Legislature(2001 - 2002)
02/19/2002 02:00 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 253-EXTENDING THE REGULATORY COM. OF ALASKA
CHAIRMAN BEN STEVENS called the Senate Labor & Commerce Committee
meeting to order at 2:00 p.m. and announced SB 253 to be up for
consideration.
MS. DEBORAH GRUNDMANN, Staff to Senator Stevens, said that SB 253
extends the termination date of the Regulatory Commission of
Alaska (RCA) to June 30, 2006. Page 7 of the audit has three
recommendations that Nan Thompson, Chair, RCA, would comment on.
MS. NAN THOMPSON, Chair, RCA, supported SB 253. She informed them
that this is the agency that was reformed in 1999 by the previous
legislature. The APUC was sunset and this is the RCA's first
review. She said that they have managed to reduce the case
backload by hundreds of cases since they started. "Most
importantly, all the new cases we have received are being
processed in a timely manner within deadlines."
The number of substantive decisions issued by the agency has
increased dramatically when compared to previous work of the
agency.
We are taking the time to work on the hard cases, build
records and make decisions. We have spent a lot of time
over the last couple of years designing and
implementing the MIS system that the legislature asked
us to design and work on two years ago and that should
be operational by the end of this month. It should
allow us to operate more efficiently internally and
allow the public to be better informed.
MS. THOMPSON said they have been very responsive to consumer
complaints and she is proud that the auditor recognized that over
80 - 90 percent of the consumer complaints they receive are
handled within 30 days. Their appeal record speaks well for the
kind of work they have done. Some utilities are not happy with
the RCA's decisions, but noted that she listens carefully. She is
concerned if they are not being treated fairly and she tried to
make adjustments for that, but if it's about results, the
question is whether the RCA is accurately and fairly applying the
law as written by the Legislature and Congress. Their track
record on appeal shows that they have been doing the right thing
there, too. Of the agency decisions since 1999, all four of the
ones that have gone to court have been upheld.
The auditor had three recommendations and the RCA agrees with all
of them and have begun work to implement them.
The first one was at the public advocacy section which
was a new section formed under the legislation in 1999
- adopt regulations to define procedures. We agree that
there should be regulations. It should be clear to all
members of the public and to utilities when they will
be appointed and what their role is in those cases. We
have asked within the agency that the public advocacy
section itself propose regulation and they have given
me a deadline of next month in March to propose those.
They will be put out to comment to the public and to
industry and should be adopted by our agency in full by
the end of this year.
I'm hoping that those regulations do a couple of things
- to clarify the role of the public advocacy section
within our agency - to clarify when they should be
appointed a party and when not and to clarify their
right to ask to participate in proceedings where
they're not appointed by the commissioners and their
rights to appeal.
She hoped to have those implemented by the end of this year.
Another recommendation identified a large number of
uncertificated water and sewer utilities.
Under existing statutes, every utility that serves more
than 10 customers should be certificated by the
commission and the auditor identified about 130 water
and sewer utilities. Many of these are paired in
communities. We're really talking about 65 communities
that don't presently have certificates.
She could not say why, because a lot of them existed before the
RCA existed and they have begun to address the deficiency. She
has identified who these utilities are and within her agency they
are in the process of revising their application process to
tailor one more appropriate for the small systems and rural
utilities that comprise most of the 130 utilities. They made the
decision to wait until they had the application process revised,
which should be later on this spring, to invite all of those
presently uncertificated utilities to join.
The other policy issue is whether small systems owned
by homeowners associations should be exempt under
regulation. We have had a series of cases where
privately owned systems owned by homeowners
associations - one where ratepayers have direct input
into rates because of their participation on a
homeowners association board have asked to be exempt.
We have granted some of those exemptions by case law.
Another issue that we hope to deal with on this is
whether or not we should have a regulation exempting
that class of utilities to make it easier for utilities
in that group going through the process to understand
where they'll fit in.
The third recommendation dealt with notice. All changes
to the terms and conditions under which a utility
offers service has to be put out to public notice and
under our statute and regulations, some are issued by
the utility and some are issued by the agency. What the
auditor identified is that our records for proof of
publication were not as complete as they should be.
Since we received the recommendation, we have
internally remedied that situation already and have
raised within the agency's mind the bigger question of
what's effective public notice and what changes we
might consider in order to make consumers more aware of
the changes. Now many of the notices go on our web page
and we found that to be a more effective way of
noticing the public than some of the newspaper
publications. That third recommendations is pretty much
taken care of and we'll continue to try and work on
more effective notice in the future.
SENATOR LEMAN said it's his opinion that they make it very easy
for small utilities to become certificated. He noted that was one
of the auditor's recommendations.
MS. THOMPSON agreed saying that complying with another set of
regulations can be burdensome. Many of the utilities that are
uncertificated are owned by local government and wouldn't be
economically regulated. Their concern in looking at any small
utility is whether or not there is some process for in put. The
ones owned by local government, the citizens have the opportunity
to have an impact on rates and they don't need the RCA to review
them.
