Legislature(1999 - 2000)
05/05/1999 08:10 AM House URS
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 81-ELECTRIC CONSUMER'S BILL OF RIGHTS CHAIRMAN HUDSON announced that the first order of business would be HOUSE BILL NO. 81, "An Act relating to the provision of electric service in the state; and providing for an effective date." JANET SEITZ, Legislative Assistant, Representative Rokeberg, Alaska State Legislature, informed the committee that she was working from the work draft labeled LS0191\I, Cramer, 5/3/99. She reviewed the changes encompassed in version I. New language was inserted on page 1, line 6: "As part of any general proceeding to investigate electric industry restructuring,"; on page 1, line 8: "for those utilities subject to economic regulation by the commission,"; page 1, line 14: "electric service providers" replaces "electric suppliers, aggregators, and distributors"; page 3, line 12: "including service connect or disconnect fees,"; and page 3, line 13: "that meets generally accepted industry standards". The definition for "electric service provider" is found on page 4, line 14. A new subsection was inserted, subsection (i) on page 4, lines 18-20. With regard to Chairman Hudson's question, Ms. Seitz explained that subsection (i) was desired by ARECA for those utilities that have opted out of economic regulation. She agreed that this would be relevant to the testimony from Sitka and Copper Valley. Number 0491 REPRESENTATIVE DAVIES said that the change on page 1, line 8 is actually dealt with on page 4, lines 18-20. He believed that the insertion of that language has an unintended consequence; HB 81 would then only apply to utilities that are subject to economic regulation. The intent is to apply to competitive market place situations where there is no economic regulation. Representative Davies moved to strike that insertion on page 1, line 8, which reads, "for those utilities subject to economic regulation by the commission." MS. SEITZ said that the sponsor's intent is that any utility in a competitive market be subject to these consumer protections. In response to Representative Cowdery, Ms. Seitz pointed out that there is a definition of competitive on page 4, line 11. REPRESENTATIVE PORTER recalled the testimony from Copper Valley, "I thought one of the problems they had was the private individual providers with individual generation systems coming in and competing. And the reason they opted out was so that they could be responsive to that competitive environment. If that then would make them subject to a competitive environment, I would agree that they've got consumers like everybody else that should be protected and I would agree then that that should come out." CHAIRMAN HUDSON announced that he would like to hold action on Representative Davies' motion until Representative Rokeberg, sponsor, is present. He indicated agreement with Representatives Davies and Porter. Number 0632 REPRESENTATIVE KOTT moved to adopt the committee substitute (CS) labeled LS0191\I, Cramer, 5/3/99 as the working document before the committee. There being no objection, it was adopted. ROBERT WILKINSON, Chief Executive Director, Copper Valley Electric Association (CVEA), testified via teleconference. He noted that he had not reviewed version I and therefore, cannot make any specific comments. He also noted that he has provided the committee with additional testimony. Upon Chairman Hudson's request, Mr. Wilkinson spoke generally to the legislation. He noted that the legislation did create a number of new suppliers, aggregators, and distributors which seemed to be tightened in version I. He expressed the need for these suppliers to be subject to the same requirements as other public electric utilities as opposed to a new restriction in the form of licensing. These suppliers should be required to have a certificate of public convenience and necessity as required by AS 42.05. Mr. Wilkinson believed that rural cooperatives that elected to be exempt should not be placed back under economic regulation which seems to be addressed in the new subsection (i). He noted that Representative Porter was correct that Copper Valley's attempts to deregulate from APUC was purely competitive. Mr. Wilkinson commented that he remained confused with regard to whether there is a "cherry picking" situation in the Copper River Valley, Valdez. He wondered whether Copper River Valley will be placed back under economic regulation or subject to the requirements of HB 81. Number 0891 REPRESENTATIVE DAVIES said that he did not believe that Copper Valley should be classified nor is it a competitive market under the terms of HB 81. There was an unfortunate delay with the APUC's response with regard to that situation, but he did not believe the APUC intended for there to be a competitive retail service in that area. With regard to subsection (i), that language as well as committee discussion is clear that there is no intention to bring utilities that have opted out of economic regulation back under economic regulation. REPRESENTATIVE PORTER read this language to mean that any certified electrical provider would fall under the requirements of HB 81. However, if there is the possibility of "cherry picking," there is a loop hole. He believed that to be competition. REPRESENTATIVE DAVIES reiterated that in the situation being referred to the APUC did not act quickly enough to resolve the issue. The APUC did not give that entity the ability to enter and compete. Representative Davies recalled that the situation resolved itself. He stressed that the APUC did not give that company a certificate to operate within that territory and therefore, he believed that company should not have been able to compete in that area, except in the wholesale power provision. REPRESENTATIVE PORTER asked then if there should be language included that would require such a company to be certified in order to avoid such. REPRESENTATIVE DAVIES stated that is the circumstance currently. Therefore, every utility is under APUC regulation with regard to its territory. REPRESENTATIVE PORTER posed the scenario in which there is an uncertified maverick generator provider who wants to enter the Copper Valley. He inquired