02/10/2005 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB14 | |
| HB108 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 14 | TELECONFERENCED | |
| *+ | HB 108 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
February 10, 2005
8:10 a.m.
MEMBERS PRESENT
Representative Kurt Olson, Co-Chair (via teleconference)
Representative Bill Thomas, Co-Chair
Representative Pete Kott
Representative Gabrielle LeDoux
Representative Mark Neuman
Representative Sharon Cissna
Representative Woodie Salmon
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 14
"An Act relating to municipal initiative and referendum
elections."
- MOVED SB 14 OUT OF COMMITTEE
HOUSE BILL NO. 108
"An Act relating to the regulation of water and sewer utilities
of political subdivisions that are not in competition with other
water and sewer utilities."
- MOVED HB 108 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 14
SHORT TITLE: MUNICIPAL ELECTIONS
SPONSOR(S): SENATOR(S) STEVENS G
01/11/05 (S) PREFILE RELEASED 12/30/04
01/11/05 (S) READ THE FIRST TIME - REFERRALS
01/11/05 (S) CRA
01/26/05 (S) CRA AT 1:30 PM FAHRENKAMP 203
01/26/05 (S) Heard & Held
01/26/05 (S) MINUTE(CRA)
01/31/05 (S) CRA AT 1:30 PM BELTZ 211
01/31/05 (S) Moved SB 14 Out of Committee
01/31/05 (S) MINUTE(CRA)
02/02/05 (S) CRA RPT 5DP
02/02/05 (S) DP: STEVENS G, WAGONER, KOOKESH,
STEDMAN, ELLIS
02/02/05 (S) TRANSMITTED TO (H)
02/02/05 (S) VERSION: SB 14
02/04/05 (H) READ THE FIRST TIME - REFERRALS
02/04/05 (H) CRA, STA
02/10/05 (H) CRA AT 8:00 AM CAPITOL 124
BILL: HB 108
SHORT TITLE: WATER & SEWER UTILITIES OF POLIT. SUBDIV.
SPONSOR(S): LABOR & COMMERCE
01/26/05 (H) READ THE FIRST TIME - REFERRALS
01/26/05 (H) CRA, L&C
02/10/05 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
SENATOR GARY STEVENS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SB 14.
KATHIE WASSERMAN
Alaska Municipal League (AML)
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 14 and during
hearing on HB 108, related that local government is the most
responsive government.
LINDA MURPHY, Clerk
Kenai Peninsula Borough
Soldotna, Alaska
POSITION STATEMENT: Testified on SB 14.
MONA LISA DREXLER, Clerk
Fairbanks North Star Borough
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 14.
JOSH APPLEBEE, Staff
to Representative Tom Anderson;
House Labor and Commerce Standing Committee
Alaska State Legislature,
Juneau, Alaska
POSITION STATEMENT: Presented HB 108.
MARK PREMO, General Manager
Anchorage Water and Wastewater Utility (AWWU)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 108.
KATE GIARD, Chairman
Regulatory Commission of Alaska (RCA)
Anchorage, Alaska
POSITION STATEMENT: During discussion of HB 108, stated that
it's premature for AWWU to leave RCA regulation.
ACTION NARRATIVE
CO-CHAIR BILL THOMAS called the House Community and Regional
Affairs Standing Committee meeting to order at 8:10:25 AM.
Representatives LeDoux, Neuman, Salmon, Olson (via
teleconference), and Thomas were present at the call to order.
Representatives Kott and Cissna arrived as the meeting was in
progress.
SB 14-MUNICIPAL ELECTIONS
8:10:43 AM
CO-CHAIR THOMAS announced that the first order of business would
be SENATE BILL NO. 14, "An Act relating to municipal initiative
and referendum elections."
8:10:54 AM
SENATOR GARY STEVENS, Alaska State Legislature, sponsor, related
that SB 14 really came from the municipal clerks' association.
He explained that when there are initiatives or referendums,
[municipalities] must hold an election within 75 days. However,
sometimes these initiatives or referendums aren't time sensitive
and don't require immediate action. Furthermore, special
elections often have poor voter turnout as compared to that of a
regular election. This legislation would provide the
municipalities the option to decide whether an issue is
important enough to hold a special election. He informed the
committee that the Fairbanks North Star Borough had 46 petitions
in a four-month period, although only one led to a special
election. He related that one special election cost the
Fairbanks North Star Borough $60,000. This legislation merely
places the matter [of whether to hold a special election] in the
hands of the locals.
