Legislature(2019 - 2020)BELTZ 105 (TSBldg)

02/11/2020 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony --
Moved CSSB 47(L&C) Out of Committee
+ Bills Previously Heard/Scheduled: TELECONFERENCED
Moved CSSB 76(L&C) Out of Committee
        SB  81-TELEPHONE COOPERATIVES;TELECOMMUNICATIONS                                                                    
2:08:07 PM                                                                                                                    
CHAIR  BISHOP  reconvened the  meeting  and  announced the  first                                                               
hearing of SENATE  BILL NO. 81, "An Act relating  to electric and                                                               
telephone  cooperatives; and  relating to  telephone service  and                                                               
related telecommunications services."                                                                                           
2:08:26 PM                                                                                                                    
SENATOR  SHELLEY   HUGHES,  Alaska  State   Legislature,  Juneau,                                                               
Alaska, sponsor  of SB 81,  related that a  year or two  ago when                                                               
she was visiting  with members of her local  telephone co-op, she                                                               
suggested that the term "telephone"  should be changed to reflect                                                               
the broader  scope of service. The  members said they had  a bill                                                               
on  that point  and asked  if  she would  like to  carry it.  She                                                               
SENATOR  HUGHES explained  that SB  81 would  provide updates  to                                                               
allow  telephone  cooperatives  to  use  current  technology  and                                                               
conduct business  more efficiently. This will  help co-op members                                                               
engage more  effectively and allow telephone  associations to use                                                               
updated terminology  to describe  themselves. The bill  will also                                                               
allow   cooperatives    to   discuss   personnel    matters   and                                                               
competitively sensitive information in executive session. This                                                                  
language mirrors existing statutes.                                                                                             
2:12:02 PM                                                                                                                    
DAWSON MANN, Intern, Senator Shelley Hughes, Alaska State                                                                       
Legislature, Juneau, Alaska, paraphrased the following sponsor                                                                  
statement for SB 81: [Original punctuation provided.]                                                                           
     Senate  Bill  81  updates the  Electric  and  Telephone                                                                    
     Cooperatives Act  to allow cooperatives the  ability to                                                                    
     assimilate  twenty-first-century technology  into their                                                                    
     governance process  and to update their  name to better                                                                    
     communicate the services they provide.                                                                                     
     SB  81  will allow  cooperatives  to  adopt into  their                                                                    
     bylaws   the   options   of  providing   members   with                                                                    
     electronic  notice of  membership meetings,  conducting                                                                    
     annual  meetings through  teleconference, and  counting                                                                    
     voting members  who attend  via teleconference  for the                                                                    
     purposes  of  a  quorum. These  provisions  will  allow                                                                    
     cooperatives  to more  thoroughly engage  their members                                                                    
     and allow members  to more readily take  an active role                                                                    
     regardless of their location, the  weather, the cost or                                                                    
     any  other obstacle  that may  be a  challenge for  in-                                                                    
     person attendance.                                                                                                         
     Over half  a dozen electric and  telephone cooperatives                                                                    
     have the word "association" in  their name due to their                                                                    
     creation  prior to  the statutory  requirement to  have                                                                    
     "cooperative"  in their  name.  SB 81  allows the  word                                                                    
     "association" in  place of  the word  "cooperatives" in                                                                    
     the  name  of  the  cooperative.  Additionally,  SB  81                                                                    
     allows   telephone  cooperatives   to  use   the  words                                                                    
     "telecommunications"   or   "telecom"   in   place   of                                                                    
     'telephone'  in the  cooperative's  name. These  simple                                                                    
     changes will  allow these cooperatives  the flexibility                                                                    
     to make  changes to their  name to  one that is  a more                                                                    
     suitable descriptor of the services they provide.                                                                          
     By supporting  these simple  and yet  effective changes                                                                    
     to  the Electric  and Telephone  Cooperatives Act  that                                                                    
     are proposed  in SB 81,  we will be  affording Alaska's                                                                    
     electric  and  telephone  cooperatives  throughout  the                                                                    
     state the ability to represent  the services they offer                                                                    
     more appropriately via the names  of their entities and                                                                    
     to  conduct  business  as  a   cooperative  in  a  more                                                                    
     practical  manner  using  the  very  technologies  they                                                                    
     currently provide to the public.                                                                                           
MR. MANN delivered the following sectional analysis for SB 81:                                                                  
