Legislature(2013 - 2014)BELTZ 105 (TSBldg)
04/03/2014 03:30 PM Senate LABOR & COMMERCE
Audio | Topic |
---|---|
Start | |
HB32 | |
HB276 | |
HB234 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | HB 32 | TELECONFERENCED | |
+ | HB 276 | TELECONFERENCED | |
+ | HB 234 | TELECONFERENCED | |
HB 234-EXTEND REGULATORY COMMISSION OF ALASKA 3:50:56 PM CHAIR DUNLEAVY reconvened the meeting and announced the consideration of HB 234. "An Act extending the termination date of the Regulatory Commission of Alaska; and providing for an effective date." This was the first hearing. 3:51:12 PM REPRESENTATIVE MIKE HAWKER Alaska State Legislature, Juneau, Alaska, as joint prime sponsor, stated that HB 234 extends the termination date of the Regulatory Commission of Alaska (RCA) from June 30, 2014 to June 30, 2022. The Legislative Budget and Audit Agency conducted an audit and recommended the eight-year reauthorization consistent with the findings that the agency has been operating in an efficient and effective manner. He pointed out that the appendixes to the audit include ratings by the stakeholders that demonstrate overwhelming support for how well the agency is functioning. The analysis on page 31 of the audit shows that the regulatory cost charges are sufficient to support the RCA's operations. He concluded that what the RCA needs more than anything else is long term future stability and that is the reason for the recommendation for an eight-year extension. CHAIR DUNLEAVY asked if the fiscal note has changed. REPRESENTATIVE HAWKER explained that it's the original fiscal note that shows receipts, primarily from regulatory cost charges, of about $9 million per year. The other charges are I/A and CIP receipts that are essentially fees for services. 3:53:46 PM KRIS CURTIS, Legislative Auditor, Legislative Audit Division, Legislative Agencies and Offices, Juneau, Alaska, reported that the division conducted an audit of the RCA dated July 2013. The purpose was to determine whether the commission was serving the public's interest and whether its termination date should be extended. Overall, the audit concluded that the RCA is operating in the public's interest and that the termination date should be extended for eight years, until June, 2022. She noted that the audit includes two recommendations, but neither impacted the recommendation for the extension. The first recommendation is to a repeat of a prior audit recommendation for the RCA to improve its case management system. The 2013 audit found there were still high error rates in the case management system and again recommended improvements. MS. CURTIS reported that the sunset audit also made a new recommendation for the legislature to consider clarifying the statutory timeline for rulemaking proceedings. The statutes currently require the RCA to issue a final order on a rulemaking docket no later than 730 days after a petition for a regulatory change is filed or after the commission issues an initiating order for such proceedings. A provision in the statutes allows one 90-day extension for good cause, but prohibits the RCA from terminating a proceeding in one docket and opening a proceeding in another docket on substantially the same matter. The audit found that on occasion the RCA has split rulemaking proceedings into two dockets. First, the RCA will open a docket to consider whether there is a need for regulation in an area of concern or interest and then close it once public testimony and comments are taken. If the record indicates a need for a regulation, the RCA may open a second docket to consider adopting the regulations. The audit found that this process allows the RCA to take up to 4.5 years to complete its proceedings, but the RCA management has argued that including clear intent language in a docket's initiating order makes the process transparent and complies with statute. The auditors confirmed that the RCA was including clear intent language in the docket, which provides transparency, but determined that this was an issue for legislative consideration because it appears that this practice evades the statutory timelines and does not appear to serve the regulated community or the public's interest. She restated the recommendation for the legislature to consider clarifying the statute to ensure that the RCA complies with legislative intent when processing regulatory dockets. 3:57:20 PM T.W. PATCH, Commissioner and Chair, Regulatory Commission of Alaska, Department of Commerce, Community and Economic Development (DCCED), stated that it is the position of the Commission that it has earned the trust of the legislature, has met its obligations, and should be extended for the eight-year statutory maximum. Complying with prior legislative guidance, the RCA filed a report with the legislature on January 16, 2012 and promised a further report. That report outlined the process to address concerns regarding the length of time it took for the commission to decide cases involving rate changes and certain other matters. The commission filed a second report on January 21, 2014 that documented that the commission had significantly reduced the timeline for rate cases from 450 days to 300 days. This was done without requesting any additional funding, staff, or authority. Although it has stressed the agency and the regulatory affairs and public advocacy section of the Department of Law, the commission is holding that timeline and will do its best to continue to hold that timeline. He warned that the stresses may mount as the RCA is being asked to undertake new and complex matters. He cited work with AGDC, AOGCC, the governor's Interior gas project, and the pending matters related to transmission that may come before the commission in the near future. MR. PATCH addressed the audit report. The RCA concurs and has taken steps to address the first recommendation that the Chair of the RCA should improve and enforce written procedures. The manuals have been updated and new manuals are being written. He expressed confidence that there would be measurable enhancement in this area. SENATOR MICCICHE asked if there were serious data issues associated with the business of the RCA or simple errors that were identified during the audit. MR. PATCH replied the issues weren't quantified, but he doesn't believe the commission would have been faulted on simple transposition errors in their database. CHAIR DUNLEAVY asked Ms. Curtis to quantify the errors. 