Legislature(2007 - 2008)BARNES 124

07/22/2008 02:00 PM House COMMUNITY & REGIONAL AFFAIRS


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Audio Topic
02:02:32 PM Start
02:02:55 PM HB4002|| HB4003
03:57:11 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Time Change --
+= HB4002 RESOURCE REBATE PROGRAM FOR RESIDENTS TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
+= HB4003 APPROP: ENERGY RELIEF/REBATE/FUEL TAX TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
Presentation & overview of legislation
by the Dept of Revenue, Dept of Law
Alaska Energy Authority, & the
Dept of Health & Social Services
                    ALASKA STATE LEGISLATURE                                                                                  
    HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                   
                         July 22, 2008                                                                                          
                           2:02 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Anna Fairclough, Co-Chair                                                                                        
Representative Gabrielle LeDoux, Co-Chair                                                                                       
Representative Mark Neuman                                                                                                      
Representative Kurt Olson                                                                                                       
Representative Sharon Cissna                                                                                                    
Representative Woodie Salmon                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Nancy Dahlstrom                                                                                                  
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                              
Representative Les Gara                                                                                                         
Representative Andrea Doll                                                                                                      
Representative Kyle Johansen                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
HOUSE BILL NO. 4002                                                                                                             
"An  Act  establishing the  Alaska  resource  rebate program  and                                                               
relating to the program; and providing for an effective date."                                                                  
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
HOUSE BILL NO. 4003                                                                                                             
"An Act  making supplemental appropriations to  the Alaska Energy                                                               
Authority   for   power   cost   equalization;   making   special                                                               
appropriations  to   the  Department   of  Revenue  and   to  the                                                               
Department of Health and Social  Services for the Alaska resource                                                               
rebate program; making a special  appropriation to the Department                                                               
of Revenue  for the payment  of certain shared taxes  relating to                                                               
aviation fuel; and providing for an effective date."                                                                            
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                              
BILL: HB4002                                                                                                                  
SHORT TITLE: RESOURCE REBATE PROGRAM FOR RESIDENTS                                                                              
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
07/09/08       (H)       READ THE FIRST TIME - REFERRALS                                                                        
07/09/08       (H)       CRA, FIN                                                                                               
07/11/08       (H)       CRA AT 8:00 AM BARNES 124                                                                              
07/11/08       (H)       Heard & Held                                                                                           
07/11/08       (H)       MINUTE(CRA)                                                                                            
07/15/08       (H)       CRA AT 8:00 AM BARNES 124                                                                              
07/15/08       (H)       Heard & Held                                                                                           
07/15/08       (H)       MINUTE(CRA)                                                                                            
07/17/08       (H)       CRA AT 4:00 PM Anch LIO Conf Rm                                                                        
07/17/08       (H)       Heard & Held                                                                                           
07/17/08       (H)       MINUTE(CRA)                                                                                            
07/22/08       (H)       CRA AT 2:00 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB4003                                                                                                                  
SHORT TITLE: APPROP: ENERGY RELIEF/REBATE/FUEL TAX                                                                              
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
07/09/08       (H)       READ THE FIRST TIME - REFERRALS                                                                        
07/09/08       (H)       CRA, FIN                                                                                               
07/11/08       (H)       CRA AT 8:00 AM BARNES 124                                                                              
07/11/08       (H)       Heard & Held                                                                                           
07/11/08       (H)       MINUTE(CRA)                                                                                            
07/15/08       (H)       CRA AT 8:00 AM BARNES 124                                                                              
07/15/08       (H)       Heard & Held                                                                                           
07/15/08       (H)       MINUTE(CRA)                                                                                            
07/17/08       (H)       CRA AT 4:00 PM Anch LIO Conf Rm                                                                        
07/17/08       (H)       Heard & Held                                                                                           
07/17/08       (H)       MINUTE(CRA)                                                                                            
07/22/08       (H)       CRA AT 2:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
RANDY RUARO, Special Staff Assistant                                                                                            
Office of the Governor                                                                                                          
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the hearing on HB 4002 and                                                              
HB 4003.                                                                                                                        
                                                                                                                                
STEVEN HAAGENSON, Executive Director                                                                                            
Alaska Energy Authority (AEA); Statewide Energy Coordinator                                                                     
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Presented a PowerPoint report titled                                                                     
"Project Overview Alaska Energy Plan."                                                                                          
                                                                                                                                
REPRESENTATIVE BRYCE EDGMON                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during  the hearing on HB 4002 and                                                             
HB 4003.                                                                                                                        
                                                                                                                                
MIKE HARPER, Deputy Director                                                                                                    
Rural Energy                                                                                                                    
Alaska Energy Authority (AEA)                                                                                                   
Department  of   Commerce,  Community,  &   Economic  Development                                                               
(DCCED)                                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during  the hearing on HB 4002 and                                                             
HB 4003.                                                                                                                        
                                                                                                                                
JON SHERWOOD, Medical Assistance Administrator                                                                                  
Division of Public Assistance                                                                                                   
Department of Health & Social Services (DHSS)                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during  the hearing on HB 4002 and                                                             
HB 4003.                                                                                                                        
                                                                                                                                
STACIE KRALY, Chief Assistant Attorney General                                                                                  
Human Services Section                                                                                                          
Civil Division                                                                                                                  
Department of Law                                                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Answered a  question during the  hearing on                                                             
HB 4002 and HB 4003.                                                                                                            
                                                                                                                                
DENNIS WHEELER, Advisory Section Manager                                                                                        
Regulatory Commission of Alaska (RCA)                                                                                           
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions  during the hearing on HB
4002 and HB 4003.                                                                                                               
                                                                                                                                
JERRY BURNETT, Director                                                                                                         
Administrative Services Division                                                                                                
Department of Revenue (DOR)                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during  the hearing on HB 4002 and                                                             
HB 4003.                                                                                                                        
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CO-CHAIR ANNA FAIRCLOUGH called  the House Community and Regional                                                             
Affairs  Standing  Committee  meeting  to order  at  2:02:32  PM.                                                             
Representatives  Neuman,  Cissna,   Salmon,  Olson,  LeDoux,  and                                                               
Fairclough  were  present  at  the   call  to  order.    Also  in                                                               
attendance were Representatives Gara, Doll, and Johansen.                                                                       
                                                                                                                                
HB4002-RESOURCE REBATE PROGRAM FOR RESIDENTS                                                                                  
HB4003-APPROP: ENERGY RELIEF/REBATE/FUEL TAX                                                                                  
                                                                                                                                
2:02:55 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH  announced that  the committee would  be hear                                                               
the  following  two  bills:     HOUSE  BILL  NO.  4002,  "An  Act                                                               
establishing the  Alaska resource rebate program  and relating to                                                               
the program;  and providing  for an  effective date.";  and HOUSE                                                               
BILL NO. 4003, "An Act  making supplemental appropriations to the                                                               
Alaska  Energy  Authority  for power  cost  equalization;  making                                                               
special appropriations  to the Department  of Revenue and  to the                                                               
Department of Health and Social  Services for the Alaska resource                                                               
rebate program; making a special  appropriation to the Department                                                               
of Revenue  for the payment  of certain shared taxes  relating to                                                               
aviation fuel; and providing for an effective date."                                                                            
                                                                                                                                
2:03:54 PM                                                                                                                    
                                                                                                                                
RANDY  RUARO, Special  Staff Assistant,  Office of  the Governor,                                                               
said  that  personnel from  the  Department  of Health  &  Social                                                               
Services, the Department of Law,  and the Department of Commerce,                                                               
Community &  Economic Development would provide  clarification of                                                               
the bills.                                                                                                                      
                                                                                                                                