2:14:00 PM                                                                                                                    
Sections 1-3 Alaska Cooperative Corporation Act; Page 1.                                                                      
     Sec. 1  AS 10.15.005 Page 1, Lines 4-8                                                                                   
     Section one  adds "related  telecommunications service"                                                                    
     to  the list  of  excluded purposes,  for  the type  of                                                                    
     cooperative  under the  Alaska Cooperative  Corporation                                                                    
     Act  from which  electric  and  telephone services  are                                                                    
     already excluded.                                                                                                          
     Sec. 2   AS 10.15.575 Page  1, Lines 9-14, Page 2, Line                                                                  
     This section  adds "related  telecommunication service"                                                                    
     to  the   list  of  cooperative  types   exempted  from                                                                    
     restrictions on  the use of  the term  "cooperative" in                                                                    
     its  title  under  the Alaska  Cooperative  Corporation                                                                    
     Sec. 3 AS 10.15.585 Page 2, Lines 2-8                                                                                    
     This section  adds "related  telecommunication service"                                                                    
     to  the list  of cooperatives  types exempted  from the                                                                    
     application of the Alaska Cooperative Corporation Act.                                                                     
     Sections 3-21  Electric and Telephone  Cooperative Act;                                                                  
     Pages 1-3.                                                                                                               
     Sec. 4   AS 10.25.010(a)  Page 2,  Lines 9-31,  Page 3,                                                                  
     Lines 1-14                                                                                                               
     This section adds  "related telecommunications service"                                                                    
     to the  list of  physical line types  that cooperatives                                                                    
     have  the power  to  maintain under  and across  public                                                                    
     lands  through the  Electric and  Telephone Cooperative                                                                    
     Sec.  5    10.25.030(a) Page  3, Lines  15-31, Page  4,                                                                  
     Line 1                                                                                                                   
     This   section  broadens   the  purpose   of  telephone                                                                    
     cooperatives  to cover  all related  telecommunications                                                                    
     services and  allow cooperatives to offer  a full range                                                                    
     of telecommunication services.                                                                                             
     Sec. 6  AS 10.25.040(a) Page 4, Lines 2-5                                                                                
     This  section adds  "telecommunications" and  "telecom"                                                                    
     to the list of potential  terms mandated in the name of                                                                    
     cooperatives based on services.  It also allows for the                                                                    
     use  of  the term  "association  "in  the naming  of  a                                                                    
     cooperative   and   changes    the   abbreviation   for                                                                    
     cooperatives to "Inc.".                                                                                                    
     Sec. 7 AS 10.25.080(a) Page 4, Lines 6-11.                                                                               
     This section  adds "related telecommunications"  to the                                                                    
     list  of services  an individual  agrees to  use to  be                                                                    
     considered  a  member  of  the  cooperative  under  the                                                                    
     Electric and Telephone Cooperative Act.                                                                                    
     Sec. 8  AS 10.25.090(a) Page 4, Lines 12-18                                                                              
     This  section  removes   the  explicit  obligation  for                                                                    
     cooperatives  to hold  member  meetings at  a time  and                                                                    
     place  outlined in  their  bylaws  and instead  directs                                                                    
     them  to  conduct  meetings  more  generally  as  their                                                                    
     bylaws  direct. It  also  clarifies  that the  relevant                                                                    
     bylaws  in   this  section  are   the  bylaws   of  the                                                                    
     cooperative. This  section also  allows for  the annual                                                                    
     meetings  of  cooperatives   to  be  conducted  through                                                                    
     teleconference   unless   prohibited   by   cooperative                                                                    
CHAIR BISHOP noted that the bill would also allow cooperatives                                                                  
to conduct meetings by teleconference.                                                                                          
MR. MANN agreed and continued the sectional.                                                                                    
     Sec. 9  AS 10.25.090(c) Page 4, Lines 19-22                                                                              
     This  section  removes   the  explicit  obligation  for                                                                    
     cooperatives  to hold  district delegate  meeting at  a                                                                    
     time  and place  outlined in  their bylaws  and instead                                                                    
     directs  them to  conduct  meetings  more generally  as                                                                    
     their  bylaws  direct.  It   also  clarifies  that  the                                                                    
     relevant bylaws for this section  are the bylaws of the                                                                    
     Sec.  10  AS  10.25.100 Page  4, Lines  23-31, Page  5,                                                                  
     Lines 1-8                                                                                                                
     This section adds  the use of electronic  mail and text                                                                    