4:02:59 PM MS. CURTIS directed attention to page 11 of the audit and noted that this is the fourth time this been before the legislature. It is a reoccurrence from the two prior audits of the annual report and the prior sunset audit. The audit examined 26 of 261 tariff filings and 41 of 171 utility dockets and found error rates of 27 percent in 20 percent of the respective sample. When the audit mentions error rates it is talking about information like open and close dates included in the annual report. That is the nature of the errors, she said. SENATOR MICCICHE asked if any of the errors were associated with the calculation of tariffs. MS. CURTIS replied the nature of the errors related to descriptive information in an annual report as opposed to anything that would have affected a decision. CHAIR DUNLEAVY asked who follows up on the corrective actions. MS. CURTIS said the recommendation was directed to the RCA Chair who is responsible for ensuring it occurs. SENATOR MICCICHE summarized that the errors were clerical in nature. MS. CURTIS said most likely the errors were data input and those can be associated with a lack of procedures in entering the data. These are things that can be addressed by adequate training and procedures and a quality control procedure at the commission for continuous review to ensure that the information is being gathered and entered accurately, she said. 4:06:19 PM MR. PATCH said the commission is in the process of changing policies and procedures to address the 2-3 day discrepancy between the date on a letter or document that comes to the commission and the date it is entered into the database. A tariff filing that isn't addressed within 45 days is given the force of law on day 45, so that two or three day difference has a legal consequence in favor of the utility applicant. He agreed with Ms. Curtis that it has taken the commission some time to address this issue, and noted that adopting electronic filing measures has helped in its resolution. MR. PATCH asked the committee to consider the second audit finding by reviewing page 3 of his response to the audit because it may affect another matter. He posed a hypothetical example to illustrate how it might happen that the RCA would open a docket, close the docket to stay within the statutory timeline, and then open a second docket 10 months to four years later on a substantially similar question. He stated that it is RCA's belief that to open a docket to consider the need for a regulation is entirely different than opening a docket to consider a specific regulation and how it may address a problem. "In this case, I do not think her recommendation need concern this legislature with respect to my agency's sunset extension," Mr. Patch stated. 4:11:28 PM SENATOR OLSON asked how long he has been Chair of the RCA. MR. PATCH replied it will be three years on June 30, 2014. SENATOR OLSON asked if he served on the RCA before that. MR. PATCH relayed that he was appointed by Governor Parnell in 2010. SENATOR OLSON asked how he managed to reduce the timeline from 450 days to 300 days. MR. PATCH replied it was a matter of diligence, clear expression of desire for a cooperative process, early meeting between the RCA's administrative law judges and the parties to set procedural schedules for discovery, careful employment of the RCA assets, and honest and open conversation with parties in the dockets regarding requests for additional time. SENATOR OLSON asked if anything was compromised in the time reduction. MR. PATCH said he didn't believe anything was compromised. SENATOR OLSON asked if he anticipates that the RCA will regulate the gas pipeline. MR. PATCH said the agency's engineering, pipeline, technical, and legal staff is actively engaged in the process of getting ahead of the AGDC tariff issues. The RCA should be able to decide a filing in a timely fashion, he said. 4:16:26 PM SENATOR MICCICHE said he'd like to talk off the record about the second recommendation, because the issue won't go away in future audits if the discrepancy isn't resolved. MR. PATCH said the RCA has a solution that he believes is acceptable to Ms. Curtis. The RCA adopted an additional information gathering "I" docket to receive and store information. This docket has no statutory timeline. If there is need for a regulation that addresses the concern in the "I" docket the RCA could move forward to an R docket, which is subject to the timeline. SENATOR MICCICHE observed that one is an application process and the second starts the 730 day timeline. MR. PATCH agreed. CHAIR DUNLEAVY suggested that after the discussion he make a statement that his concerns have been addressed. SENATOR MICCICHE asked Ms. Curtis to comment on the proposed solution. MS. CURTIS said the division's opinion is based on field work and extensive work, and does not factor in what management might do to address an audit recommendation. It's a matter of appearing and being independent as auditors. She restated that the recommendation is to the legislature to consider clarifying the statute to address the issue. If the legislature doesn't take any action on this recommendation, she said she will be reluctant to pursue it again. 4:21:21 PM CHAIR DUNLEAVY announced that he would hold HB 234 in committee for further consideration. Public testimony was open.