8:13:20 AM
REPRESENTATIVE NEUMAN stated his support for SB 14. He opined
that on occasion special elections are used in a way to pass
legislation that perhaps the entire general populous wouldn't
support. The aforementioned happens when special interest
groups make sure that their members go out and vote.
Representative Neuman said he wasn't sure that represented the
good of all the people.
8:14:11 AM
REPRESENTATIVE SALMON inquired as to the amount of savings this
legislation would afford.
REPRESENTATIVE GARY STEVENS pointed out that the savings would
depend upon the amount of initiatives and referendums that each
municipality may have. He clarified that this legislation
wouldn't save the state money, although it would save local
communities money.
8:14:49 AM
KATHIE WASSERMAN, Alaska Municipal League (AML), related AML's
support for SB 14. Ms. Wasserman said that the city clerks
certainly know better than anyone what is occurring [in their
area]. Furthermore, any suggestions from the city clerks is
usually based on hard facts rather than politics. This
[legislation] would save the communities money while allowing
for good public process.
8:15:34 AM
LINDA MURPHY, Clerk, Kenai Peninsula Borough, highlighted that
SB 14 doesn't apply to home rule communities. The cost savings,
she related, depends upon the size of the city or borough. She
informed the committee that a boroughwide special election in
the Kenai Peninsula Borough would cost approximately $50,000.
She pointed out that [municipalities] don't budget for special
elections, and therefore special elections require a special
appropriation for the governing body. Ms. Murphy also
highlighted that SB 14 is essentially the same legislation that
sailed through the House last year.
8:17:22 AM
MONA LISA DREXLER, Clerk, Fairbanks North Star Borough, urged
the committee to pass SB 14.
8:18:32 AM
CO-CHAIR THOMAS, upon determining no one else wished to testify,
closed public testimony.
8:18:44 AM
REPRESENTATIVE NEUMAN moved to report SB 14 out of committee
[with individual recommendations and the accompanying fiscal
notes]. There being no objection, it was so ordered.
HB 108-WATER & SEWER UTILITIES OF POLIT. SUBDIV.
CO-CHAIR THOMAS announced that the final order of business would
be HOUSE BILL NO. 108, "An Act relating to the regulation of
water and sewer utilities of political subdivisions that are not
in competition with other water and sewer utilities."
8:20:04 AM
JOSH APPLEBEE, Staff to Representative Tom Anderson; House Labor
and Commerce Standing Committee, Alaska State Legislature,
introduced HB 108 on behalf of the House Labor and Commerce
Standing Committee, which Representative Anderson chairs. Mr.
Applebee paraphrased from the following written sponsor
statement [original punctuation provided]:
House Bill 108 would exempt Anchorage Waste Water
Utility from regulation by the Regulatory Commission
of Alaska (RCA). Except for the City of Pelican, no
other municipal owned water/wastewater utility is
regulated by the RCA. (Pelican requested regulation
of its water utility by the RCA).
The Municipality of Anchorage [MOA] believes the
current RCA regulation processes are cumbersome, slow,
expensive, and non-responsive to local needs.
Ratepayers are required to pay for the expensive RCA
regulatory process as a surcharge on every bill,
whether or not their utility has a case pending. For
example, from 1993 until 2003 AWWU [Anchorage Water
and Wastewater Utility] never had a rate increase from
the RCA or the APUC, yet ratepayers have paid a
regulatory assessment to the RCA as part of every
bill. In 2004 AWWU ratepayers are projected to pay
about $500,000 to the RCA to cover the costs of
regulation. The greatest costs appear in the form of
regulatory delay in obtaining approval of a requested
change.
The MOA is directly accountable to ratepayers served
by the utilities - they are voters. The Municipality
has experience successfully regulating enterprise
activities. The Port of Anchorage, Solid Waste
Services and Merrill Field are all financially sound
and provide first class customer service. Municipal
public hearings are held on any proposed rate increase
and the public is very involved in the hearing
process.
HB 108 changes existing law by adding lines 5 thru 8
on Page 2. This language states that a water or sewer
utility owned by a political subdivision not directly
competing with another water or sewer utility is
exempt from RCA regulation.
I would ask for your support on HB 108.
8:22:52 AM
REPRESENTATIVE NEUMAN asked if AWWU receives funding from the
Department of Commerce, Community, & Economic Development
(DCCED). If AWWU does receive funding from DCCED, would AWWU
lose that funding [were HB 108 to pass], he asked. If the
aforementioned is the case, would it cause any rate increase, he
also asked.