     messages   to  the   list   of   acceptable  means   of                                                                    
     communicating notices  of regular and  special meetings                                                                    
     of a  cooperative. This  section also  provides further                                                                    
     clarification of  the time  restrictions of  notices of                                                                    
     meetings  while also  outlining what  constitutes being                                                                    
     given  "notice"   with  relation  to  email   and  text                                                                    
     Sec. 11 AS 10.25.110(a) Page 5, Lines 9-19                                                                               
     This  section establishes  that individuals  considered                                                                    
     present under  10.25.110 (c) may be  considered present                                                                    
     to make  a vote  to adjourn  in circumstances  in which                                                                    
     quorum has not been met.                                                                                                   
2:18:25 PM                                                                                                                    
     Sec. 12 AS 10.25.110 Page 5, Lines 20-22                                                                                 
     This  section adds  subsection (c)  to 10.25.110  which                                                                    
     allows  for  those  members   or  delegates  that  vote                                                                    
     electronically  to be  considered  having attended  the                                                                    
     Sec. 13  AS 10.25.175(a) Page 5, Lines 23-31                                                                             
     This section removes  "similar communications equipment                                                                    
        from the  description  of authorized  teleconference                                                                    
     meetings for a cooperative board of directors.                                                                             
     Sec. 14  AS 10.25.175(c) Page 6, Lines 1-13                                                                              
     This section adds "personnel  matters" and "matters the                                                                    
     immediate  knowledge of  which  could  have an  adverse                                                                    
     effect on the ability of  the cooperative to compete in                                                                    
     the market  served by the  cooperative" to the  list of                                                                    
     subjects of discussion in an executive session.                                                                            
     Sec. 15 AS 10.25.290(a) Page 6, Lines 15-19                                                                              
     This    section   adds    "related   telecommunications                                                                    
     services" to  the list of  services that  a corporation                                                                    
     could  supply  to  be  permissible   to  convert  to  a                                                                    
     cooperative once  it has met  the requirements  of this                                                                    
     Sec. 16    AS  10.25.430 Page 6,  Lines 20-31,  Page 7,                                                                  
     Lines 1-3                                                                                                                
     This  section replaces  references  to 7  U.S.C. 901  -                                                                    
     950B with 7 U.S.C. 901  - 950bb-2 and removes "of 1936"                                                                    
     from the  references to  the Rural  Electrification Act                                                                    
     of 1936  to update  the chapters references  to federal                                                                    
     Sec. 17  AS 10.25.460 Page 7, Lines 4-12                                                                                 
     This section  adds "a  domestic or  foreign corporation                                                                    
     authorized  to transact  business  in  the state  whose                                                                    
     business  office  is   identical  with  the  registered                                                                    
     office"  to  the  types  of  agents  a  cooperative  is                                                                    
     required to maintain in the state.                                                                                         
     Sec. 18 AS 10.25.810 Page 7, Lines 13-17                                                                                 
     This section adds  "related telecommunications service"                                                                    
     to  the   list  purposes   for  which   a  cooperative,                                                                    
     nonprofit,  membership  corporations may  be  organized                                                                    
     under this chapter.                                                                                                        
     Sec. 19 AS 10.25.820 Page 7, Lines 18-25                                                                                 
      This   section    adds   "related   telecommunications                                                                    
     service" to  the list of services  provided by existing                                                                    
     nonprofit  cooperatives   that  are  subject   to  this                                                                    
     chapter as if originally organized by it.                                                                                  
     Sec.  20  AS  10.25.840 Page  7, Lines  26-31, Page  8,                                                                  
     Lines 1-4                                                                                                                
     This  section  adds  a   paragraph  defining  the  term                                                                    
     "related  telecommunications   service"  to   mean  the                                                                    
     transmission  and reception  of messages,  impressions,                                                                    
     pictures,   and  signals   by  means   of  electricity,                                                                    
     electromagnetic waves,  or any other source  of energy,                                                                    
     force  variations,  or  impulses, whether  conveyed  by                                                                    
     cable,  wire, radiated  through  space, or  transmitted                                                                    
     through   other  media;   or  a   service  capable   of                                                                    
     electronically    generating,    acquiring,    storing,                                                                    
     transforming,  processing,  retrieving,  utilizing,  or                                                                    
