Legislature(2007 - 2008)SENATE FINANCE 532
05/11/2007 01:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB209 | |
| HB110 | |
| HCR8 | |
| HB177 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 110 | TELECONFERENCED | |
| + | HB 209 | TELECONFERENCED | |
| + | HCR 8 | TELECONFERENCED | |
| + | TELECONFERENCED |
CS FOR HOUSE BILL NO. 209(JUD)
"An Act relating to the chair of the Regulatory Commission
of Alaska and amending the timeline requirements for a
final order of the commission; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
AT EASE 2:07:12 PM /2:07:30 PM
Senator Elton moved to adopt committee substitute, Version 25-
LS0717\O, Kane, dated May 11, 2007, as the working document.
Without objection, the Version "O" committee substitute was
ADOPTED as the working document.
Co-Chair Stedman pointed out that the bill's title is changed by
the adoption of the Version "O" committee substitute. Therefore,
a Senate concurrent resolution would accompany the bill when it
reports from Committee.
2:08:01 PM
REPRESENTATIVE KURT OLSON, Chair, House Labor & Commerce (L&C)
Committee, the bill's sponsor, addressed the changes in the
committee substitute. The majority of the revisions result from
the decision to present time references in terms of days rather
than months. For example, the deadline specified in Section 1
subsection (a) page 1 line 5 now reads "180 days" rather than
the former reference to "six months".
Representative Olson communicated that Version "O" also
eliminated contentious language included in earlier bill
versions. For instance, during its hearings in the House, there
was disagreement over a section that specified that the governor
would select the chair of the Alaska Regulatory Commission
(RCA). The issue of whether the RCA chair should be appointed by
the governor or the RCA Board could be argued from either side.
The omission of this section from the bill is acceptable to the
sponsors.
2:09:23 PM
Representative Olson also concurred with increasing the
timeframe in which the Commission must issue its final order, as
specified in Section 3 subsection (c) page 2 line 4, from 270
days to 450 days.
Representative Olson concluded his remarks by affirming that the
changes in the Version "O" committee substitute were reasonable
and therefore acceptable to the House L&C Committee.
2:09:57 PM
Senator Thomas directed attention to new subsection (k), page 2
line 31 through page 3 line 1, added to AS 42.05.075 by Section
7, and the reference to (k) in new subsection (l), page 3 line
6, also added by Section 7. The question was whether AS
42.05.075(k) and (l) would limit the extension provision amended
in AS 42.05.175(f), page 2 line 20, by Section 6, to those
matters specified in subsection (k) that were advanced only by
the Commission.
2:11:25 PM
Representative Olson understood that the extension would apply
to matters presented by either the Commission or other parties.
Senator Thomas had also inferred that to be the intent. He was
simply seeking affirmation.
2:11:54 PM
DAN GAVORA, President and Chief Executive Officer, Utility
Services of Alaska (USA) operating as College Utilities
Corporation and Golden Heart Utilities, testified via
teleconference from an offnet location. USA is the second
largest water and waste water company in the State and serves
more than 8,500 accounts and 50,000 people in the Greater
Fairbanks area.
Mr. Gavora communicated that his company has experienced "the
consequences of the regulatory lag that allows excessively long
statutory periods to resolve rate case filings. The rate
adjustment process is cumbersome" and thereby often expensive.
Filing expenses are disproportionate to the return the utility
and its customers receive. USA is a strong proponent of the bill
before the Committee, particularly the provision that would
reduce the statutory time period for rate cases from 15 months
to nine months.
To that point, Mr. Gavora noted that numerous states have
determined that a lengthy hearing and review process does not
serve the interests of a utility's customers. For example,
oftentimes, by the time the RCA has ruled on a rate case, the
company has been forced to file a second rate adjustment case
due to escalating costs. This significantly "increases the
complexity" of the filings.
Mr. Gavora avowed that "reasonable actions and guidelines" by
the RCA should provide a utility "some assurance of a response
within a reasonable time after a filing takes place." USA
believes that "a reasonable time for a resolution of a rate case
is nine months."
2:14:15 PM
Mr. Gavora characterized rate case filings as "historical in
nature" in that a utility filing for the rate adjustment
provides backup information including the history of "increased
costs that have been in effect for at least one year before the
rate adjustment is presented" to the RCA.
Mr. Gavora reiterated that several states have "recognized the
benefit of more immediate action on rate adjustments and have
implemented statutory or voluntary timelines of nine months or
less." A study conducted by Michigan's public utility commission
"analyzed rate case filings from 1990 through 2003" and found
that 27 states provide determinations on such filings in nine
months or less. Alaska should "follow suit."