SENATOR LEMAN asked if they were looking for a mechanism to get
some public process involved.
MS. THOMPSON replied yes and of the 130 identified, about 50 of
those are local government owned. The others are generally small
utilities of another sort. If there is an opportunity for input
by the ratepayers on rates already, they don't need the RCA
looking at the rates as well. They are trying to tailor the
application process to reflect that.
CHAIRMAN STEVENS asked when the regulations would be ready for
public comment on the water and sewer.
MS. THOMPSON replied that realistically it would happen in May.
CHAIRMAN STEVENS asked if she was working with the 50
municipalities to write the regulations.
MS. THOMPSON replied when they are put out for public comment,
those utilities will have an opportunity to comment.
Most of those water systems were built with government
funding of one sort or another. So we've worked with
DEC and the federal government agencies to help them
understand that first those utilities are operating
safely now….
CHAIRMAN STEVENS asked if the regulations contain maintenance
provisions for the municipality.
MS. THOMPSON replied:
That issue comes up in the context of the requirement
that we determine the utility is fit, willing and able
to operate the utility. Management capacity, which is
what I understand you to be talking about, is one thing
we look at carefully. We ask them to show us that they
have set up an accounting system that will allow them
to collect the money they need to continue to operate,
that they have a qualified management team in place -
that they have qualified engineers to run the system.
Yes we look at those issue in a context of
certification.
CHAIRMAN STEVENS asked if "fit, willing and able" has to do more
with capacity, not addressing the revenue side. She said that was
right. He asked if where additional revenue would come from if it
was needed to operate the facility.
2:16 p.m.
MS. THOMPSON replied that was a good question and the legislature
would be dealing with it over the next few years in the context
of the many new rural water and sewer systems that are being put
in. She said that they could use grants and perhaps a different
type of management structure that would allow them to achieve
efficiencies by combining with other utilities in the region or
community.
CHAIRMAN STEVENS said he assumed the 50 utilities are new and
asked if there was a way they could start to get information to
understand how much they cost to operate once they have been
built.
MS. THOMPSON replied that was the kind of information they get in
reviewing the certification applications and that is an important
thing to look at early on when they are setting up a new utility.
CHAIRMAN STEVENS said that the Denali Commission helps fund the
construction of a lot of these facilities and asked if it has an
operational component.
MS. THOMPSON replied no. They have some training money, but
generally the money from the Denali Commission is for capital
grants, not ongoing operations.
MS. DANA TINDELL, Vice President Regulatory Affairs, GCI, said as
a regulated utility they interact with the RCA on a daily basis.
They were involved in the legislation that constituted the RCA.
"I'm pleased to report to you that from our perspective, the
Regulatory Commission today is a functional body, as opposed to a
dysfunctional body."
As a utility, they are not always pleased with the RCA's
decisions, but they are free to appeal. There have been a lot of
appeals and prior to this commission there was never an order in
which appeal. So, they are much happier with that outcome.
A lot of times the Regulatory Commission is somehow
accused of enacting bad law. I've heard that said. I
wanted to clarify from our perspective, in many cases,
in telecommunications particularly, what the Regulatory
Commission is doing is interpreting federal law and
carrying it out as required by the federal agency. So,
many of the issues that some of the other utilities in
telecommunications industry complain about are not
really issues that are up for state question. They are
proscribed by federal law.
She said that from their perspective it is critical that there be
a Regulatory Commission. Without it, it wouldn't be clear where
the day-to-day decisions would have to be made, possibly the
legislature or the courts. "An expert commission is better able
to deal with these issues and is probably more willing than the
legislature is."
She said as a veteran of eight two-year sunset reviews, it would
be great if they would continue the commission for the four-year
term.
SENATOR LEMAN moved to pass SB 253 from committee with individual
recommendations with the accompanying $6 million fiscal note.
CHAIRMAN STEVENS said they would hold the motion for further
testimony from people on teleconference.
MR. STEVE CONN, Executive Director, Alaska Public Interest
Research Group, said that consumer involvement is critical in the
business of utility regulation and he has seen substantial
improvement in that area. "To cast a member of staff as public or
to cast a position as public or citizen centered is not the same
thing as active involvement by consumers."
At meetings he presses for increased outreach and notice of the
many things that affect Alaska consumers on a day to day basis in
their private and business lives. "All of the advocates who go
before the Regulatory Commission benefit from early on and
informed consumer involvement."
People in Alaska don't want to see brown outs or ideologically or
politically driven Enron-type situations he said. "There is more
interest on the part of consumers in utility matters than ever
before. At this juncture I would hope the legislature would allow
the bill to pass…."
MS. CRISTI KATLIN, AT&T Alascom, supported SB 253 and asked them
to pass it without amendments. "Any efforts to modify or reverse
the jurisdiction of rulings of the RCA should be considered
separately from the sunset review."
SENATOR LEMAN renewed his motion to move SB 253. There were no
objections and it was so ordered.
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