2:04:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH  stated that testimony would  be heard today;                                                               
however, the  bills and amendments  would be taken up  during the                                                               
meeting  of  July 23,  2008.    Proposed amendments  address  the                                                               
issues   of:     physical  addresses,   telephone  numbers,   the                                                               
collection of  debt owned  to the state,  and a  "super Permanent                                                               
Fund  [Dividend (PFD)]"  distribution  versus  a resource  rebate                                                               
program.  She  further announced that public  testimony will also                                                               
be  taken during  the  July  23rd meeting.    The  intent of  the                                                               
committee was to bring the  bills before the committee, hear from                                                               
the public, take amendments, and  move the bills out of committee                                                               
at  that point.   Co-Chair  Fairclough noted  that the  committee                                                               
would decide  whether the  focus of  this legislation  was energy                                                               
issues across the state or a resource rebate.                                                                                   
                                                                                                                                
2:07:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN informed  the  members that  he asked  the                                                               
director of  the Office of  Management & Budget (OMB)  [Office of                                                               
the   Governor],  for   the   administration's   plan  on   state                                                               
expenditures.  He  noted that many billions of  dollars have been                                                               
budgeted for transportation needs for  the [gas] pipeline and for                                                               
job training by  the Department of Labor  & Workforce Development                                                               
(DLWD).    In addition,  there  are  several other  multi-billion                                                               
dollar  projects that  have been  proposed.   His request  to the                                                               
director   was  for   a  "running   total"  on   these  projects.                                                               
Representative Neuman asked whether  the committee would hear the                                                               
response from OMB so that the  amount of money going out would be                                                               
known before the vote.                                                                                                          
                                                                                                                                
2:09:24 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FAIRCLOUGH  suggested  that  the  testimony  today  may                                                               
answer  some  of  these  questions; if  not,  the  committee  can                                                               
discuss a delay.  She invited the first presenter to speak.                                                                     
                                                                                                                                
2:10:13 PM                                                                                                                    
                                                                                                                                
STEVEN  HAAGENSON, Executive  Director,  Alaska Energy  Authority                                                               
(AEA);  Statewide  Energy  Coordinator, Department  of  Commerce,                                                               
Community & Economic Development  (DCCED), presented a PowerPoint                                                               
report titled "Project Overview Alaska Energy Plan."                                                                            
                                                                                                                                
2:10:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FAIRCLOUGH  asked  whether   Mr.  Haagenson  has  heard                                                               
previous  discussions  about energy  relief  for  Alaskans.   She                                                               
opined  that   this  debate  has  concentrated   the  committee's                                                               
attention  on   energy  related  issues  such   as  conservation,                                                               
preservation, and  the investment of resource  dollars.  However,                                                               
the bill[s]  [are] resource  rebate bill[s],  with considerations                                                               
of how  to measure the rebate  and "how quickly it  needs to go."                                                               
She  pointed   out  that  members  have   differing  opinions  on                                                               
eligibility  requirements  and  the   immediacy  of  the  state's                                                               
response.                                                                                                                       
                                                                                                                                
2:126:18 PM                                                                                                                   
                                                                                                                                
MR. HAAGENSON noted that he has  heard the comments, but was here                                                               
to speak  to the  one- to  ten-year energy  plan rather  than the                                                               
"immediate portion" of  the plan.  He presented  the first slide,                                                               
and asked  members of  the audience  to estimate  their household                                                               
energy use for electric, space  heating, and transportation.  The                                                               
goal of  the Alaska Energy Plan  is to reduce the  cost of energy                                                               
to  all Alaskans  and to  rapidly identify  and deploy  solutions                                                               
rather  than further  long-term study.   He  noted that  the cost                                                               
components  are not  prepared yet,  and  that the  plan would  be                                                               
completed by December 2008.   The [planned] result of the project                                                               
is  to identify  and deploy  energy sources  that are  vertically                                                               
integrated, economic,  long-term stable priced,  and sustainable.                                                               
Slide 4  illustrated the "Guiding  Principals [sic]" and  he said                                                               
that the  first guiding principle  recognizes the  massive amount                                                               
of money  that has been  put into the existing  infrastructure by                                                               
the  Denali  Commission for  generators  and  tank storage.    He                                                               
elaborated that  using existing infrastructure  could be  the use                                                               
of  [alternative] fuel;  for example,  a  different liquid  fuel,                                                               
perhaps from a different source,  provided for use in an existing                                                               
boiler.  He  pointed out that the costs of  energy projects would                                                               
be evaluated  on a delivered  basis and by looking  at low-profit                                                               
businesses such as a port authority,  a joint agency, a co-op, or                                                               
a Native corporation.   Other guiding principles  are to minimize                                                               
the  risk  of  technology  failure, to  engage  Alaskans  in  the                                                               
solutions,  and  to   seek  the  lowest  cost   energy  for  each                                                               
community.  Slide 5 illustrated the  source "of all the energy in                                                               
the world."                                                                                                                     
                                                                                                                                
2:16:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  asked whether the Alaska  Energy Authority                                                               
(AEA)  was  working  with groups  such  as  resource  development                                                               
councils and  Native corporations  to help research  programs and                                                               
gather information in different regions of the state.                                                                           
                                                                                                                                
2:17:21 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON indicated  yes, and added that  28 communities have                                                               
been  canvassed for  information on  their energy  challenges and                                                               
possible solutions.   Any group or individual "with  a passion to                                                               
solve the problem" will be involved.                                                                                            
                                                                                                                                
2:17:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN observed  that many  citizens are  located                                                               
near, but not  on, the power grid and  are generating electricity                                                               
with  diesel generators.   He  asked  whether the  state may  put                                                               
money in  the budget  for pioneer  extension lines  to individual                                                               
homeowners.                                                                                                                     
                                                                                                                                
2:19:18 PM                                                                                                                    
                                                                                                                                
MR.  HAAGENSON  said that  the  AEA  is  trying to  identify  the                                                               
highest  level  and cheapest  option,  without  allowing for  any                                                               
state subsidy.   These options include biomass,  wind, and solar.                                                               
Referring  to slide  5,  he explained  that  solar energy  drives                                                               
wind,  rivers,  clouds,  and  hydroelectricity,  in  addition  to                                                               
photosynthesis and carbon-based fuels.   Thus a lot of the energy                                                               
in the world  comes from the sun.  Also  illustrated were nuclear                                                               
options, crustal  thermal energy,  and gravitational energy.   He                                                               
described the  slide as "the palette  of colors you get  to paint                                                               
your  energy  picture  with."     He  then  provided  a  list  of                                                               
communities with  information on  their local  alternative energy                                                               
resources such  as geothermal, tidal, and  non-commercial sources                                                               
of gas.   Mr. Haagenson stated  that the AEA is  working with the                                                               
Department of  Natural Resources (DNR) geological  surveys to map                                                               
resources  and  develop a  matrix  of  communities and  resources                                                               
available to  them.   He presented slide  7 titled  "Identify the                                                               
current fuel usage and costs."   Anecdotal data was used to first                                                               
determine the fuel  needs in different regions of  the state; for                                                               
example, the  estimate for rural  Alaska was 750 gallons  of fuel                                                               
per  year.   Another  estimate based  on the  use  of Power  Cost                                                               
Equalization  (PCE)  fuel and  multiplied  by  a factor  of  3:4,                                                               
equaled the number  of gallons per person.  He  estimated the use                                                               
to be a  total of between 39-54 million gallons  per year.  Slide                                                               
8  illustrated  the  energy  flow   into  Selawik:  the  cost  of                                                               
petroleum   and  wind   energy  totaled   $9,000  per   year  and                                                               
represented as  average of 33  percent of household  income being                                                               
spent  for  fuel  and  electricity.    Furthermore,  this  amount                                                               
represents $2,400,000 leaving the  community of Selawik annually.                                                               
He stressed that  AEA wants to learn what local  resources can be                                                               
provided to keep  money and jobs local, and to  support the local                                                               
economy.                                                                                                                        
                                                                                                                                
2:24:42 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH  observed that this  is the data  that brings                                                               
up   questions  about   the  administration's   proposal.     She                                                               
questioned  the  direction of  a  flat  distribution of  resource                                                               
rebate to everyone versus targeted  household energy [relief] for                                                               
communities similar to Selawik.                                                                                                 
                                                                                                                                