MR. APPLEBEE deferred to the general manager of AWWU.
8:23:40 AM
REPRESENTATIVE SALMON inquired as to how Anchorage came to be
under the RCA.
MR. APPLEBEE deferred to the general manager of AWWU.
8:24:19 AM
MARK PREMO, General Manager, Anchorage Water and Wastewater
Utility (AWWU), testified in support of HB 108. He explained:
This bill would exempt AWWU from economic regulation
by the Regulatory Commission of Alaska and place it in
the same status as every other municipally owned
water, wastewater utility in Alaska, except one:
Pelican. First, some background: AWWU is two
separate utilities, both subject to economic and
service area regulations by the Regulatory Commission
of Alaska. The water utility, a former City of
Anchorage utility, has been under RCA regulation since
inception of the APUC [Alaska Public Utilities
Commission - predecessor to RCA] in 1970. The
Anchorage sewer utility, which was formerly owned by
the greater Anchorage area borough was voluntarily
submitted to the APUC for regulation in 1971. An
umbrella organization, AWWU, was formed in 1975
following the unification of the Municipality of
Anchorage. The Municipality of Anchorage in 1991
petitioned the then-APUC to exempt AWWU and its
electric utility from regulation. The commission
split evenly by a 2:2 vote on the question of
exempting the electric utility and AWWU at that time.
The opinion by the commissioners opposing self-
regulation cited competition by the municipality's
electrical utility and telephone utility with other
utilities as the primary reason why AWWU should remain
regulated by the state. No commissioner suggested
then, or has suggested since that competition between
water and wastewater was present, nor is there any
competition today. On April 28, 2004, the House of
Representatives approved House Bill 515, approximately
in a 3:1 margin. This bill would've exempted AWWU
from economic regulation by the RCA. Time ran out and
the Senate did not act on the bill last year.
8:27:01 AM
Why does the Municipality of Anchorage desire
exemption from RCA? One, the current RCA regulation
process and procedures are expensive. From 1993-2003
AWWU filed only minor housekeeping and procedural
matters with the RCA and never requested an increase
in rates. Yet, during that same period of time, AWWU
ratepayers paid approximately $2.8 million in
regulatory assessments to the RCA during this period
as part of every monthly bill. In fact, in 2004 AWWU
paid for $445,000 to cover the cost of regulation and
we estimate that will be $550,000 in 2005. However,
the greater cost to AWWU and its customers is in the
form of the cost for preparing and filing and
regulatory lag. AWWU filed for the initial part of a
two-phase rate increase in a refundable interim rate
in January 2004 with the expectation that by year-end
2004, the RCA would rule on both phases of this
request. The public hearing has been delayed and
rescheduled by the RCA, and is now set for June 2005,
15 months later. This large delay substantially
increases the jeopardy for the AWWU ratepayers and
AWWU in the event that a portion of the requested
rates have to be refunded. In addition, due to the
extreme amount of discovery questions in the case -
over 530 in all - this case has also become extremely
expensive to the utility. History and present events
show that local regulation is faster, less structured,
and more economical.
Two, current RCA regulations and procedures are
nonresponsive to local needs. The RCA was designed
for public utilities and is not entirely appropriate
for municipal utilities. The RCA is very structured.
The municipality is more responsive to local needs and
is directly accountable to the ratepayers who were
served by the utilities. These customers are also
municipal voters. Public hearings are held by the
municipality on all rate matters. I ask for the
committee's support of HB 108. Self-regulation has
worked effectively across the nation and other Alaskan
communities and in Anchorage. Anchorage has regulated
its own public utilities for many more years than have
state regulators. The Municipality of Anchorage has a
proven track record of [effectively] regulating the
Port of Anchorage, Merrill Field, and Solid Waste
Services. All are financially strong, highly
reputable enterprises that provide excellent customer
services. Rate changes have been infrequent. AWWU
has provided its customers with excellent service, low
stable rates, and sound finances. In 2004 AWWU filed
for its first rate increase since 1992. For more than
a decade, AWWU ratepayers have benefited. We have
reduced positions and expense by leveraging technology
and improving business processes while, at the same
time, increasing spending on system repairs and
rehabilitation. This has all been done without the
direction and or assistance for value-added from the
RCA. Over the years the mayor and the assembly have
made sound decisions in their oversight of AWWU and
other municipally owned utilities. The Municipality
of Anchorage supports the establishment of a strong,
independent authority to oversee and regulate AWWU in
lieu of the RCA. The ratemaking process will be very
similar to standard industry practices. In fact, the
development of revenue requirements and cost of
services to meet the additional cost causer/cost payer
regulatory approach.
