Legislature(2013 - 2014)SENATE FINANCE 532
04/14/2014 09:00 AM Senate FINANCE
Audio | Topic |
---|---|
Start | |
HB239 | |
HB240 | |
HB241 | |
HB242 | |
HB234 | |
HB210 | |
HB378 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | HB 239 | TELECONFERENCED | |
+ | HB 240 | TELECONFERENCED | |
+ | HB 241 | TELECONFERENCED | |
+ | HB 242 | TELECONFERENCED | |
+ | HB 234 | TELECONFERENCED | |
+ | HB 210 | TELECONFERENCED | |
+ | HB 378 | TELECONFERENCED | |
+ | HB 75 | TELECONFERENCED | |
+= | SB 220 | TELECONFERENCED | |
+ | TELECONFERENCED |
HOUSE BILL NO. 234 "An Act extending the termination date of the Regulatory Commission of Alaska; and providing for an effective date." 9:50:39 AM REPRESENTATIVE MIKE HAWKER, explained that the legislation would extend the termination date of the Regulatory Commission of Alaska (RCA) to June 30, 2022. He noted that the commission differed from other professional licensing boards; the commission was one of the state's few independent, quasi-judicial regulatory commissions. He stated that the RCA was responsible for ensuring the safe, adequate and fair public utility and pipeline services across the state. He explained that the audit objectives in evaluating the reauthorization of the Regulatory Commission of Alaska were no different than other boards and commissions; it must demonstrate a continued need for its continued existence and show that it has been operating in an effective and efficient manner. The bill recommended and 8 year extension and was consistent with the recommendation of the Division of Legislative Audit. He offered a brief history of the commission. He asserted that the commission was currently functioning well in discharging its assigned responsibilities. He shared that legislative auditors had included an appendix on Pages 23 through 30, which included information gathered by the auditors from people who had had dockets dealt with by the RCA. The users of the RCA proved to be very satisfied with the work performed by the commission. He pointed out to the committee Page 18 of the audit, which included a summary pie chart that detailed in aggregate how the users viewed the RCA's function; 70 percent felt that the commission was operating in a very good/good rating, with only 8 percent giving a poor rating. He continued to Page 31 of the audit which showed that the regulatory cost charge base was sufficient for the commission to operate. The RCA had maintained an adequate, but not excessive reserve for operations. He thought that the commission needed the full year reauthorization period. 9:56:22 AM Co-Chair Meyer requested further clarification of the second recommendation in the recent audit. Representative Hawker deferred to the Division of Legislative Audit and the RCA chairman. 9:57:10 AM Senator Hoffman noted page 31, and wondered if there would be an addition of personal and contract services and what the cost would be over the next 8 years. Representative Hawker remarked that the primary fund source for the RCA was approximately $9 million in RCA receipts. He said that beyond the recognition that the commission was a receipt authority, he deferred the question to the RCA 9:59:01 AM Co-Chair Meyer remarked that the Regulatory Commission of Alaska chairman. 9:59:53 AM T.W. PATCH, CHAIRMAN, REGULATORY COMMISSION OF ALASKA, NASHVILLE (via teleconference), explained that the concerns regarding the performance of the RCA had been raised by the committee in 2011. At that time, the committee offered the commission guidance and set a termination date of June 30, 2014. He said that the RCA, under the guidance of the committee, provided to the legislature a report on January 16, 2012. The report laid out a program to address utility company concerns and legislative concerns regarding discovery regulations, and set out a program to consider and adopt best practices whereby sooner decisions could be made in those proceeding wherein a utility proposed a new revenue requirement or where a utility proposed to adopt a new rate design. Subsequent to the report the RCA began to consider several regulation changes; it sought public comment and implemented new and aggressive internal protocols to assist rate payers and utility constituencies. He asserted that the changes were resulting in decisions in those types of complex cases in just over 300 days, which was a reduction from the statutory time allowed of 450 days. He said that in reducing the time in which a final decision in a rate case was derived at, the RCA achieved the result without enhancement in funding, additional staffing, new enabling legislation, reported adverse impact on the utility industry or protestation by rate payers. He testified that the progress resulted in better credit ratings for utilities across the state, which resulted in lower capital costs and lower customer rates. He stressed that there was a strong relationship between agency managers and industry. He felt it was important to recognize that the commission had assisted the legislature and many other state agencies. 10:04:00 AM Mr. Patch noted that the commission had worked with the legislature and the governor on the interior energy project and the stand along gas pipeline legislation. The commission was currently assisting Alaska Gasline Development Corporation on tariff and open season issues as well as working with the Alaska Energy Authority and the Alaska Industrial Development and Export Authority on important planning and development issues. He urged the committee to approve the extension of the sunset date. 10:05:39 AM Co-Chair Meyer remarked that the commission was successful. 10:05:53 AM Senator Hoffman reiterated his previous question. Mr. Patch responded that there was an authorization for the collection of approximately $9 million. Senator Hoffman said that in the budget and reflected in the fiscal note there was a 20 percent increase in salaries, he wondered if it reflected an increase for salaries for management positions. He noted the increase in contracting services and highlighted that the numbers on Page 31 of the audit differed from those in the fiscal note. He understood that there were no general funds involved but requested justification for the fiscal note and what the process the board went through when approving a budget. Mr. Patch replied that the legislature set an authorized entitlement to collect and from that entitlement the commission collected the regulatory cost charges and an amount of money that was made available to the Regulatory Affairs and Public Advocacy Section that was generally the consumer advocate representing rate payers. He added that when funds were not expended the monies were returned to rate payers as a credit against the next year's cycle of calculated regulatory cost charges. 