Mr. Gavora noted that were a mistake made either in favor or
against the utility, a prompt re-filing could be made by the
utility or required by the RCA. This process protects both the
public interest and the viability of the utility. Rates need to
be in effect during the computed timeframe, not one to two years
later."
2:15:29 PM
Mr. Gavora stressed that "the current statutory timeline does
not serve the best interests of our rate payers," as they
typically end up absorbing the expense of "legal consulting and
other direct expenses over these many months".
Mr. Gavora urged the Committee to support this legislation as
presented. It would assist in "repairing a system in dire need
of repair. Shortening the statutory timeline is one of the first
steps in this process."
2:15:58 PM
DAVE DENGEL, Chief Executive Officer, Copper Valley Telephone
Cooperative, testified via teleconference from Valdez. The
cooperative is a member-owned company with approximately 3,000
members serving approximately 9,000 residents in an area of
approximately 9,600 square miles.
Even thought he did not object to the bill, Mr. Dengel cautioned
that, without the addition of more RCA staff, the timelines
might be too short. Therefore, he urged that the legislation be
accompanied by a fiscal note reflecting a staffing increase to
ensure that thorough analyses could be conducted.
Mr. Dengel specified that the RCA's responsibilities are vast.
Furthermore, each of its telecommunications, pipeline, and other
utility work obligations are complicated. Additional staff is
necessary in order to allow the RCA "to continue to provide the
service to companies like Copper Valley".
2:17:44 PM
DENNIS NIEDERMEYER, Representative, Bristol Bay Telephone
Cooperative, testified via teleconference from Anchorage. His
testimony has been shortened due to the fact that the committee
substitute eliminated the section of the previous bill that
specified that the governor would designate the RCA chair.
Mr. Neidermeyer remarked that the cooperative does not take
issue with any of the timelines proposed in the bill. He echoed
Mr. Dengel's remarks about the good service provided by the
Commission and that, in order to support the shortened timelines
proposed in this bill, the RCA must be appropriately staffed.
2:19:40 PM
TED MONINSKI, Director, Regulatory Affairs, Alaska
Communications Systems (ACS), testified via teleconference from
Anchorage and informed the Committee that his remarks would be
in terms of statutory references rather than specific sections
of the bill because the Version "O" committee substitute was not
available to those testifying in the Anchorage Legislative
Information Office (LIO).
Mr. Moninski questioned whether private settlements and
contracts language that had been included in an earlier version
of the bill was included in the Version "O" committee
substitute.
2:20:47 PM
Representative Olson advised Mr. Moninski that the language in
question was not included in Version "O".
Mr. Moninski thus advised the Committee that he would address
the affect of eliminating that language. First, however, he
wanted the Committee to know that ACS, which has closely
followed this legislation, advocates for one principle: that
being that a timeline should be specified for every matter
coming before the RCA.
Mr. Moninski then advised that eliminating the language
pertaining to private settlements and contracts would serve "to
create one category of settlements and contracts" that would
have no timeline. "And that would be disappointing. Instead, I
believe the concerns about the language that was in the earlier
version of the bill, could be resolved rather easily by
eliminating the word 'private'" and adding the words "within the
Commission's jurisdiction" after "settlements and contracts".
Mr. Moninski stated that proceeding in that manner "would
continue to provide a timeline for all categories of cases that
come before the Commission and at the same time recognizes that
all of the normal procedures and legal standards that would be
applied to contracts and settlements that the Commission would
normally review anyway would be in no way affected by applying a
timeline in this provision."
Mr. Moninski urged the Committee to consider this course of
action as opposed to eliminating the language in its entirety.
2:22:33 PM
DEAN THOMPSON, Legal Representative, Municipal Light & Power
(ML&P), testified via teleconference from Anchorage. ML&P, which
is owned and operated by the Municipality of Anchorage,
"provides retail electric service" to the area via its own
generation system and transmission and distribution facilities.
ML&P participated in the regulatory hearings held by the RCA
regarding potential changes to AS 42.05, and, while not opposed
to the bill, ML&P was disappointed that adequate funding for
staff had not been addressed in the bill. There is concern
whether existing staffing levels could accommodate the shortened
timelines being proposed.
Mr. Thompson shared that ML&P was "impressed with the work of
the current Commission and the improvements that have been made
over the past several years." ML&P also commended the work of
RCA chair Kate Giard. While ML&P does not always agree with
RCA's rulings, it has witnessed a "marked improvement in docket
management and the overall timeliness of dockets".
Mr. Thompson stated that ML&P was pleased that Version "O" does
not further previous language that would have terminated the
current panel of commissioners.