2:25:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SALMON  surmised that the  Yukon River could  be a                                                               
source of energy for its surrounding area.                                                                                      
                                                                                                                                
2:26:29 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON agreed  that the Yukon River has  a large potential                                                               
for  hydropower;  however,  the  communities  must  consider  the                                                               
potential affect on salmon.                                                                                                     
                                                                                                                                
2:26:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SALMON observed  that there  are many  hydropower                                                               
systems that do not use turbines and would not affect fish.                                                                     
                                                                                                                                
2:27:45 PM                                                                                                                    
                                                                                                                                
MR.  HAAGENSON agreed  and  added that  the  technology group  is                                                               
looking at any way to make energy.                                                                                              
                                                                                                                                
2:27:56 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX  referred to  the  governor's  proposal to  give                                                               
funds to  utility companies.   She asked  for the status  of that                                                               
proposal.                                                                                                                       
                                                                                                                                
2:28:38 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON responded that the proposal is not moving forward.                                                                
                                                                                                                                
2:28:44 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX asked why.                                                                                                      
                                                                                                                                
2:28:47 PM                                                                                                                    
                                                                                                                                
MR.  HAAGENSON  answered  that problems  with  the  proposal  are                                                               
connected to taxes and whether the  funds are taxable income.  He                                                               
opined that the proposal became a quagmire.                                                                                     
                                                                                                                                
2:29:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  questioned whether  a rebate  from the  state to                                                               
regulated  utilities that  results in  lower rates,  could become                                                               
taxable income to the ratepayers.                                                                                               
                                                                                                                                
2:30:05 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON  said that advice  from council indicated yes.   He                                                               
then  presented slide  9 that  illustrated "Regional  Energy Cost                                                               
Comparison."   He  acknowledged that  this "best  available data"                                                               
can  not be  verified.   On  this slide  the cost  of energy  was                                                               
compared between the regions  of Anchorage, Fairbanks, Southeast,                                                               
and  Rural.   He  opined  that  the  numbers  are accurate.    In                                                               
Anchorage, the total cost of energy  is about $5,900 per year; in                                                               
Fairbanks  the cost  is about  $9,400  per year;  in Southeast  -                                                               
excluding villages  such as Angoon and  Kake - the cost  is about                                                               
$4,900 per  year; and in  Rural areas  the cost is  about $10,000                                                               
per year.   One component of  this comparison is that  heating in                                                               
Anchorage costs about  $1,000 per year but costs up  to $7,700 in                                                               
Rural  Alaska.    The  costliest  areas  for  transportation  are                                                               
Anchorage and Fairbanks  due to their access to  the road system.                                                               
Mr.  Haagenson said  that the  hardest analysis  was the  average                                                               
cost per household; in fact,  hub communities such as Bethel have                                                               
mixed income  levels that skew  averages.  He presented  slide 10                                                               
titled  "Estimated Household  Costs  for Home  Energy  Use."   He                                                               
pointed  out  that  20  percent of  households  with  the  lowest                                                               
incomes in  remote rural  communities spend  47 percent  of their                                                               
income on energy use, not including transportation.                                                                             
                                                                                                                                
2:34:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN asked  how Power  Cost Equalization  (PCE)                                                               
affected electrical costs.                                                                                                      
                                                                                                                                
2:34:32 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON  clarified that the  estimate on slide 9  for Rural                                                               
Alaska is after  PCE; the PCE rate  is 31 1/2 cents.   In further                                                               
response, he  restated that the estimate  includes the adjustment                                                               
for PCE.                                                                                                                        
                                                                                                                                
2:35:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN referred  to the  median shares  of income                                                               
spent for  home energy  use and observed  that the  numbers would                                                               
look different between rural and  urban [regions] if the property                                                               
taxes for organized regions were factored in.                                                                                   
                                                                                                                                
2:36:32 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON affirmed that only energy costs were incorporated.                                                                
                                                                                                                                
2:36:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SALMON  asked why  every village  in a  rural area                                                               
does not get PCE.                                                                                                               
                                                                                                                                
2:36:57 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON opined that most  remote communities have access to                                                               
PCE or receive it, except  for Kodiak, utilities within the four-                                                               
dam pool and Railbelt, Glennallen, and Copper Valley utilities.                                                                 
                                                                                                                                
2:37:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FAIRCLOUGH recalled  that there  are some  criteria [to                                                               
qualify] for PCE.                                                                                                               
                                                                                                                                
2:37:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SALMON remarked:                                                                                                 
                                                                                                                                
        Not everybody in the village, just because they                                                                         
     receive PCE for the program ... receive PCE.  That's a                                                                     
     known fact.                                                                                                                
                                                                                                                                
2:38:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   FAIRCLOUGH   agreed    that   regarding   Power   Cost                                                               
Equalization, all is not equal in rural communities.                                                                            
                                                                                                                                
2:38:24 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX  asked  for  clarification   of  slide  10  that                                                               
indicated  the estimated  household  costs for  home energy  use.                                                               
She  stated  that the  median  cost  for  all households  of  all                                                               
incomes is 4.7 percent.                                                                                                         
                                                                                                                                
2:38:52 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON said yes, that amount is for the year 2008.                                                                       
                                                                                                                                
2:38:57 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX further  noted that  the percentages  around the                                                               
state  range from  8.7 to  47, and  then from  2.0 to  6.1.   She                                                               
questioned whether these  percentages would add up  to [a median]                                                               
of 4.7 percent.                                                                                                                 
                                                                                                                                
2:39:45 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON  explained that the  study takes 20 percent  at the                                                               
poverty level,  where the  cost of  energy would  be a  very high                                                               
percentage of  total income, and  [compares it to] the  middle 60                                                               
percent that  is pretty close  to average, depending on  how many                                                               
people are in  those sectors.  He opined that  ISER [Institute of                                                               
Economic Research at the University  of Alaska, Anchorage (ISER)]                                                               
did  a good  job on  the study,  although he  has not  personally                                                               
verified the math.                                                                                                              
                                                                                                                                
2:40:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH asked  whether the ISER study used  PCE as an                                                               
actual component or if it was "added back in for energy costs."                                                                 
                                                                                                                                
2:40:50 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON  expressed his  belief that  it was  actual dollars                                                               
paid, thus would include PCE.                                                                                                   
                                                                                                                                
2:41:01 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  surmised that  the ISER  study does  not include                                                               
transportation.                                                                                                                 
                                                                                                                                
2:41:19 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON concurred.                                                                                                        
                                                                                                                                
2:41:23 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  asked whether there  is an ISER study  that does                                                               
include transportation.                                                                                                         
                                                                                                                                
2:41:41 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON  advised that the AEA  has hired ISER to  study the                                                               
amount  of fuel  used in  each  community; however,  there is  no                                                               
model to estimate  [the cost of] transportation.   The study will                                                               
include  home  heating  and electricity  but  the  transportation                                                               
number is unknown.                                                                                                              
                                                                                                                                
2:41:57 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   LEDOUX   asked   how    the   AEA   staff   determined                                                               
transportation numbers for slide 9.                                                                                             
                                                                                                                                
2:42:11 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON explained  that Fairbanks did a  study with numbers                                                               
from an  [oil and gas]  industry market study that  included data                                                               
on  all of  the transportation  fuel and  heating oil.   He  then                                                               
extrapolated that data for the comparison.                                                                                      
                                                                                                                                
2:42:43 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  further asked whether  ISER could use  that data                                                               
and "come up with at least a rough calculation."                                                                                
                                                                                                                                
2:42:57 PM                                                                                                                    
                                                                                                                                
MR.  HAAGENSON said,  "I don't  think our  studies are  that much                                                               
different, to be honest."                                                                                                       
                                                                                                                                
2:43:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH remarked:                                                                                                   
                                                                                                                                