as to what enforcement mechanism currently in place would preclude such. REPRESENTATIVE DAVIES indicated that the APUC would take that provider to court. Number 1148 BOB LOHR, Executive Director, Alaska Public Utilities Commission in Anchorage, Department of Commerce and Economic Development, testified via teleconference from Anchorage. He added that under the Public Utility Regulatory Policies Act of 1978, (PURPA), a provider can operate without the benefit of an APUC certificate if the provider qualifies as a qualifying facility (QF) under the federal law. Mr. Lohr believed that was an issue in the case being discussed and he further believed that there was not a ruling on that point by the commission. MR. LOHR stated, in response to Representative Porter, that PURPA has made it simple to qualify as a QF. This qualification is almost a self certification, although there is a filing with the Federal Energy Regulatory Commission (FERC). He said this is essentially on the applicant's initiative and is not subject to state commission review. REPRESENTATIVE DAVIES indicated that a QF is essentially a wholesale provider. In other words, the customer is not allowed to choose their provider. The QF puts there power on line and the certificated entity must utilize that power and pay for it. MR. LOHR agreed that would be one possibility. However, Mr. Lohr believed that the QF could serve as a retail provider and co-locate on the premises of the customer as he indicated happened in Glennallen. REPRESENTATIVE DAVIES inquired as to how that would be different from any customer providing his/her own power by co-generation or a diesel generator. MR. LOHR indicated that Representative Davies was correct. However, state law provides that if there are 10 or more customers or if the total amount of power sold is in excess of $50,000, the entity would fall under state restrictions and require a certificate. The interplay of that and the federal law was unclear in the case being discussed. He agreed that the case took too long. Mr. Lohr believed that case has not yet been closed, and he had no knowledge of any substantive order. Number 1359 ERIC YOULD, Executive Director, Alaska Rural Electric Cooperative Association (ARECA), explained that in this case, under PURPA, an individual can provide their own generation. However, there are restrictions against the individual also becoming a retailer and providing power from that facility to other co-located entities or entities in the area, unless the entity falls under the threshold mentioned by Mr. Lohr. In this case, Alaska Power Systems came into the service territory and did not request a license and let it be known that they would serve anyone willing. Therefore, the electric utility industry presented this to the APUC who suggested filing a formal complaint. There was a complaint filed and much money spent. Although this entity fell under Alaska's APU statutes and was required to prove it was financially capable to be a utility, the entity ultimately went bankrupt. The docket still remains. This case is an example of PURPA which Congress is looking to repeal. Congress is also looking to repeal PUCA (ph). Mr. Yould pointed out that the two clauses suggested by ARECA accomplish different things. The last clause would ensure that Copper Valley Electric, for example, will not be subject to economic regulation as a result of passage of this law. However, passage of the first clause would not allow these clauses to be imposed on those utilities that are presently not subject to economic regulation. REPRESENTATIVE DAVIES reiterated his rationale to strike that language. If a municipality or utility who has opted out is providing service in a competitive retail market, why would we not want such entities to be subject to these consumer protections. MR. YOULD stated that the majority of his members would agree with Representative Davies. REPRESENTATIVE PORTER commented that he was hesitant to pass legislation that "in effect, is shooting in the dark." REPRESENTATIVE DAVIES said he believed that deleting the phrase of page 1, line 8 makes it very clear that the legislation applies to every utility in the state which offers retail, competitive service. REPRESENTATIVE PORTER asked then what was the situation when the now defunct company in the Copper River Valley was "cherry picking." REPRESENTATIVE DAVIES responded that was wholesale competition. MR. YOULD interjected that it was supposed to be wholesale competition, but the provider was attempting to enter retail competition which was the point of objection. If this legislation had been in place, there may have been some additional protection against that entity entering that service territory. Mr. Yould indicated agreement with Representative Davies that deletion of the language would apply to virtually every utility in Alaska. Number 1686 RANDY CORNELIUS, Director, Electric Utility, Sitka City and Borough, testified via teleconference from Sitka. He commented that he did not want to fall under dual regulation which seems to be accomplished in subsection (i). Mr. Cornelius emphasized that he supported a customer bill of rights. MS. SEITZ commented that she believed Representative Rokeberg would not object to Representative Davies amendment because his intent was to bring all utilities in a competitive market under this consumer bill of rights. CHAIRMAN HUDSON restated that the amendment before the committee, Amendment 1, would on page 1, line 8 delete the following language: "for those utilities subject to economic regulation by the commission,". There being no objection, Amendment 1 was adopted. Number 1764 REPRESENTATIVE PORTER moved to report CSHB 81, LS0181\I, Cramer, 5/3/99, out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE BERKOWITZ objected. He said this is a step in the right direction, but indicated the need to extend consumer protection to all consumers not just those in a competitive market. Representative Berkowitz withdrew his objection. CHAIRMAN HUDSON announced then that there being no objection, CSHB 81(URS) was reported from committee and forwarded to the House Labor & Commerce Standing Committee.
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