Legislature(1993 - 1994)
04/15/1993 07:07 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE BILL NO. 163: An Act relating to power cost equalization; and providing for an effective date. Co-chair Pearce announced that CSSB 163(FIN) work draft "J" was before the committee. She said that there were proposed amendments to SB 163 that had been added to CSSB 163(FIN). Section 1 adds Palmer, Homer and Seward. She invited Brent Petrie, Manager /Planning & Project Development, Alaska Energy Authority, to join the members at the table and speak to the bill. BRENT PETRIE said that Section 1 added Palmer, Homer and Seward, three additional utilities to the method in which the base calculation is made for the power cost equalization program. These utilities represent about 30 percent of the energy sales in the railbelt. Those utilities that would be added for the purpose of making a calculation will probably be Matanuska Electric Assoc., Homer Electric Assoc., and Seward Electric System. End SFC-93 #56, Side 1 Begin SFC-93 #56, Side 2 Co-chair Pearce said public schools would be exempt, and still receive the PCE, but, referring the committee to page 2, line 6 and 7, pointed out that state and federal offices do not receive a PCE under this legislation. Senator Kelly asked the net result of adding Palmer, Homer, and Seward to the bill. Mr. Petrie said that he did not know the exact amount of the net result but it would raise the base on which the PCE was calculated because all those utilities have higher rates than the other utilities in the railbelt, approximately 11 cents a kilowatt-hour. He felt it would raise the PCE to about 10 cents per kilowatt-hour. He recommended that the base remain at 9.82 cents per kilowatt-hour for this year because he was aware that the Golden Valley Assoc. had lowered their rates. Senator Jacko asked why these utilities had been added to the legislation. Senator Rieger asked for an explanation of the last phrase on page 2, lines 13 through 16, "less than 52.5 cents per kilowatt-hour." Mr. Petrie said a utility would not be reimbursed over 52.5 cents per kilowatt-hour, and would be reimbursed 95 percent of the eligible costs between 9.82 cents and 52.5 cents per kilowatt-hour. In answer to Senator Kelly, Co-chair Pearce said that AEA had requested the addition of Palmer, Homer and Seward utilities to the legislation. Mr. Petrie answered for the record that AEA had not requested the addition of those utilities to the legislation. DAVID P. HUTCHENS, Alaska Rural Electric Cooperative Association, said that adding Palmer, Homer and Seward would have the affect of increasing the average cost for that base slightly the first year to about 10 cents per kilowatt-hour based on 1991 year end calculations. He agreed with Mr. Petrie's recommendation to leave the rate at 9.82 cents the first year because the following year's calculation would be very close to the 9.82 cents (since Golden Valley Assoc. had lowered their rates). In answer to Senator Jacko, Mr. Hutchens' said that he had not recommended that the three utilities be added to the legislation. Mr. Petrie said that when HB 216, Power Cost Equalization, was dealt with a week ago, a question had been raised regarding the calculation of the PCE rate. He said he gave out information regarding the five utilities, including Anchorage, Fairbanks, and Juneau, that were involved in that calculation. He said someone had asked him if Palmer was in the calculation and as a result he gave out the names of the utilities that were not included, including Palmer, Homer and Seward. He said that the addition of these three utilities may have resulted from a misunderstanding from that discussion but that AEA did not recommend adding those three communities to the calculation. Discussion was had by Senator Jacko, Mr. Petrie, Co-chair Pearce and Senator Kelly regarding the addition of Palmer, Homer and Seward utilities to the legislation. Senator Jacko MOVED that CSSB 163(FIN) be amended by deleting Section 1 on page 1, and deleting the words "Palmer, Homer, and Seward" from page 2, line 20. No objections being heard, the amendment was ADOPTED. Senator Kelly MOVED for passage of CSSB 163(FIN) as amended from committee with individual recommendations. No objections being heard, CSSB 163(FIN) was REPORTED OUT of committee with a "do pass," and a fiscal note for the Department of Commerce & Economic Development in the amount of $600.0. Co-chairs Pearce and Frank, Senators Kelly, Sharp, Rieger, and Jacko signed "do pass." Senator Kerttula was absent from the meeting and did not sign. ADJOURNMENT The meeting was adjourned at approximately 9:25 p.m.