     Legislators  are  concerned with  delivering  something                                                                    
     that's fair  and equitable  across the  state.   And as                                                                    
     Representative  Salmon points  out all  things are  not                                                                    
     equal  in  Rural Alaska  when  we  look at  Power  Cost                                                                    
     Equalization,  and  what Representative  Neuman  points                                                                    
     out, through  property taxes ....  And so  we're trying                                                                    
     to  ...  appropriately  meet  Alaskan's  needs  without                                                                    
     getting into the mire of  all the arguments that people                                                                    
     keep saying.  ... We  want to  be united  in addressing                                                                    
     energy needs through Alaska.                                                                                               
                                                                                                                                
2:44:09 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON  agreed and added  that the governor's  energy team                                                               
discussed the  same issue; it is  hard to find data  and the goal                                                               
is to  be fair and  just.  He  opined that  the AEA must  rely on                                                               
incomplete data.                                                                                                                
                                                                                                                                
2:44:46 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   FAIRCLOUGH  informed   the   members   that  she   and                                                               
Representative Edgmon looked at a  legislative task force on this                                                               
issue and "were  successful in rolling it into a  passed piece of                                                               
legislation last year."   She observed that  from the legislative                                                               
perspective  versus  the   administrative  perspective  [problems                                                               
arise  regarding the  veracity  of] the  criteria  and start  the                                                               
urban/rural divide debate.  Legislative  "buy-in" on the criteria                                                               
and  the  process  would raise  legislator's  confidence  in  the                                                               
numbers.                                                                                                                        
                                                                                                                                
2:45:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE EDGMON added  that the task force  would also look                                                               
at  the bigger  picture;   for  example,  reviewing the  existing                                                               
institutions in concert  with the [present task of the]  AEA.  He                                                               
said, "All  hands on deck  are necessary for this  energy problem                                                               
in front of us."                                                                                                                
                                                                                                                                
2:46:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN  asked  Mr.  Haagenson  where  low  income                                                               
energy assistance enters into the  household energy costs for the                                                               
lowest income households in rural communities.                                                                                  
                                                                                                                                
MR. HAAGENSON deferred the question to Mr. Harper.                                                                              
                                                                                                                                
2:46:58 PM                                                                                                                    
                                                                                                                                
MIKE  HARPER,  Deputy  Director,   Rural  Energy,  Alaska  Energy                                                               
Authority (AEA),  Department of  Commerce, Community,  & Economic                                                               
Development  (DCCED), advised  that  the Low  Income Home  Energy                                                               
Assistance Program  (LIHEAP) is a  program run by  the Department                                                               
of Health  & Social  Services (DHSS) and  provides aid  for urban                                                               
and village Alaska.   Previously, the program has  been funded at                                                               
about nine  million dollars for  the state, although  funding was                                                               
increased  this past  session.    He noted  that  the program  is                                                               
administered   through  state   agencies  and   Native  nonprofit                                                               
organizations.                                                                                                                  
                                                                                                                                
2:48:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  expressed his  intent to  look at  all the                                                               
"pots and  pools of money"  and how  [they] affect energy  in the                                                               
state.                                                                                                                          
                                                                                                                                
2:48:36 PM                                                                                                                    
                                                                                                                                
MR. HARPER clarified  that $200 million was funded  to the Alaska                                                               
Housing   Finance  Corporation   (AHFC)   for   the  low   income                                                               
weatherization  improvements  program   and  an  additional  $100                                                               
million was funded for rebates without income limits.                                                                           
                                                                                                                                
2:49:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH remarked:                                                                                                   
                                                                                                                                
     What the committee  is trying to get  their arms around                                                                    
     is all the toggles  that affect different components of                                                                    
     formulas when  we go  to address  energy needs  in each                                                                    
     community  across the  state.   And so,  Representative                                                                    
     Neuman  is seeking  to understand  where  the state  is                                                                    
     currently making  investments and  how those  are made.                                                                    
     And  then trying  to  create some  kind  of formula  or                                                                    
     district  cost factors  so  that  we can  appropriately                                                                    
     meet those needs.                                                                                                          
                                                                                                                                
2:49:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   CISSNA   appreciated    the   presentation   and                                                               
reiterated that  the goal is to  figure out all of  the different                                                               
pieces.  She expressed her  interest in determining what would be                                                               
the short  fix to  help people  next year, and  then to  begin to                                                               
look for  a comprehensive  answer to energy  that does  not waste                                                               
money.  She asked Mr.  Haagenson to design [recommendations] that                                                               
reflect this complexity.                                                                                                        
                                                                                                                                
2:51:05 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FAIRCLOUGH  welcomed  Representatives Gara,  Doll,  and                                                               
Johansen.                                                                                                                       
                                                                                                                                
2:51:50 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON  presented slide 11 titled  "Potential Technologies                                                               
and Fuels."    He  observed that  everywhere in Alaska  there are                                                               
resources to be used; however, long  distances and low usage  can                                                               
make  almost every  project uneconomic  and delivery  costs limit                                                               
options.                                                                                                                        
                                                                                                                                
2:52:46 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FAIRCLOUGH asked  for  the  meaning of  Fischer-Tropsch                                                               
technology.                                                                                                                     
                                                                                                                                
2:52:53 PM                                                                                                                    
                                                                                                                                
MR.  HAAGENSON  explained  that Fischer-Tropsch  methodology  was                                                               
developed  during  World  War  II  and  is  energy  derived  from                                                               
liquefied  coal.    Any  biomass  or  carbon-based  fuel  can  be                                                               
gasified to  make carbon  monoxide and  hydrogen which  is called                                                               
[synthetic gas ("syngas")].  The  syngas is then processed by the                                                               
Fischer-Tropsch  method  to  make  paraffin that  is  refined  to                                                               
various liquid fuels.                                                                                                           
                                                                                                                                
2:53:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX asked whether the fuel was like regular wax.                                                                    
                                                                                                                                
2:53:49 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON said  that it looks like wax but  is a carbon-based                                                               
material.   He  continued with  his presentation  and noted  that                                                               
technology  teams and  members of  the public  will evaluate  the                                                               
capital and delivery  costs of various fuels  for each community.                                                               
He  presented slide  14  titled  "Financial Model-Template"  that                                                               
illustrated data  from the  Fairbanks Energy Plan.   In  order to                                                               
transfer this data to the entire  state, he created slide 15 that                                                               
illustrated    the   choices    for   heat,    electricity,   and                                                               
transportation   energy:     propane,  [Fischer-Tropsch   ("FT")]                                                               
diesel, biomass, geothermal,  hydro, and diesel.   The end result                                                               
is  a  tool   that  shows  each  community   what  resources  are                                                               
available, and  at what delivery  cost, on a million  Btu (mmBtu)                                                               
basis.  Subsequently,  local feedback will direct  the search for                                                               
the cheapest  and best option  for the community.   Mr. Haagenson                                                               
further explained  that the  AEA would  identify new  or existing                                                               
local  companies that  can provide  energy  and that  have a  low                                                               
profit model.   The AEA would  also work with public  and private                                                               
partnerships   to  leverage   state  money,   with  power   sales                                                               
agreements with electric utilities,  and with state, private, and                                                               
public financing  institutions.   He concluded with  the schedule                                                               
for the Alaska Energy Plan and  listed several of its sources for                                                               
data.   Currently, the  AEA is working  on the  technology matrix                                                               
and the evaluation tool.                                                                                                        
                                                                                                                                
2:58:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SALMON asked whether  Mr. Haagenson's reference to                                                               
Native corporations was to nonprofit or for-profit corporations.                                                                
                                                                                                                                
2:58:33 PM                                                                                                                    
                                                                                                                                
MR.  HAAGENSON  answered  that he  was  referring  to  for-profit                                                               
Native  corporations  such  as Cook  Inlet  Region,  Incorporated                                                               
(CIRI), and its relationship with the Fire Island wind farm.                                                                    
                                                                                                                                