     making  available  information,   through  the  use  of                                                                    
     broadband  Internet   access,  data   center  services,                                                                    
     information technology, or other technology services.                                                                      
     Sec. 21  AS 10.25.030(b)  and 10.25.400(e) Page 8, Line                                                                  
     This  section repeals  AS  10.25.030(b) which  outlined                                                                    
     the  original  meaning of  "related  telecommunications                                                                    
     service".  It   also  repeals  AS   10.25.400(e)  which                                                                    
     excludes  telephone cooperatives  which have  an annual                                                                    
     gross   revenue    exceeding   $25,000,000    from   AS                                                                    
     10.25.400(b) (which  outlines the actions that  must be                                                                    
     taken by  a cooperative's  board of directors  before a                                                                    
     disposition   or   sale  of   more   than   15%  of   a                                                                    
     cooperative's  total  assets)  unless a  resolution  is                                                                    
     passed by the cooperative's  board of directors to make                                                                    
     AS 10.25.400(b) apply.                                                                                                     
2:21:57 PM                                                                                                                    
SENATOR  HUGHES  pointed   out  that  the  bill   uses  the  term                                                               
"teleconference," which includes  communication over the internet                                                               
using microphones and  speakers. The telecommunications community                                                               
has a  preference for the  language that  refers to that  and may                                                               
request clarification.  She also  pointed out  that there  are 17                                                               
telephone utility cooperatives and  17 electric cooperatives that                                                               
provide service throughout Alaska. She  said she was not aware of                                                               
any  opposition  to  the  bill  and  both  the  Alaska  Telephone                                                               
Association  and  the  Alaska   Power  Association  have  written                                                               
letters of support.                                                                                                             
She  commented that  the small  fiscal note  could be  covered by                                                               
passing the hat and thus avoid a finance referral.                                                                              
2:24:02 PM                                                                                                                    
SENATOR STEVENS  referenced Section 15  and asked if the  list of                                                               
services that  a corporation  could supply  to be  permissible to                                                               
convert to a cooperative was actually listed in the bill.                                                                       
SENATOR HUGHES deferred the question to an expert in the room.                                                                  
2:24:59 PM                                                                                                                    
RYAN PONDER, Director, Legal,  Regulatory and Government Affairs,                                                               
Matanuska Telephone  Association, Palmer, Alaska, said  a list of                                                               
electric   and  telecommunication   cooperatives  that   will  be                                                               
affected by the  bill was distributed but it  is more appropriate                                                               
to describe SB 81 as a  bill that will empower co-op customers to                                                               
better manage  their service providers.  It updates  the statutes                                                               
to the 21st century.                                                                                                            
Responding  to  Senator  Stevens'  question,  he  explained  that                                                               
Section 20 provides a  definition for "related telecommunications                                                               
services."  It  includes all  the  types  of services  one  would                                                               
expect   from  a   technology  company   that  offers   broadband                                                               
2:27:52 PM                                                                                                                    
MR.  PONDER  began the  PowerPoint.  He  spoke to  the  following                                                               
points  that describe  telephone cooperatives  in Alaska  and why                                                               
the update was needed:                                                                                                          
        • Since before statehood, Alaskans have joined                                                                          
          together   to   form    electric   and   telephone                                                                    
          cooperatives. They did this  to bring electric and                                                                    
          telephone  service to  areas that  other utilities                                                                    
          had no interest in serving.                                                                                           
        • Today, electric and telephone  cooperatives  are                                                                      
          the  economic   backbone  of   their  communities,                                                                    
          providing    affordable   and    reliable   power,                                                                    
          telecommunications,  broadband internet  and other                                                                    
          vital  technology services  to thousands  of their                                                                    
          members all across Alaska.                                                                                            
        • Alaska statutes  for   telephone  and   electric                                                                      
          cooperatives,  adopted  in   1959,  are  outdated.                                                                    
          Decades  have  passed without  needed  substantive                                                                    
          revisions   to   reflect   changes  in   law   and                                                                    
        • Current statutes place undue restrictions on the                                                                      
