Legislature(2003 - 2004)
04/20/2004 08:03 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 RCA. 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 that. ... 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 submission. 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 here. CHAIR WEYHRAUCH announced that HB 520 was heard and held.