2:58:56 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FAIRCLOUGH   recalled  a  recent  press   release  that                                                               
described  Alaska as  rich in  resources,  especially this  year.                                                               
She opined that the  administration appropriately determined that                                                               
the greater  number of dollars coming  in to the state  should be                                                               
invested  in [helping  citizens pay  for] the  increased cost  of                                                               
energy needs  across the  state.  She  continued to  explain that                                                               
the committee is  trying to determine whether to act  now or wait                                                               
for the AEA's  energy plan.  Co-Chair Fairclough  asked, "Is this                                                               
short  term energy  relief plan,  that  has now  'hybrid' into  a                                                               
resource rebate  plan, the  right way  to go  in using  a billion                                                               
dollars to help Alaskans?"                                                                                                      
                                                                                                                                
3:00:41 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON called the plan  he was presenting the "short term,                                                               
long term plan."   For example, the plan is  not for this winter;                                                               
in   fact,  the   recommendation   for   [the  installation   of]                                                               
hydroelectric [power]  is ten years  away.  He opined  that there                                                               
is a  need to look  at faster options that  can be deployed  in a                                                               
one-year timeframe.    He  said that  he feels that  Alaskans are                                                               
"starving to  death" and  they should  be given  a fish  now, and                                                               
also taught how to fish later.  He remarked:                                                                                    
                                                                                                                                
     If you say,   "I think I  have a solution for  you in a                                                                    
     year, or  two years, or  possibly three years,  are you                                                                    
     going to  be O.K.?"  People will  still stay  in Alaska                                                                    
     and survive that.  ... If you say ...  "Who knows," ...                                                                    
     they are  now hopeless,  and that's when  they're going                                                                    
     to start  making some decisions  to move out  of Alaska                                                                    
     and leave.                                                                                                                 
                                                                                                                                
MR. HAAGENSON opined  that the legislature can use  its wisdom to                                                               
determine a method  to help Alaskans in the short  term, and then                                                               
"to teach you how to fish."                                                                                                     
                                                                                                                                
3:02:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CISSNA observed  that  Alaskans  face change  and                                                               
difficulties.    She  was  troubled  by  the  obvious  growth  of                                                               
problems in  rural areas of the  state and opined that  those who                                                               
survived the depression  of the '80s are poorer and  need help to                                                               
face additional costs in the  health and housing sector, together                                                               
with  the energy  crisis.   Representative  Cissna expressed  her                                                               
concern  that programs  should  not be  duplicated;  in fact,  an                                                               
effort should be made to put  together a group of stakeholders to                                                               
represent regions.  She suggested  other factors that affect each                                                               
community such  as transportation and municipal  financing.  "I'd                                                               
love to know  what kind of effort there is  to really making sure                                                               
that we're  doing this in a  really well thought out  way so that                                                               
we don't waste, but we act quickly,"  she said.                                                                                 
                                                                                                                                
3:06:56 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON  related that  Alaskans in  the Nenana  region told                                                               
him that they  could not survive with the present  cost of diesel                                                               
fuel,  yet they  did not  have a  plan to  change to  a different                                                               
fuel.   He compared energy costs  to the five steps  of grieving:                                                               
Rural Alaska  is accepting;   Fairbanks is  mad; Anchorage  is in                                                               
denial; Southeast  has to  change.    He recalled  that Alaskans,                                                               
before the pipeline, were independent and self-reliant.                                                                         
                                                                                                                                
3:09:09 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH related her  experience that Anchorage is not                                                               
in denial.                                                                                                                      
                                                                                                                                
3:09:34 PM                                                                                                                    
                                                                                                                                
MR.  HAAGENSON  gave a  personal  example  and encouraged  fellow                                                               
citizens to take action.                                                                                                        
                                                                                                                                
3:10:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX expressed  her understanding  that a  part of  a                                                               
long term plan is conservation.                                                                                                 
                                                                                                                                
3:11:00 PM                                                                                                                    
                                                                                                                                
MR.  HAAGENSON opined  that  conservation is  a  short term  plan                                                               
[because it] can start tomorrow.                                                                                                
                                                                                                                                
3:11:08 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX, looking  at the  cost of  energy in  Southeast,                                                               
stated that there  would be no reason to conserve  in that region                                                               
if families are given an energy rebate of $4,800.                                                                               
                                                                                                                                
3:12:11 PM                                                                                                                    
                                                                                                                                
MR.  HAAGENSON  acknowledged that  some  people  will waste  this                                                               
money and some will invest wisely.                                                                                              
                                                                                                                                
3:12:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  OLSON recalled  that the  energy solutions  began                                                               
with  the offer  of $100  per month  on a  per capita  basis; the                                                               
second offer  was the  needs-based rebate  to utilities;  and the                                                               
third  was the  long term  plan.   He opined  that the  situation                                                               
would "not have a happy ending."                                                                                                
                                                                                                                                
3:13:19 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FAIRCLOUGH  pointed  out  that  the  committee  is  not                                                               
getting  its   questions  answered.     She   questioned  whether                                                               
investing  $1,200  right  now and  sharing  Alaska's  wealth,  is                                                               
addressing  energy  [solutions].     She  appreciated  the  AEA's                                                               
assessment of communities' energy needs.                                                                                        
                                                                                                                                
3:14:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CISSNA   asked  Mr.  Haagenson  to   explain  the                                                               
financial  difference  between  money going  to  individuals,  or                                                               
going to  communities and energy  associations.  She  opined that                                                               
if money is given to individuals,   communities will not have the                                                               
funding  and  bonding they  need  to  change  the way  energy  is                                                               
produced.                                                                                                                       
                                                                                                                                
3:15:43 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON explained  that the approach is to  build a private                                                               
and  public partnership  that makes  sense on  a business  level,                                                               
without any  subsidy at all.   His  goal is to  evaluate projects                                                               
without  state help,  and  then  use public  money  to make  them                                                               
better.   In  fact, an  energy  project should  be a  straight-up                                                               
business deal,  going to  public bonding  and marketing  with its                                                               
benefits.  He  said, "This is really about  Alaskans ... standing                                                               
up  on their  own two  feet, not  going to  the legislature  with                                                               
their hand  out and saying,  'give me  money to do  something ...                                                               
for myself.'"                                                                                                                   
                                                                                                                                
3:16:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CISSNA encouraged  the  committee  to meet,  even                                                               
after  the bills  move from  committee,  to develop  a long  term                                                               
strategy.                                                                                                                       
                                                                                                                                
3:17:26 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FAIRCLOUGH  said that  a  work  session can  be  called                                                               
providing  enough  members are  in  Juneau  for  a quorum.    She                                                               
offered  to  discuss a  possible  time  schedule;   however,  she                                                               
pointed out that the public expects  the bills to move during the                                                               
meeting on July 23, 2008.                                                                                                       
                                                                                                                                
3:17:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CISSNA stated  that this  subject is  key to  the                                                               
survival  of  people  in  the  state;  in  fact,  [adherence  to]                                                               
"timelines are  what sometimes destroy  projects that  could have                                                               
made it."                                                                                                                       
                                                                                                                                
3:18:24 PM                                                                                                                    
                                                                                                                                
MR. HAAGENSON reminded  members that HB 152 created  a task force                                                               
to address the long term future of the energy plan.                                                                             
                                                                                                                                
3:18:38 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FAIRCLOUGH  noted  that   HB  152  task  force  members                                                               
appointed from the House  include Representatives Edgmon, Thomas,                                                               
and herself.   She then invited testimony from  the Department of                                                               
Health  & Social  Services on  the  hold harmless  clause of  the                                                               
bill.                                                                                                                           
                                                                                                                                