          member-owners    of    telephone   and    electric                                                                    
          cooperatives  regarding how  they can  operate and                                                                    
          manage  the  cooperative  and  take  advantage  of                                                                    
          current technology.                                                                                                   
        • Statutes also are very limiting in the  types of                                                                      
          services that cooperatives  can offer, restricting                                                                    
          a  cooperative's ability  to  meet its  membership                                                                    
     MR. PONDER highlighted the following proposed changes                                                                      
     to the Electronic and Telephone Cooperative Act:                                                                           
      Broadly speaking, the proposed amendments to the Act                                                                      
        • Expand the definition of the services a telephone                                                                     
          cooperative  can  provide  to  cover  all  of  the                                                                    
          telecommunications  and information  services that                                                                    
          cooperative customers expect;                                                                                         
        • Further expand  cooperatives'  ability   to  use                                                                      
          electronic   means  to   communicate  with   their                                                                    
          members and conduct cooperative business;                                                                             
        • Update the reasons  a  cooperative's  board  can                                                                      
          conduct  an executive  session  to better  reflect                                                                    
          disclosure  concerns  of  employment  matters  and                                                                    
          protect  cooperatives   operating  in  competitive                                                                    
     He noted that as stated earlier, this mirrors what is                                                                      
     already in Chapters 6 and Chapter 15 of Title 10.                                                                          
        • Improve the   language   regarding   cooperative                                                                      
          registered   agents  and   sales  of   cooperative                                                                    
        • Changes in technology require additional services                                                                     
          to be offered                                                                                                         
        • Transparency, accountability  and   privacy  are                                                                      
          required by members                                                                                                   
        • Protection of   aggregate  and   specific   data                                                                      
          required  for providers  to protect  the value  of                                                                    
        • Improved communication methods  between  members                                                                      
          and   their   co-op    assure   increased   member                                                                    
     2:30:35 PM                                                                                                               
      MR. PONDER displayed the following benefits that the                                                                      
     update will achieve:                                                                                                       
        • Adding "or a related telecommunications service"                                                                      
          permits telephone cooperatives  to offer broadband                                                                    
          and  other  data  services that  are  required  by                                                                    
          their Members and  Federal Regulations through the                                                                    
          cooperative  rather  than  a  subsidiary,  thereby                                                                    
          permitting   customers  to   be  members   of  the                                                                    
        • Amending AS   10.25.040(a)  allows   cooperative                                                                      
          members  to use  something other  than "telephone"                                                                    
          in the  cooperative's name, which  better reflects                                                                    
          the nature of  services cooperatives are currently                                                                    
        • Allows all   cooperatives   to  use   the   word                                                                      
          "association"  in   the  name,  not   just  grand-                                                                    
          fathered in existing cooperatives                                                                                     
MR. PONDER  related that years ago  the legislature informed                                                                    
all cooperatives  that had "association" in  their name that                                                                    
they were  not in compliance  with the statute  because they                                                                    
didn't have "cooperative"  in their name. It  took some time                                                                    
to  explain  to  the  legislature   that  these  names  were                                                                    
grandfathered. SB 81 will eliminate  the possibility of that                                                                    
happening in the future.                                                                                                        
He continued to describe  the following benefits of updating                                                                    
the Electronic and Telephone Cooperative Act:                                                                                   
        • Allows members to  receive  notice  of  meetings                                                                      
          electronically (10.25.100)                                                                                            
        • Allows members to   attend  annual  meetings  by                                                                      
          teleconference (10.25.090)                                                                                            
        • Allows teleconferenced attendees to be part of                                                                        
          the quorum (10.25.110)                                                                                                
        • Allows members who voted by mail or electronic                                                                        