2:24:43 PM
Mr. Thompson advised of another issue that ML&P would support
being included in the bill. That being language allowing the
governor or the administration to set the salaries of the RCA
commissioners. While supportive of cost containment, ML&P
believes that "you get what you pay for." The regulation of
utility rates is becoming an increasingly specialized and
technical field that requires knowledgeable individuals.
Reasonable compensation is required. ML&P would support "a
modest increase in the Regulatory Cost Charge (RCC) rate to
support adequate salary funding.
2:25:47 PM
Mr. Thompson expressed that ML&P agreed with the effort to
address rate change filings in an expedient manner; however,
while a nine month period might be "adequate" for most rate
change cases, complex or multi-party cases would require
additional time.
Mr. Thompson concluded his remarks by emphasized that ML&P is
very supportive of the Commission and its chair person. To that
point, ML&P encouraged consideration of increasing the
Commission's salaries.
2:26:45 PM
VIRGINIA RUSCH, Representative, AARP, testified via
teleconference from Anchorage. AARP is interested in utility
rate legislation due to the potential impact on its members and
other rate payers. AARP asked her to follow this legislation
because of her extensive experience with the RCA and its
predecessor agency since she had served either as the public
advocacy attorney assigned to the Commission or as the attorney
for the Commission during 14 of her 23 years as a State
assistant attorney general. She has represented AARP in rate
cases, consumer hearings, and appeals since retiring from State
employment.
Ms. Rusch was very familiar with Commission processes and
problems and would be happy to answer any Committee questions on
the subject.
Ms. Rusch, noting that a copy of the Version "O" committee
substitute has now been provided to the testifiers in the
Anchorage LIO, stated that AARP is happy with some of the
changes made in the committee substitute, specifically that the
deadline in Section 3(c), page 2 lines 2 through 6, "had been
restored" to specify that the Commission must issue a final
order in 450 days.
Ms. Rusch agreed with Mr. Thompson that a reasonable amount of
time must be provided to address complex issues and issues
concerning large utilities.
2:28:47 PM
Ms. Rusch addressed Mr. Gavora's remarks in support of
"shortened timelines." During her career with the State, she had
participated in several rate cases, including one involving Mr.
Gavora's companies. One of her duties at the time was to
schedule conferences. Her experience then in "divvying up" the
15 month period amongst the participants in the case was that
"everybody wanted more time". Based on those experiences, she
did not foresee that the timeframe could be shortened.
Ms. Rusch detailed the mechanics of a rate case, including the
requirement that the utility submit information justifying its
rate adjustment request and the responsibility of the Commission
and attorney general assigned to it to determine whether the
costs argued by the utility justify a rate increase. "By
shortening the time period to nine months as Mr. Gavora
suggests, you are harming the ability of the Commission to
protect ratepayers."
Ms. Rusch noted that the investigation of requested rate
increase filings has been conducted by the Attorney General's
Office for the past several years. This is the result of an
Executive Order a few years prior that moved the investigatory
responsibility in a rate case into that Office.
2:30:26 PM
Ms. Rusch noted that the Attorney General Office's is short-
staffed and has often had to delay rate investigations for
months in order to address other matters before them. Added to
the timing issue is the fact that in recent years, utilities
themselves have requested more time to file "reply testimony."
In one recent case, the Commission required four months to issue
an order once the other processes allowed it to come before
them. A timeline of nine months is unrealistic.
Ms. Rusch spoke against reducing the timeframe to nine months
until the issue of adequate staffing is addressed.
2:31:49 PM
JIM ROWE, Executive Director, Alaska Telephone Association,
testified via teleconference from Anchorage. The Association,
which is comprised of 15 companies serving rural Alaska,
supports many of the changes made in Version "O".
Mr. Rowe advised the Committee that he was also concerned about
the private settlement and contract language discussed earlier.
The suggestion offered by Mr. Moninski would be acceptable as it
would address his concerns.
Mr. Rowe voiced approval of the timelines specified in Version
"O". However, reducing the length of time in which an issue must
be addressed would increase pressure on staff. Unfortunately,
this issue has not been addressed in the bill.
2:32:57 PM
Mr. Rowe announced therefore that the Association supports
increased staffing levels. Thus, the proposal to increase the
RCC rate to support increased staff levels as well as to support
an increase in commissioners' salaries is also acceptable.
Commissioners should be adequately compensated for the demands
of the job.
Mr. Rowe declared that, like others, the Association is not
always happy with the rulings made by the Commission; however,
they are "satisfied with the effort and the integrity of the
people who are sitting on that commission today." Their
compensation should be addressed in the bill.
