Legislature(2001 - 2002)
05/06/2002 05:15 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.