Legislature(2017 - 2018)BELTZ 105 (TSBldg)
04/10/2017 01:30 PM JUDICIARY
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SB 58-DEPT OF LAW: ADVOCACY BEFORE FERC 2:11:27 PM CHAIR COGHILL announced the consideration of SB 58. 2:12:17 PM ED SNIFFEN, Assistant Attorney General, Civil Division, Regulatory Affairs & Public Advocacy (RAPA), Department of Law, Anchorage, Alaska, introduced SB 58 on behalf of the administration. He reminded the members that public utilities and pipelines in Alaska are regulated by the Regulatory Commission of Alaska (RCA). The RCA pays for the regulations by assessing the utilities a regulatory cost charge (RCC), which is passed along to consumers through their utility bills. To ensure that the public interest is protected, the attorney general is allowed by statute to participate before the RCA to make sure those rates are just and reasonable; DOL also receives part of that regulatory cost charge. MR. SNIFFEN said he had a short PowerPoint to help explain what the regulatory cost charge is and where it comes from. What is the regulatory cost charge (RCC)? The RCC is a fee assessed on public utilities and pipelines that are regulated by the Regulatory Commission of Alaska (RCA). It is created by AS 42.05.254 and AS 42.06.286. Who Pays RCCs? Utilities and pipelines that are regulated by the RCA, including over 125 public utilities and about 20 common carrier pipelines with in-state deliveries. These utilities and pipelines may pass the charge on to customers that benefit from RCA regulation. Each year, the RCA assesses RCCs to utilities and pipelines based on the amount of work required for each industry sector. What does the RCC pay for? The money collected in the RCC provides funding for the Regulatory Commission of Alaska (RCA), which is responsible for the economic regulation of public utilities and intrastate common carrier pipelines in Alaska, and the Regulatory Affairs and Public Advocacy (RAPA) section in the Department of Law, which is charged with advocating for the public interest in matters related to the economic regulation of public utilities and pipelines. It pays for just and reasonable rates for utility and pipeline customers. How much is it? Total RCCs cannot exceed 0.87 percent of the adjusted gross revenue (revenue derived from operations in Alaska) of the regulated utilities and pipelines. Statute allocates that 0.87 percent between the RCA and RAPA. RCCs funding the RCA cannot exceed 0.7 percent and RCCs funding RAPA cannot exceed 0.17 percent. RAPA's 2017 Budget. For 2017, the statutory cap for the Department of Law was $2,374,390. The budget submitted last year was for $2,333,700, which is $40,690 under the cap. The pie chart shows that DOL spent about 7 percent of the time on pipeline matters that came before the RCA; the rest of the time was spent on utility matters. SB 58 doesn't ask to grow the size of the pie; it would just allow DOL to change the shape of the pieces. What would SB 58 change? This bill does not change the 0.17 percent RCC cap or create new authority for the attorney general to participate in matters before FERC. The bill will allow some costs incurred by the department in matters before FERC (TAPS pipeline tariffs) in the pipeline RCC. This bill might increase the amount of RCC allocated to pipelines. Because the size of the "pie" is not changing, an increase in the pipeline RCC would reduce the RCC paid by utilities. 2:16:52 PM How would SB 58 impact consumers? Pipelines can pass the RCC on to customers for in-state shipments. This increase would not be significant because the cost is spread across all regulated pipelines and each unit of oil or gas shipped. For example, adding $100,000 to the pipeline RCC for the last two quarters of 2016 would increase the pipeline RCC surcharge by about 0.041 percent. A $10,000 billing to a pipeline customer would increase by $4.10. The $4.10 surcharge helps ensure the $10,000 bill is "just and reasonable." Why now? For over 30 years, outside counsel has represented the state on FERC pipeline matters. To reduce costs, DOL is developing the necessary expertise and bringing more of this work in-house. In the process of budgeting for this increased in-house workload and searching for budget efficiencies, it came to our attention that the RCC may be an appropriate funding source. Will SB 58 impact AK LNG? No. Is there a check on RCC spending? Yes. RCCs to fund RAPA cannot exceed the 0.17 percent cap. RAPA's budget is submitted to the RCA for review of RAPA's certified costs in a public docket where any interested party can comment. 2:18:23 PM SENATOR MEYER asked if the attorney general him/herself participates as a party before the RCA or his or her designee. MR. SNIFFEN replied the attorney general designee, generally someone in the RAPA section. SENATOR COSTELLO asked if the RCA has an opinion on the bill. MR. SNIFFEN replied DOL has talked with the RCA on several occasions and it has not voiced opposition. CHAIR COGHILL noted that, as judiciary chair, he has not received any negative comments from the RCA. SENATOR MEYER informed members that RCA Commissioner Norm Rokeberg testified in support of the bill in a previous committee. SENATOR WIELECHOWSKI asked how much the statutory cap would need to be increased to fully cover RAPA's budgetary needs. MR. SNIFFEN estimated that the 0.17 percent cap would need to be increased to 0.23 percent. CHAIR COGHILL thanked Mr. Sniffen and announced he would hold SB 58 in committee for further review.