8:31:03 AM
In conclusion, with the passage of HB 108, municipal
regulation of AWWU will balance consumer protection
with financial soundness. And AWWU will continue to
operate on a sound business basis. This bill only
makes a minor adjustment to the existing statute to
facilitate the proper self-regulation of AWWU and is
identical to the House Bill 515 which passed the House
last session. The RCA would still continue to
regulate AWWU water and wastewater services. And in
closing, in answer to one of the questions that was
asked by a Representative earlier, AWWU does not
receive any operational funds from any department of
the state. The only funds that AWWU receives are an
occasional direct appropriation or a 50:50 matching
grant program for capital expenditures through the
ADEC program.
8:32:22 AM
KATE GIARD, Chairman, Regulatory Commission of Alaska (RCA),
informed the committee that until last year she was the Chief
Fiscal Officer (CFO) for MOA. She recalled that during her time
as the CFO for MOA, she, too, raised the issues [brought forth
by Mr. Premo]. As the chair of the RCA, she said that she has
reviewed what Mr. Premo taught her regarding value added because
Mr. Premo and the Assembly of MOA have improved AWWU without a
great deal of RCA intervention. Ms. Giard related that when she
originally reviewed this matter, coming fresh from the
municipality, she suggested letting AWWU function out from under
the RCA. However, she suggested that the RCA functions for AWWU
in a similar fashion as the state's ownership of Alaska Housing
Finance Corporation (AHFC). Regulations stand between [the
state and AHFC] to ensure [AHFC] is a healthy entity. The RCA
is in the same position between the ratepayers of AWWU and MOA.
Ms. Giard agreed that the RCA is slow, but stressed that "you"
wouldn't want it to be a speedy process. She emphasized that
she is pleased that the RCA is slow and that it has been 15
months since a rate case increasing the rate by $108 a year came
before it. She characterized the $108 rate increase as huge
because it's a $6 million increase in property taxes that the
city passed through to AWWU. The ratepayers want the RCA to
take 15 months to review such a case. She highlighted that now
the attorney general is going to review the rate case and
determine whether it's appropriate for the city to pass through
its costs to the utility. Ms. Giard informed the committee that
approximately 40 percent of AWWU's costs are from general
government in the form of property taxes or costs for which it
has already received approval to shift.
MS. GIARD said she understood why AWWU wants control. In fact,
she said that AWWU should have control. She highlighted that
comments [from AWWU] on this matter last year indicated that
[AWWU] would create a system similar to that of the RCA.
However, she questioned what system or ordinance the [Anchorage
Assembly] has created. She also questioned what has been done
to show the state that [the proposed system] would result in a
cheaper and better method of regulation than that of the RCA.
Ms. Giard asked, "Why, when they put forward a 20 percent rate
increase, did they tell you last year: 'If you let us come out
of RCA jurisdiction, our rates will go down.'" Although Ms.
Giard said that she didn't believe it's wrong for the city to
want to manage its own utility, she did believe it to be a bit
premature this year. Therefore, she suggested letting the rate
case go forward and if AWWU continues to operate as it has in
the past, there won't be another rate case for 15 years.
Therefore, the city won't have to implement processes similar to
the RCA. Ms. Giard emphasized the need for there to be a plan
that specifies the benefit to the ratepayers, which hasn't been
done.
8:40:40 AM
REPRESENTATIVE LEDOUX inquired as to how other utilities in
other cities have been functioning without the RCA.
MS. GIARD agreed that it's unfair that AWWU is being regulated
and others aren't. However, she reiterated the need for the
city to put in place a plan because there are costs that don't
go to AWWU because of the RCA. The aforementioned protection
would be removed with this legislation.
8:41:56 AM
REPRESENTATIVE LEDOUX asked if there have been any problems in
the utilities that aren't regulated by the RCA.
MS. GIARD said that AWWU is unlike other utilities. She
emphasized that with or without RCA regulation, AWWU will
continue to provide good services. However, the temptation will
be that the cost of government may inappropriately shift to the
ratepayers, which are not homogenous with the taxpayers. Before
removing the protection [the RCA provides], she suggested that
[the legislature should] require a plan. She questioned whether
there has been a public hearing on this matter.