3:20:23 PM                                                                                                                    
                                                                                                                                
JON  SHERWOOD,  Medical  Assistance  Administrator,  Division  of                                                               
Public  Assistance,  Department  of  Health  &  Social  Services,                                                               
reviewed the hold  harmless provision in HB 4002.   He noted that                                                               
the bill allows for a  resource rebate one-time payment of $1,200                                                               
and,   in  some   circumstances,  the   payment  will   count  in                                                               
determining  a  household's  eligibility to  qualify  for  public                                                               
assistance  benefits.    He   advised  members  that  legislation                                                               
requires that  if the  department is required  by federal  law to                                                               
count a benefit, the department must  make up the loss in federal                                                               
benefits  through   a  hold  harmless  program.     Mr.  Sherwood                                                               
estimated  the  cost  of the  hold  harmless  program,  including                                                               
administration  costs,  to be  $10.7  million.   Primarily,  this                                                               
amount is  needed to make  up lost  benefits to food  stamps, the                                                               
Supplemental  Security  Income  (SSI)  program,    Medicaid,  and                                                               
veteran's benefits to  the Adult Public Assistance  program.  The                                                               
department   anticipated  that most  people receiving  assistance                                                               
benefits  will spend  the rebate  relatively quickly,  as happens                                                               
with the  Permanent Fund Dividend  (PFD) program.   Regarding the                                                               
timing  and  the  adequacy  of  the  hold  harmless  benefit,  he                                                               
explained that the  public assistance benefit is  limited to four                                                               
months.   Furthermore,  the four  months refers  to the  benefits                                                               
received, rather than the processing  time, and benefits would be                                                               
given for four  months regardless of whether  the rebate affected                                                               
the  beneficiary's benefits  immediately, or  a couple  of months                                                               
later.    He  advised  that different  assistance  programs  have                                                               
different  rules regarding  the treatment  of one-time  payments;                                                               
thus  sometimes there  is  an immediate  impact  on benefits  and                                                               
sometimes  there  is a  delayed  impact.   Needs-based  veterans'                                                               
programs  are not  administrated  by the  DHSS  and although  the                                                               
department  would   make  up  the  benefits,   the  benefits  are                                                               
calculated  by the  U. S.  Department of  Veterans Affairs  (VA).                                                               
The VA  would prorate  the money received  in this  calendar year                                                               
and make a  prorated adjustment to benefits  across the following                                                               
12 months.   For that reason, HB 4002 does  not have a four-month                                                               
limit to  the hold harmless clause  for veterans and the  loss to                                                               
veterans would  be made up by  a lump sum payment  from the DHSS.                                                               
However,  Mr.  Sherwood  further  explained that  for  the  pubic                                                               
assistance  programs   there  is   a  four-month  limit   and  if                                                               
recipients  retain  the   payment  they  would  see   a  loss  in                                                               
assistance benefits.                                                                                                            
                                                                                                                                
3:25:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CISSNA expressed a  constituent's worry that there                                                               
are other groups  that receive aid that may not  be identified by                                                               
the state.                                                                                                                      
                                                                                                                                
MR. SHERWOOD  assured the  members that  DHSS looked  at programs                                                               
and  drew on  its experience  with the  PFD.   He noted  that the                                                               
Pioneer's Home and the Alaska  Housing Finance Corporation (AHFC)                                                               
would not count this one-time payment as income.                                                                                
                                                                                                                                
3:27:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN referred to [HB  4002 Fiscal Note] Number 2                                                               
and read:                                                                                                                       
                                                                                                                                
      Persons who apply for public assistance in the same                                                                       
      month they receive the resource rebate or who do not                                                                      
     spend the money right away, could be affected.                                                                             
                                                                                                                                
REPRESENTATIVE  NEUMAN opined  that if  all of  the beneficiaries                                                               
spent the money  right away, the state would  save $10.7 million.                                                               
He further read:                                                                                                                
                                                                                                                                
     The department  estimates that 7,000 households,  or 30                                                                    
     percent  of  the  nearly  24,000  households  currently                                                                    
     eligible  for the  food stamp  program, will  need hold                                                                    
      harmless benefits to replace that for one month with                                                                      
     an average allotment of $400.                                                                                              
                                                                                                                                
REPRESENTATIVE NEUMAN observed that  there are 11,500 individuals                                                               
who  receive [Supplemental  Security Income]  and who  would also                                                               
receive  hold harmless  benefits.   He  assumed  that this  [time                                                               
restriction]  encourages   people  to   spend  their   rebate  on                                                               
something,  whether   it  is  energy   or  not,  and   asked  for                                                               
clarification.                                                                                                                  
                                                                                                                                
3:29:03 PM                                                                                                                    
                                                                                                                                
MR. SHERWOOD advised that each  public assistance program works a                                                               
little differently.   Under the  rules of the food  stamp program                                                               
the  payment  would  not  count as  income  received  unless  the                                                               
recipient  retains  it. However,  because  of  the hold  harmless                                                               
benefit  there  is no  incentive  for  the  client to  spend  the                                                               
payment  right away  if they  need to  retain the  payment for  a                                                               
short period  of time.    For the SSI program,  the payment would                                                               
be counted as  income for one month and if  retained, as an asset                                                               
for an  additional month.   He  agreed that  if people  spend the                                                               
rebate quickly, it would lower  the state's overall hold harmless                                                               
cost.                                                                                                                           
                                                                                                                                
3:31:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   NEUMAN  observed   that  recipients   should  be                                                               
encouraged to spend the money right away.                                                                                       
                                                                                                                                
3:31:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FAIRCLOUGH   pointed  out   that  there  could   be  an                                                               
additional appropriation needed for  the resource pay-out in 2010                                                               
depending  on  the  [yet]  unknown  cost  of  the  hold  harmless                                                               
provisions.                                                                                                                     
                                                                                                                                
3:31:59 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX  questioned  if   people  have  to  spend  their                                                               
resource  rebate  within four  months,  what  will they  use  for                                                               
energy costs for the rest of the year.                                                                                          
                                                                                                                                
3:32:24 PM                                                                                                                    
                                                                                                                                
MR.  SHERWOOD suggested  that beneficiaries  can  prepay or  pre-                                                               
purchase  energy costs,  rent, or  other things  that would  help                                                               
reduce their future costs.                                                                                                      
                                                                                                                                
3:32:58 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  asked whether prepayments would  count as assets                                                               
and thereby, affect benefits.                                                                                                   
                                                                                                                                
3:33:17 PM                                                                                                                    
                                                                                                                                
MR.  SHERWOOD  expressed  his understanding  that  pre-purchasing                                                               
rent and energy would not  affect the income determination of the                                                               
programs administered by the state or by the VA.                                                                                
                                                                                                                                
3:34:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CISSNA observed that there  is a complexity to the                                                               
aid received  by beneficiaries.   She asked  whether there  was a                                                               
plan to ensure  that recipients understand their  choices and the                                                               
subsequent consequences.                                                                                                        
                                                                                                                                
3:34:44 PM                                                                                                                    
                                                                                                                                
MR.  SHERWOOD  informed  the  members   that  the  DHSS  provides                                                               
information  on the  PFD and  its hold  harmless provisions.   He                                                               
envisioned that the  department would do the same  to educate the                                                               
recipients on the  rebate program and its  effects.  Furthermore,                                                               
additional staff time to answer  questions and advise clients was                                                               
factored into the administration costs.                                                                                         
                                                                                                                                
3:35:31 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  requested an opinion  from the  Attorney General                                                               
on the prepayment of rent and fuel.                                                                                             
                                                                                                                                
3:35:58 PM                                                                                                                    
                                                                                                                                
STACIE KRALY,  Chief Assistant  Attorney General,  Human Services                                                               
Section, Civil  Division, Department  of Law, concurred  that the                                                               
prepayment of  rent and fuel  is not an  asset.  She  stated that                                                               
she would prepare a written opinion.                                                                                            
                                                                                                                                
3:36:57 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   FAIRCLOUGH   recalled   an  earlier   question   about                                                               
contributions   to  utilities   and  asked   for  comments   from                                                               
representatives of the Regulatory Commission of Alaska (RCA).                                                                   
                                                                                                                                
3:37:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  related that  she had  a question  about whether                                                               
contributions  from  the  state   to  power  utilities  would  be                                                               
considered taxable income to the utilities' customers.                                                                          
                                                                                                                                