          means to be part of the quorum (10.25.110)                                                                            
        • Allows discussion of personnel matters in                                                                             
          executive session (10.25.175)                                                                                         
        • Allows  discussion    of    matters    affecting                                                                      
          competitive    factors   in    executive   session                                                                    
MR. PONDER displayed the following  points to summarize why SB 81                                                               
was necessary:                                                                                                                  
   • Aligns naming convention with historical names before                                                                      
     current legislation was adopted                                                                                            
 • Aligns names with industry standards and service offerings                                                                   
   • Aligns legislation with current member service needs and                                                                   
   • Protects integrity of the cooperatives                                                                                     
   • Allows for increased member involvement                                                                                    
CHAIR  BISHOP  asked  if  the bill  would  provide  any  monetary                                                               
MR.  PONDER  said yes.  The  statutes  require that  every  co-op                                                               
member is mailed  notification of annual meetings so  it would be                                                               
a  sizable  savings if  all  the  cooperatives could  send  those                                                               
electronically. He noted that MTA alone has 30,000 members.                                                                     
2:33:13 PM                                                                                                                    
SENATOR STEVENS asked if the  electrical cooperatives in Cordova,                                                               
Homer, and Kodiak support SB 81.                                                                                                
MR. PONDER  said absolutely; both the  Alaska Telecom Association                                                               
(ATA)  and  the  Alaska  Power   Association  (APA)  support  the                                                               
2:34:10 PM                                                                                                                    
At ease                                                                                                                         
2:34:35 PM                                                                                                                    
CHAIR BISHOP  reconvened the meeting  and asked who  supplied the                                                               
language for Section 20.                                                                                                        
MR. PONDER replied Mr. Lehman  with APA supplied the language. He                                                               
offered his belief that it reflects the FCC definitions.                                                                        
2:35:28 PM                                                                                                                    
MICHAEL  BURKE,  CEO,  Matanuska Telephone  Association,  Palmer,                                                               
Alaska, stated  support for  SB 81. He  said this  legislation is                                                               
past due. The  Act has had no major changes  since it was enacted                                                               
in 1959  even though  technology and the  way members  and owners                                                               
interact have changed.  SB 81 will also provide  the members with                                                               
flexibility in how they interact  and manage the affairs of their                                                               
co-op.  The bill  would allow  members  to change  the bylaws  of                                                               
their cooperative  if they decided  it was beneficial but  it was                                                               
not compulsory.  He said  there wasn't any  downside for  the MTA                                                               
membership and how it wants to conduct business going forward.                                                                  
2:37:39 PM                                                                                                                    
CHRISTINE   O'CONNOR,   Executive    Director,   Alaska   Telecom                                                               
Association, stated that ATA  represents broadband, landline, and                                                               
wireless  telecommunication  companies statewide.  She  testified                                                               
that SB  81 will allow  modern cooperatives in Alaska  to operate                                                               
in  a  modern  way  which will  accommodate  more  effective  and                                                               
efficient service.  She reported  that ATA's  members unanimously                                                               
support SB 81.                                                                                                                  
2:38:49 PM                                                                                                                    
CRYSTAL  ENKVIST, Executive  Director, Alaska  Power Association,                                                               
Anchorage,  Alaska,  stated  that  APA  is  the  statewide  trade                                                               
association for Alaska's electric  utilities. The members provide                                                               
power to more  than 0.5 million Alaskans  statewide. She reported                                                               
that APA  supports SB  81 which  would modify  statutes governing                                                               
telephone and electric  cooperatives to accommodate technological                                                               
advances in  communications. In particular,  sections 8,  10, and                                                               
11  of the  bill will  provide more  flexibility for  cooperative                                                               
members in their annual meetings.                                                                                               
2:40:35 PM                                                                                                                    
CHAIR BISHOP opened  public testimony on SB 81.  Finding none, he                                                               
said  he  would  leave  it  open  and  hold  SB  81  for  further                                                               

Document Name Date/Time Subjects
SB 81 Sponsor Statement ver M.pdf SL&C 2/11/2020 1:30:00 PM
SB 81
SB 81 Sectional Analysis ver M.pdf SL&C 2/11/2020 1:30:00 PM
SB 81
SB 81 DRAFT Fiscal Note DCCED-CBPL-02-07-2020.pdf SL&C 2/11/2020 1:30:00 PM
SB 81
SB 81 Presentation.pdf SL&C 2/11/2020 1:30:00 PM
SB 81
SB 81 Alaska telephone cooperative coverage map.pdf SL&C 2/11/2020 1:30:00 PM
SB 81
SB 81 Letters and Resolutions 02-10-2020.pdf SL&C 2/11/2020 1:30:00 PM
SB 81