10:08:20 AM Senator Hoffman queried whether there would be an increase in salaries that would total over $1 million in the proposed personal services. Mr. Patch replied that there was not an authorization to increase salaries; rather, there was approval for additional staff. 10:09:23 AM Co-Chair Meyer remarked that the fiscal note did not reflect an increase in staff numbers. Representative Hawker interjected that it was important to notice that the governor's request was for FY15, the most recent numbers in the unaudited schedule of revenues and expenditures was for FY12, and was 3 years out-of-date. He noted that the commissioner's salaries were established in statute and could not be increased without a statutory change. He highlighted that the fiscal note included a $1.3 million Department of Law Regulatory Affairs and Public Advocacy transfer, which would need to be included in additional expenditures and was, undoubtedly, the largest share of the reconciling item. 10:11:15 AM AT EASE 10:11:45 AM RECONVENED 10:11:48 AM Representative Hawker spoke to the difference between the numbers on Page 31 of the audit and the fiscal note. He stated that the transfer to the Department of Law Regulatory Affairs and Public Advocacy was noted on the bottom Page 31 of the audit. The transfer was included in the fiscal note and made up a significant amount of the contract services differential. Co-Chair Meyer CLOSED public testimony. 10:13:21 AM KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF LEGISLATIVE AUDIT, stated that the audit of the commission had found that the RCA was working in the public interest and reiterated the recommendation for the 8 year extension. She highlighted two audit recommendations; first, it was recommended that the RCA continue to improve its case management data, as the division had encountered high error rates when running tests in 2013. Secondly, the division recommended that the legislature consider clarifying statutory timelines for rule making, or "regulatory," proceedings. She stated that statutes required RCA to issue a final order in a rule making docket no later than 730 days after completer petition for a change was filed, or after the commission initiated proceedings. There was a provision for one 90 day extension for good cause; statutes prohibited RCA from terminating a proceeding in a docket, and then opening a proceeding in another docket on substantially the same matter. The audit had found that on occasion the RCA had split rule making proceedings into two dockets, the first to consider whether there was a need for regulations in an area of concern or interest. Once public testimony and comments were obtained regarding the potential regulations, the docket was closed. If the record indicated a need for regulations, RCA opened a second docket to consider adopting the regulations. The division found that the process allowed the RCA to take up to 4.5 years to complete proceedings. She said that RCA management believed that including clear intent language in the dockets initiating order made the process transparent and complied with statute. The division had found that RCA was including clear intent language in the dockets and in that regard the process was transparent. The division wanted to raise the issue for legislative consideration because the process appeared to evade statutory timelines and did not appear to serve the regulated community or the public interest. The recommendation was for the legislature to consider clarifying statutes to ensure RCA complied with legislative intent when processing regulatory dockets. 10:16:00 AM Co-Chair Meyer believed that the recommendation would have to be implemented through a new and separate piece of legislation. Representative Hawker said that the legislature could do anything it chose; however, there had been a long history of keeping reauthorization bills "clean". 10:16:37 AM Mr. Patch disagreed with the audit recommendation. He stated that the orders of the commission, as regulatory proceedings were opened and closed, contained very clear and explicit statements of the RCA's intention as it engaged in the process. He noted that one of the matters before the committee in past RCA sunset extension hearings was the matter of discovery; should the RCA have an articulated discovery concern, after consideration the consensus had been that the commission should adopt a discovery regulation. He stressed that decided whether the commission should adopt discovery regulations was different that deciding what the language of the regulations would contain and how it would allow parties to discover information. He did not believe that it was necessary to change the law for two reasons: first, the current statutory prohibition states that the commission would not seek to evade the legislature's intent; secondarily, subsequent to the last reauthorization the commission had adopted a procedure that allowed the commission to consider and obtain matters of public opinion in an informational docket which had no timeline. 10:20:36 AM Senator Hoffman looked at the fiscal note and Appendix C of the audit, and remarked that in FY11 there was approximately $62,000 of revenue that came from the Power Cost Equalization Program (PCE) that had jumped up to $93,000 FY12. He requested clarification as to the breakdown of the revenue. Mr. Patch replied that Alaska Energy Authority (AEA) had provided yearly grants of $140,000. The commission had certain responsibilities under the PCE program and billed against the grant for quantification, analysis and community assistance in obtaining the benefits of the program. He stated that the numbers cited in the fiscal note was the funds that the commission had expended in past years against the grant. 10:22:16 AM Senator Hoffman wondered if Ms. Curtis could respond to the $30,000 increase from FY11 to FY12. Ms. Curtis replied that she could not. She pointed out that the numbers listed in Appendix C had been unaudited and that the figures had been provided by the commission for inclusion into the report for informational purposes. 10:23:00 AM Senator Hoffman requested that the auditor or the chairman of the commission provide a copy of the grant to the committee. 10:23:24 AM Representative Hawker announced that the line item was an on-demand type of spending activity; the commission had not spent the entire $140,000 in each year and in the 9 months of FY13, the expenditure had been only $55,000. 10:24:19 AM Co-Chair Meyer remarked that the fiscal note was substantial, but it had been adequately justified. 10:24:39 AM HB 234 was HEARD and HELD in committee for further consideration.