3:38:10 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH remarked:                                                                                                   
                                                                                                                                
     My   recollection  is   that   we   had  talked   about                                                                    
     contributing to  energy companies throughout  the state                                                                    
     and one of the arguments  that was rumored against that                                                                    
     was that the RCA would  have to go back and recalculate                                                                    
     tariff charges, if  we were to somehow  lower the rate.                                                                    
     And then  the second  curiousness about it  was whether                                                                    
     we would actually see a  reduction in consumer rates if                                                                    
     we  were to  allocate  dollars to  utilities to  reduce                                                                    
     individual payer's costs.                                                                                                  
                                                                                                                                
3:39:14 PM                                                                                                                    
                                                                                                                                
DENNIS WHEELER,  Advisory Section Manager,  Regulatory Commission                                                               
of  Alaska (RCA),  Department of  Commerce, Community  & Economic                                                               
Development (DCCED), regarding the effect  on the tariff that the                                                               
utilities have, informed  the members that there  would have been                                                               
some sort of  trigger that would have required changes  to all of                                                               
the tariffs on  file, and the approval  processes associated with                                                               
that, if  the energy rate were  changed.  He opined  that the RCA                                                               
did   not  work   to  resolve   the  tax   implications  of   the                                                               
aforementioned  question.   With respect  to rate  making if  the                                                               
utilities  were given  assistance, a  formal request  for opinion                                                               
was not asked of the RCA to  resolve that.  He opined that "there                                                               
would have  been a significant  amount of work generated  here at                                                               
the RCA to deal with the implications of such a proposal."                                                                      
                                                                                                                                
3:40:38 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH  invited representatives from  the Department                                                               
of  Revenue (DOR)  to discuss  HB  4002 and  to answer  questions                                                               
about HB 4003.                                                                                                                  
                                                                                                                                
3:41:20 PM                                                                                                                    
                                                                                                                                
JERRY  BURNETT,   Director,  Administrative   Services  Division,                                                               
Department   of  Revenue   (DOR),  informed   members  that   the                                                               
department has prepared amendment [25G-4] that read:                                                                            
                                                                                                                                
     Page 2, line 29, after "section":                                                                                          
          Insert "; if a physical address or telephone                                                                          
     number is not available,  the individual may substitute                                                                    
     a mailing address"                                                                                                         
                                                                                                                                
     Page 3, line 1 - 5:                                                                                                        
          Delete all material and insert:                                                                                       
                         "(1) was present in the state from                                                                     
     April  1, 2008,  through October  1, 2008,  and on  the                                                                    
     date  the  individual  applies for  a  resource  rebate                                                                    
     under  the  program, and  intends  to   remain  in  the                                                                    
     state; a temporary absence from  the state of less than                                                                    
     30  days  does  not  disqualify  a  person  under  this                                                                    
     paragraph; or                                                                                                              
                         (2) is serving on active duty as a                                                                     
     member of  the armed  forces of  the United  States, is                                                                    
     eligible  to receive  hostile fire  or imminent  danger                                                                    
     pay,  and  except for  the  active  duty service  would                                                                    
     otherwise qualify under (1) of this subsection."                                                                           
                                                                                                                                
     Page 3, line 8, following "address":                                                                                       
          Insert ", if a physical residence address is                                                                          
     available"                                                                                                                 
                                                                                                                                
     Page 3, line 18:                                                                                                           
          Delete "."                                                                                                            
          Insert ";"                                                                                                            
                                                                                                                                
     Page 3, following line 18:                                                                                                 
          Insert "(8) other documents acceptable to the                                                                         
     department."                                                                                                               
                                                                                                                                
     Page 3, line 28:                                                                                                           
          Delete "."                                                                                                            
          Insert ";"                                                                                                            
                                                                                                                                
     Page 3, following line 28:                                                                                                 
          Insert "(7) other proof of identification                                                                             
     acceptable to the department."                                                                                             
                                                                                                                                
     Page 4, line 6, following "minor;":                                                                                        
          Insert "if a court order identifies more than one                                                                     
     person  as  having custody  of  the  minor, the  person                                                                    
     having custody more than 50  percent of the time in the                                                                    
     previous 12 months shall be  considered the sponsor for                                                                    
     the minor for purposes of this paragraph;"                                                                                 
                                                                                                                                
     Page 5, following line 25:                                                                                                 
          Insert:                                                                                                               
                    "(q) A payment under the program is                                                                         
     subject  to  administrative  levy,  without  exemption,                                                                    
     only to satisfy a  child support obligation required by                                                                    
     a  court  order  or  decision   of  the  child  support                                                                    
     services agency under AS 25.27.140 - 25.27.220."                                                                           
                                                                                                                                
     Page 5, line 26:                                                                                                           
          Delete "(q)"                                                                                                          
          Insert "(r)"                                                                                                          
                                                                                                                                
     Page 5, line 26, following "state law":                                                                                    
        Insert "other than the provisions of (q) of this                                                                        
     section"                                                                                                                   
                                                                                                                                
     Page 5, line 30:                                                                                                           
          Delete "(r)"                                                                                                          
          Insert "(s)"                                                                                                          
                                                                                                                                
MR. BURNETT  explained that  one of the  issues addressed  by the                                                               
amendment was  a requirement  in the  bill for  people to  have a                                                               
physical address in order to apply  for the resource rebate.  The                                                               
amendment suggests that when a  physical address is not available                                                               
a mailing address would suffice.   In response to a question, Mr.                                                               
Burnett  clarified  that  a  physical  address  is  preferred  to                                                               
investigate  fraud;  however, the  intent  is  that an  applicant                                                               
would  not be  denied  a  rebate if  a  physical  address is  not                                                               
available.   The  second  issue addressed  by  the amendment  was                                                               
about wording  in the  original bill  that spoke  to "voluntarily                                                               
present  in  the state"  and  related  to  persons in  Alaska  on                                                               
military orders.   The amendment  directs that an  applicant must                                                               
be present in  the state from April first  through October first,                                                               
and  on  the   date  of  the  application.     Furthermore,  [the                                                               
applicants]  "intend  to remain  in  the  state and  a  temporary                                                               
absence from the  state of less than 30 days  does not disqualify                                                               
the person."   Also, Mr. Burnett stated that a  person serving on                                                               
active  duty as  a member  of the  armed forces,  except for  the                                                               
active duty service, would qualify.                                                                                             
                                                                                                                                
3:44:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   NEUMAN  related   that   he   was  assisting   a                                                               
constituent who  was out of  the state for  medical circumstances                                                               
and  was not  allowed to  collect a  PFD.   He asked  whether the                                                               
constituent would be eligible for the resource rebate.                                                                          
                                                                                                                                
3:45:27 PM                                                                                                                    
                                                                                                                                
MR. BURNETT  responded that the  rebate program does  not provide                                                               
for  the  allowable  absences  that are  present  under  the  PFD                                                               
statute.    One  who  qualified  for  the  PFD  this  year  would                                                               
automatically qualify  for the resource rebate;  however, a long-                                                               
term resident absent  under medical circumstances may  or may not                                                               
qualify.                                                                                                                        
                                                                                                                                
3:46:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  referred to  page 3,  line 3,  of the  bill that                                                               
read:                                                                                                                           
                                                                                                                                
       (2) was voluntarily and physically present in the                                                                        
        state for the period from April 1, 2008, through                                                                        
     October 1, 2008;                                                                                                           
                                                                                                                                
CO-CHAIR LEDOUX pointed out the bill  does not allow for the same                                                               
exceptions  as  for  the  Permanent Fund  Dividend.    She  asked                                                               
whether the intent is  for a person to be in  the state for every                                                               
day during that period.                                                                                                         
                                                                                                                                
3:47:09 PM                                                                                                                    
                                                                                                                                
MR. BURNETT responded that the  proposed amendment would allow an                                                               
absence for any reason for up to 30 days.                                                                                       
                                                                                                                                
3:47:49 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX surmised that the  thirty-day reduction of a six-                                                               
month residency requirement seems "pretty significant."                                                                         
                                                                                                                                
