of  the base-level accounting,  it might                                                                    
     be a little  bit more involved than that.   But, like I                                                                    
     said,  I don't  think there's  any general  fund impact                                                                    
CHAIR WEYHRAUCH announced that HB 520 was heard and held.                                                                       

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