Legislature(2001 - 2002)

05/06/2002 05:15 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
                 CSHB 302-ALASKA GAS CORPORATION                                                                            
                                                                                                                              
CHAIRMAN JOHN TORGERSON called the Senate Resources Committee                                                                 
meeting to  order at 5:15 p.m.  and announced CSHB 302(FIN)  to be                                                              
up for consideration.  He said that he intended  to take testimony                                                              
on  the bill  today  but  would hold  it  in committee  since  the                                                              
committee would be making a policy call.                                                                                        
                                                                                                                                
REPRESENTATIVE  JIM WHITAKER,  sponsor of  HB 302,  said the  bill                                                              
establishes  the  Alaska  Gas  Corporation.   The  intent  of  the                                                              
legislation is to  keep a range of options available  to the state                                                              
with regard to  the eventual taking of natural gas  to market. The                                                              
private sector is interested in that  project but the sincerity of                                                              
that effort  has been questioned from  time to time.   He believes                                                              
it would be advantageous for the  state to keep this option viable                                                              
and to progress it.                                                                                                             
                                                                                                                                
CHAIRMAN TORGERSON asked Representative  Whitaker if he intends to                                                              
replace the initiative with this legislation.                                                                                   
                                                                                                                                
REPRESENTATIVE  WHITAKER said  it is  not his  intent to use  this                                                              
bill to replace the initiative. That  subject is under the purview                                                              
of  the  Lieutenant  Governor. He  introduced  this  bill  several                                                              
months prior to  the initiative. However, once  the initiative was                                                              
filed, he  asked for a  legal opinion  about whether the  bill and                                                              
initiative  are  substantially  similar. According  to  the  legal                                                              
opinion, they  are, so whether or  not it replaces  the initiative                                                              
would  be the  Lieutenant  Governor's  call. He  said  he has  not                                                              
contacted her about the matter.                                                                                                 
                                                                                                                                
CHAIRMAN TORGERSON  questioned why  there is  no fiscal  note from                                                              
the Legislative Affairs Agency (LAA)  because the Commission would                                                              
be set up by the Legislature.                                                                                                   
                                                                                                                                
REPRESENTATIVE  WHITAKER said  it  would, but  assuming the  Joint                                                              
Committee  on Natural  Gas  Pipelines remains  viable,  it can  be                                                              
argued  that there  would be  no attendant  fiscal note.  However,                                                              
keeping that  committee in place  for this specific  purpose would                                                              
require a fiscal note from LAA.                                                                                                 
                                                                                                                                
CHAIRMAN  TORGERSON  said  that,  in general,  all  of  the  Joint                                                              
Committee on Natural Gas Pipelines  hired experts will be finished                                                              
at the end of session. He said the  committee might need to take a                                                              
different direction  and have engineering staff on  board for this                                                              
proposal.                                                                                                                       
                                                                                                                                
CHAIRMAN TORGERSON  told members that Representative  Whitaker has                                                              
submitted an  amendment to extend  the Joint Committee  on Natural                                                              
Gas Pipelines until January 31, 2004.                                                                                           
                                                                                                                                
SENATOR WILKEN  asked if the  Alaska Gas Corporation  is analogous                                                              
to anything that exists today.                                                                                                  
                                                                                                                                
REPRESENTATIVE WHITAKER  replied an analogy  could be made  to the                                                              
existing port authority,  although that is a rough  one, since the                                                              
subject matter  is the only similarity.  He said a  better analogy                                                              
is to  the operations  of the Alaska  Permanent Fund  Corporation.                                                              
The  Corporation  functions  in  an ownership  role.  He  did  not                                                              
envision  the maintenance,  operation,  building, and  engineering                                                              
functions being  attendant to state functions. He  envisioned them                                                              
as  private sector  functions  under contract  to  the Alaska  Gas                                                              
Corporation.                                                                                                                    
                                                                                                                                
SENATOR WILKEN asked how it would  differ from the Alaska Railroad                                                              
Corporation (ARRC).                                                                                                             
                                                                                                                                
REPRESENTATIVE WHITAKER  replied that  ARRC is far beyond  what he                                                              
would envision. The  ARRC has been subject to  criticism for being                                                              
somewhat   cumbersome,   bureaucratic   and   inefficient.   Those                                                              
criticisms may have  merit. On the other hand,  the Permanent Fund                                                              
Corporation's  ownership  role  provides  a  much  more  efficient                                                              
model.                                                                                                                          
                                                                                                                                
SENATOR  WILKEN asked  him to  explain why  a copy  of the  Petrie                                                              
Parkman  Report  is in  members'  packets  and  what it  means  in                                                              
relation to the sentence on page 2.                                                                                             
                                                                                                                                
REPRESENTATIVE   WHITAKER  replied  that   he  found   the  report                                                              
interesting for a number of reasons.  Different participants wrote                                                              
it  in sections.  Those  sections  written by  the  Administration                                                              
seemed to  be quite negative with  regard to state  ownership, but                                                              
he came to the  conclusion that state ownership would  result in a                                                              
substantial  return  to  the  state, the  magnitude  of  which  is                                                              
indeterminate.  He also concluded  that an 8  to 18%  reduction in                                                              
tariff is  possible, if  not probable,  given state ownership  and                                                              
its  ability  to provide  for  financing  as  well as  tax  relief                                                              
relative to the determination of the tariff.                                                                                    
                                                                                                                                
SENATOR TAYLOR asked when the bill was filed.                                                                                   
                                                                                                                                
REPRESENTATIVE WHITAKER said it was  filed at the beginning of the                                                              
first  session  of  this legislature.  He  extrapolated  that  the                                                              
reason  it is moving  now is  because  it is being  viewed as  the                                                              
lesser of two evils, meaning it and the initiative.                                                                             
                                                                                                                                
SENATOR TAYLOR asked how it differs from SB 221.                                                                                
                                                                                                                                
REPRESENTATIVE WHITAKER replied that he hadn't read that bill.                                                                  
                                                                                                                                
CHAIRMAN  TORGERSON asked  if the  bill still  called for  design,                                                              
construction, operating  and maintenance  to be vested  within the                                                              
powers of the corporation.                                                                                                      
                                                                                                                                
REPRESENTATIVE WHITAKER replied that is correct.                                                                                
                                                                                                                                
CHAIRMAN  TORGERSON  asked  Commissioner   Condon,  Department  of                                                              
Revenue, if he had any comments.                                                                                                
                                                                                                                                
COMMISSIONER  CONDON indicated  that  he would  answer  questions.                                                              
[There were none.]                                                                                                              
                                                                                                                                
CHAIRMAN TORGERSON  thanked Representative Whitaker  and held CSHB
302(FIN) in committee.                                                                                                          

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