3:48:20 PM                                                                                                                    
                                                                                                                                
MR.  BURNETT observed  that  the committee  may  not support  the                                                               
proposal.                                                                                                                       
                                                                                                                                
3:48:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH questioned  the choice of the  dates that are                                                               
during a  period when  some Alaskans may  be travelling  to visit                                                               
family and friends outside of the state.                                                                                        
                                                                                                                                
3:49:00 PM                                                                                                                    
                                                                                                                                
MR.  BURNETT  explained  that  the  application  period  is  from                                                               
October first  to November  thirtieth.   These dates  defined the                                                               
April  first date  because  [April first]  is  six months  before                                                               
October first.  He noted that  the resource rebate would be given                                                               
to anyone  who qualifies  for the  PFD; furthermore,  the program                                                               
requires that the  applicant intends to remain in the  state.  He                                                               
opined that a long-term Alaskan could  be out of the state in the                                                               
summer or in  the winter.  He  pointed out that those  who are in                                                               
the state  just for summer  employment would probably be  gone by                                                               
October  first.    "The  [October]   one  to  November  thirtieth                                                               
application period was chosen because  that gives us enough, it's                                                               
the soonest that  we believe that we could do  an application and                                                               
get it  out to people  and have a  rational chance of  people not                                                               
missing it," he explained.                                                                                                      
                                                                                                                                
3:50:37 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH  observed that  this period  of time  is also                                                               
the  time  Alaskans bring  in  the  highest portion  of  seasonal                                                               
workers.                                                                                                                        
                                                                                                                                
3:50:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  OLSON surmised  that energy  rebates and  credits                                                               
would be offered  to 45,000 [seasonal] workers who  were not here                                                               
last  winter  and did  not  have  additional fuel,  heating,  and                                                               
electricity costs.                                                                                                              
                                                                                                                                
3:51:14 PM                                                                                                                    
                                                                                                                                
MR. BURNETT  clarified that a  new resident, in order  to qualify                                                               
for the PFD, would  have to have been a resident  of the state on                                                               
January 1, 2007,  and for the entire  year of 2007.   Most of the                                                               
people [who  qualify for a rebate]  would have been in  the state                                                               
for the 2007-2008 winter.                                                                                                       
                                                                                                                                
3:51:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE OLSON remarked:                                                                                                  
                                                                                                                                
     So,   if   we   use   the  Permanent   Fund   for   the                                                                    
     qualification, we  would hit  the people  that actually                                                                    
     had  costs  for  last winter;  additional  fuel  costs,                                                                    
     additional heating costs, and people in Fairbanks.                                                                         
                                                                                                                                
3:52:12 PM                                                                                                                    
                                                                                                                                
MR. BURNETT agreed.  However,  using only the PFD guidelines, the                                                               
program  would have  missed approximately  40,000 people  who are                                                               
new  to  the state  since  January  1,  2007.   He  related  that                                                               
according  to the  Department of  Labor  & Workforce  Development                                                               
(DLWD),  approximately 41,000  people  move into  the state  each                                                               
year.                                                                                                                           
                                                                                                                                
3:52:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE OLSON  asked whether  it was possible  to estimate                                                               
the number of people who qualify  and came after the first of the                                                               
year, and those who came in 2007.                                                                                               
                                                                                                                                
3:52:54 PM                                                                                                                    
                                                                                                                                
MR. BURNETT said he would try.                                                                                                  
                                                                                                                                
3:53:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FAIRCLOUGH   reminded  members  that   the  eligibility                                                               
requirements of the  PFD have been tested in  court and expressed                                                               
her concern about expanding the  eligibility requirements for the                                                               
pay-out  to  newly arrived  residents  who  may  not stay.    She                                                               
stressed  the  importance  of  investing  a  resource  rebate  to                                                               
benefit Alaskans.                                                                                                               
                                                                                                                                
3:53:35 PM                                                                                                                    
                                                                                                                                
MR. BURNETT  advised the  members that  some new  residents would                                                               
have been here for 22 months,  as of October first, but would not                                                               
qualify for the PFD.                                                                                                            
                                                                                                                                
3:54:07 PM                                                                                                                    
                                                                                                                                
MR. BURNETT  stated that the  amendment also addresses  the issue                                                               
of  child custody  and garnishment  for  child support  purposes.                                                               
The  amendment  would  allow  for  administrative  levy,  without                                                               
exception, for child support, but  not other programs, because of                                                               
technical  difficulties and  timing.   "Child support  we can  do                                                               
internally and electronically,  so it can be done  in the context                                                               
of a separate payment," he said.                                                                                                
                                                                                                                                
[There followed  the introduction of additional  amendments to HB
4002 that were read into the record.]                                                                                           
                                                                                                                                
3:55:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CISSNA stated that, due to the lack of time, she                                                                 
would offer her amendment at the meeting on July 23, 2008.                                                                      
                                                                                                                                
3:55:41 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH submitted into the record Representative                                                                    
Cissna's amendment that read:                                                                                                   
                                                                                                                                
     An  allocation of  funds  distributing state  resources                                                                    
     for  energy relief  shall be  calculated  on a  formula                                                                    
     using  "heating degree  days and  the average  regional                                                                    
     cost of one gallon of heating fuel or Btu equivalent.                                                                      
                                                                                                                                
CO-CHAIR  FAIRCLOUGH  expressed  her concern  about  whether  the                                                               
program  is defined  as a  resource rebate  or an  energy rebate.                                                               
She  then  submitted  into   the  record  Representative  Olson's                                                               
amendment that read:                                                                                                            
                                                                                                                                
     Page 1, line 1, through page 6, line 2:                                                                                    
          Delete all material and insert:                                                                                       
                                                                                                                                
     ""An  Act  relating  to Alaska  resource  rebates,  and                                                                  
     increasing  the  amount  of  the  2008  permanent  fund                                                                  
     dividend  by the  amount of  the rebate;  and providing                                                                  
     for an effective date."                                                                                                  
     BE  IT  ENACTED BY  THE  LEGISLATURE  OF THE  STATE  OF                                                                  
     ALASKA:                                                                                                                  
        *  Section 1.  The uncodified  law of  the State  of                                                                  
     Alaska is amended by adding a new section to read:                                                                         
          ALASKA RESOURCE REBATES. (a) To provide residents                                                                     
     of  the  state  with  an Alaska  resource  rebate,  the                                                                    
     amount  of the  2008 permanent  fund dividend  shall be                                                                    
     increased.  After calculating  the amount  of the  2008                                                                    
     dividend  under   AS 43.23.025,  the   commissioner  of                                                                    
     revenue shall add $1,200 to  determine the total amount                                                                    
     of that dividend.                                                                                                          
          (b)  Subject to appropriation, the amount                                                                             
     necessary  to increase  2008  permanent fund  dividends                                                                    
     under  (a) of  this section  shall be  transferred from                                                                    
     the general fund to the dividend fund (AS 43.23.045)."                                                                     
                                                                                                                                
     Renumber the following bill section accordingly.                                                                           
                                                                                                                                
CO-CHAIR FAIRCLOUGH submitted into the record Representative                                                                    
Neuman's amendment that read:                                                                                                   
                                                                                                                                
     Page 5, line 26:                                                                                                           
          Delete "Notwithstanding"                                                                                              
          Insert "Except for (1) a debt owed to a state                                                                         
     agency or  other state entity,  or (2) a  child support                                                                    
     obligation required  by court order or  decision of the                                                                    
     child  support  services  agency under  AS 25.27.140  -                                                                    
     25.27.220, and notwithstanding"                                                                                            
                                                                                                                                
3:57:11 PM                                                                                                                    
                                                                                                                                
[Although not formally stated HB 4002 and HB 4003 were held                                                                     
over.]                                                                                                                          
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Community and Regional Affairs Standing Committee meeting was                                                                   
adjourned at 3:57 p.m.                                                                                                          

Document Name Date/Time Subjects