8:43:48 AM
REPRESENTATIVE NEUMAN asked if Mr. Premo had a response to how
the rates will change [if AWWU comes out from under RCA
regulation].
8:44:20 AM
MR. PREMO thanked Ms. Giard for indicating that AWWU is a good
utility because that its the primary purpose. Regarding the
cost of regulations and how to protect ratepayers from the
potential raid of utility funds or the potential increase of
utility rates in order to meet the needs of general government
is a concern everyone shares. With a self-regulated utility,
the intent for ratemaking purposes would be to continue to use
the same ratemaking principles as AWWU uses before the RCA;
these are industry standard principles. Simply stated, the cost
causer is the cost payer. He suggested that having a group of
people appointed by the governor, confirmed by the legislature,
and an arm's length from locally elected officials making
decisions regarding how local money is spent, isn't as strong as
an administration and a locally elected commission to oversee
the utility. The closer to local government, the more
responsive the entity is to the needs of the local people and
the more accountable the entity. Mr. Premo informed the
committee that [MOA] has an advisory commission recommended by
the mayor and appointed by the assembly. That advisory
commission reviews the operations of AWWU. In fact, there was a
recent public meeting with the advisory commission for which the
agenda included self-regulation in the formation an authority.
Mr. Premo agreed with Ms. Giard that there needs to be checks
and balances, which will be in the form of an authority.
8:47:46 AM
REPRESENTATIVE NEUMAN inquired as to the status of the plan
promised last year.
MR. PREMO surmised that Representative Neuman is referring to
the authority, which would be the governing model of the
utility. He stressed that there is a plan and the advisory
commission is working on it. In fact, MOA intends to have the
authority operational prior to year-end. The details of the
authority do need to address all of the concerns of the RCA.
8:49:11 AM
REPRESENTATIVE NEUMAN surmised then that [the MOA] plans to have
something in place by the time this legislation moves through
the process.
MR. PREMO confirmed that [MOA] does plan to go through a public
process and establish [an authority] by ordinance prior to year-
end, in time for the fiscal year '06 budget cycle. However, he
didn't believe the plan could come together before the
legislation passes through the House or Senate.
8:50:14 AM
KATHIE WASSERMAN, Alaska Municipal League, informed the
committee that up until six months ago she was the mayor and
administrator of the City of Pelican. The City of Pelican
became regulated because of circumstances that seemed to leave
no other choice. The paperwork [under RCA regulation] was
"unbelievable" and slow. She opined that most municipalities
have checks and balances in place through ordinances and public
hearings, which allow the municipality to establish fair rates.
Ms. Wasserman further opined that AML holds firm that local
government is the best and most responsive government.
Therefore, she spoke in favor of MOA having "its own regulatory
form." She also questioned how many other utility entities
within Alaska have been required to put forth a plan, as is
being recommended by the RCA.
8:52:27 AM
CO-CHAIR THOMAS, upon determining no one else wished to testify,
closed public testimony.
8:52:37 AM
REPRESENTATIVE CISSNA related that those in MOA don't quietly
watch when the municipal government does things it doesn't like.
Representative Cissna opined that the voters in MOA deserve the
right to be the gatekeepers [of AWWU].
8:53:34 AM
REPRESENTATIVE SALMON asked if Pelican wants to be under RCA
regulation.
CO-CHAIR THOMAS recalled that Kake Tribal purchased the cold
storage that held the water in Pelican, which was when the City
of Pelican shifted to RCA regulation.
REPRESENTATIVE SALMON restated his question.
CO-CHAIR THOMAS surmised from Ms. Wasserman's body language that
the City of Pelican doesn't like being under RCA regulation.
8:54:40 AM
REPRESENTATIVE SALMON asked if the legislation should be amended
such that the City of Pelican wouldn't be under RCA regulation
either.
CO-CHAIR THOMAS opined that if the City of Pelican wanted to
leave RCA regulation, it would come forward.
8:55:10 AM
MS. WASSERMAN clarified that she isn't speaking for the City of
Pelican, but related that in order to take over the water
[holding facilities] the city had no choice but to be under RCA
regulations.
8:55:50 AM
REPRESENTATIVE NEUMAN moved to report HB 108 out of committee
[with individual recommendations and the accompanying fiscal
notes]. There being no objection, HB 108 was reported from the
House Community and Regional Affairs Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 8:56:07 AM.
| Document Name | Date/Time | Subjects |
|---|