2:34:24 PM
Representative Olson clarified that the salary issue was removed
from the bill at the request of the RCA and Governor Sarah
Palin. Separate legislation regarding establishing a RCA task
force was introduced in response to a request from the Governor
that the Legislature be the body making the determination on
commissioners' salaries.
2:35:14 PM
Senator Thomas asked for clarification as to whether staffing
levels of the RCA would be expanded.
2:35:56 PM
KATE GIARD, Chair, Regulatory Commission of Alaska, testified
via teleconference from an offnet location. The $505,000 FY 2008
funding increase reflected in the Department of Commerce,
Community and Economic Development May 10, 2007 fiscal note
would increase RCA "resources" to accommodate both the shortened
timelines and the new requirement that a timeline be specified
for every type of docket coming before the Commission.
Ms. Giard noted, however, that the RCA is "challenged" because
this funding request and the $1,300,000 funding being considered
in the FY 2007 supplemental bill "will cause the RCA to exceed
the statutory rate cap which is a limit on the amount of
revenues that it can collect from regulated utilities."
Ms. Giard elaborated on how testifiers' proposal to fund new
positions and increased salaries for commissioners with an
increased RCC rate would not mesh with the ability of the RCA to
collect revenues from utilities under existing statutory
restrictions or their ability to receive the supplemental
funding.
2:37:27 PM
Senator Elton asked why the funding amount requested in the May
10, 2007 fiscal note had not decreased as a result of some of
the timeframes in Version "O" being lengthened.
Ms. Giard clarified that the staffing level proposed in the
$505,000 fiscal note was developed prior to the changes made in
Version "O". It was noted that Version "O" shortened the
entirety of timelines specified in Section 7 subsection (k),
page 2 beginning on line 28 through page 3 line 5, from nine
months to six months. The staffing levels in the fiscal note
were deemed necessary in order for the Commission to comply with
new and revised timeframes.
Ms. Giard communicated that establishing in statute a timeline
for every case coming before the RCA, as proposed in this bill,
would be labor intensive, particularly as, 181 cases, or
approximately 46 percent of the rate cases coming before the
Commission in the last three years, had not previously been
subject to any timeline.
2:39:01 PM
In response to a question from Senator Thomas, Ms. Giard pointed
out that, in addition to imposing a timeline on every rate case
filed with the RCA, this legislation would impose a timeline on
any jurisdictional matter presented to the RCA. She clarified
that this "process was heavily supported by the RCA".
Senator Thomas asked Ms. Giard whether the six month timeline
only applied to adjudicated dockets.
2:39:46 PM
Ms. Giard clarified that the six month timeline would apply "to
all cases filed with the Commission".
2:40:05 PM
Senator Olson advised the Committee that the May 10th $505,000
fiscal note was suspect. Not only had timelines in Section 3 AS
42.05.175(c) been extended from 270 days to 450 days, but the
effective date of the section had been changed to July 1, 2008.
2:40:50 PM
Senator Thomas moved to report the Version 25-LS0717\O committee
substitute from Committee with individual recommendations and
accompanying fiscal notes.
2:41:24 PM
Senator Elton objected in order to request that the bill's
fiscal note be recalculated. He agreed with Representative Olson
that the fiscal note should be substantially lower than $505,000
because of the language revisions in Version "O". While he would
not object to moving the bill from Committee, he would like an
updated fiscal analysis of the Version "O" committee substitute
before the bill came before the full Senate.
Senator Elton removed his objection.
Co-Chair Stedman announced that the RCA would provide the
requested information.
AT EASE 2:42:14 PM / 2:48:24 PM
Ms. Giard clarified that "while the Legislature has seen fit in
this CS" to alter the timelines for rate making, the RCA had
also opened a docket on revising timelines. No action has been
taken on that docket however, as the RCA was waiting on the
Legislature to address policies under their jurisdiction. The
RCA "fully intends to move forward on that docket" and "shorten
the timelines as the public utilities and the public advocate
recommend." The RCA considers reducing regulatory lag to be very
important.
Co-Chair Stedman noted that an updated fiscal note would be
developed to accompany the bill.
There being no further objection, SCS CS HB 209(FIN) REPORTED
from Committee with Senate Concurrent Resolution, Version 25-
LS0949\C and two new fiscal notes: a $229,400 fiscal note dated
May 11, 2009 from the Department of Commerce, Community and
Economic Development and an indeterminate fiscal note dated May
8, 2009 from the Department of Law.
AT EASE 2:50:36 PM / 2:51:32 PM
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