Legislature(1997 - 1998)
09/04/1998 09:10 AM House EUR
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
JOINT COMMITTEE ON ELECTRIC UTILITY RESTRUCTURING
SUBCOMMITTEE MEETING
September 4, 1998
9:10 a.m.
NOTE: This subcommittee meeting was transcribed verbatim by
Representative Rokeberg's staff.
TAPE(S) 98-8, SIDES A & B
CALL TO ORDER
SENATOR LOREN LEMAN, Chairman, convened the subcommittee meeting on
Electric Utility Restructuring at 9:10 a.m.
PRESENT
Committee members present were Chairman Leman, Representative
Davies and Representative Dyson. Representatives Davies and Dyson
were in attendance via teleconference.
ALSO ATTENDING
Jim Patras, Homer Electric; Dwight Ornquist, APUC; Bob Lohr, APUC;
Sam Cotten, APUC.
SUMMARY OF INFORMATION
CHAIRMAN LEMAN: I understand that we have Representative Davies
and Representative Dyson on line. Is that correct?
REPRESENTATIVE FRED DYSON: Yeah.
CHAIRMAN LEMAN: Okay, I'll call -- John are you there too?
REPRESENTATIVE JOHN DAVIES: Yeah, I'm here.
CHAIRMAN LEMAN: Okay, good morning.
REPRESENTATIVE DAVIES: Good morning.
CHAIRMAN LEMAN: I'll call this subcommittee meeting to order and
apologize for being just a few minutes late. I got caught in the
morning traffic and had to drop my daughter off at school on the
way in. I knew I had a very narrow window and I got trapped just
a little more than I thought I would. Anyway, both of you have
received the memo with the back up information that we sent several
days ago which essentially synthesized the comments from some of
the respondents and, that we had requested.
CHAIRMAN LEMAN: Plus I guess I added some of our own thoughts and
my thinking is that we get some input from you in response to that;
maybe anything in there that you want, and then in a few minutes we
will be joined by Commissioner Ornquist and Chairman Cotten. Mr.
Cotten will he also be here, Dwight?
DWIGHT ORNQUIST, ALASKA PUBLIC UTILITIES COMMISSION: He's planning
on being here.
CHAIRMAN LEMAN: We are going to be joined by the APUC in a few
minutes and then I would like to get some feedback from them and
I'll just tell you that my constraints are that I must leave by
10:30 am. So those are our time constraints today. Having said
that do either of you have any comments to what we distributed or
any other input to this effort that could be beneficial. How about
Fred, I'll start with you and then John we'll go to you.
REPRESENTATIVE DYSON: Yeah, but my comments don't fit on a bumper
sticker, (indisc.) the guidelines for the request proposal and
almost line by line. I'm interested in almost every aspect on that
and have comments on.
CHAIRMAN LEMAN: Is there anyway you can get your thoughts to us or
maybe you can somehow share it or put it into writing or talk to me
at another time; or somehow get this in?
REPRESENTATIVE DYSON: I thought that's what we were going to do
this morning.
CHAIRMAN LEMAN: That is what we are planning to do this morning.
REPRESENTATIVE DYSON: That is what we are going to do now is talk
about his stuff. So, I am prepared to discuss it, I haven't
written my thoughts about those discussions down.
CHAIRMAN LEMAN: That's why we have people here who can write, and
we are I think we're recording this so if we want to listen to this
again and try to decipher what it is we are saying that is our
intent. I intend for this to be fairly informal, this is
essentially a working group that will make a draft recommendation
to our full joint committee in Fairbanks, or sometime before that
so we can have it to discuss with the full committee when we are in
Fairbanks on the 16th. So as far as I'm concerned, Fred no comment
is to tedious or the fact that it isn't documented isn't a problem
to me, I'd like to talk through this and see if we can come up with
something that makes some sense.
REPRESENTATIVE DYSON: All right.
CHAIRMAN LEMAN: Before we go any farther, Annette are you on line
also?
TELECONFERENCE MODERATOR: No she's not.
CHAIRMAN LEMAN: Did she request to be hooked in? We are checking
here.
TELECONFERENCE MODERATOR: As far as I know, she was going to call
in.
CHAIRMAN LEMAN: Do you know, Janet?
JANET SEITZ, LEGISLATIVE ASSISTANT TO REPRESENTATIVE NORMAN
ROKEBERG: That's all I know she was going to call.
CHAIRMAN LEMAN: Do you have a (indisc.)?
TELECONFERENCE MODERATOR: I don't think we do, I will check.
CHAIRMAN LEMAN: John, did you have any quick comments before we
start, we go back to Fred and then start going through line by line
some of his comments.
REPRESENTATIVE DAVIES: I would be interested to sort of march
through it paragraph by paragraph as Fred has indicated. I do have
one sort of overall kind of concern or comment it has to do with
the sort of the timing and one of the concerns in there also voiced
which is the time frame that a study would be done in. It's sort
of like what is our intent here, I agree with the comment in there
that I don't think that we can get a substitute study done in time
for us to even be done, but certainly time for us to digest this
prior to making a recommendation to the legislature on the time
frame that we are presently working. So I guess, I just like a
little bit of feedback from you and Fred and then we might even
need to go back to the full committee to kind of get a sense of are
we going to modify our time scale, are we going to scale back our
objectives, I think a lot of the stuff we are going to have is
going be colored by that issue of timing. So I would like to hear
some comments on that, my feeling personally is that there is not
time to do a credible study certainly not time to do a, what do you
call the pilot program between now and January. It seems to me
like sort of two options: one is to just not do that and make a
recommendation a generic kind of general recommendation to the
legislature or the second thing to be would be to delay a final
recommendation and say that our recommendation is that we do the
study and/or a pilot program and then hold off on any other
recommendations to the legislature, till maybe a year from then.
So I -- have you guys been thinking about those things and what is
your feelings about those issues.
CHAIRMAN LEMAN: I have done some thinking about it and I share
your concerns, I don't think that this study with the proposed
scope of work has at least as we are drafting now can or even
should be done in the limited time that we have between now and
when session starts about the middle of January. I just think it
is probably - it's unreasonable, I don't think we even had somebody
under contract I'm guessing another month and would be ambitious to
think of another month and probably two months. So we are just
cutting down on time and by the time you have interactions with
people in Alaska and with utilities and you know just getting
people up to speed I just think it is unreasonable to have that
result. But, my other concern is that a study is a replacement for
action on those things that we can take action on and can probably
-- are some areas in the state that certainly the Anchorage area
where some of the concerns that have been expressed about utilities
in rural Alaska or state ownership of the Four Dam Pool and some of
those things do not have the same level of concern and I don't want
the study to be a replacement for action on those parts you know
where the legislature or the commission can act and so I have been
trying to think through what things can be done. Can the
consultant recommend or make recommendations about design of a
pilot and in what areas of the state early on and work on other
eliminates of the study and so the deliverables of parts of it
would be sometime beyond the middle of January perhaps far beyond
the middle of January and yet we could have some elements delivered
early. That's kind of, where my thinking was and I think I'm
seeing eye to eye at least with your concerns. Fred, any reaction?
REPRESENTATIVE DYSON: I found the time thing was absolutely
unreasonable. My guess is we won't even get RFP written for three
weeks. At least, so, I think we are quite unreasonable and we are
liable to get pretty shoddy results if we push that January thing.
CHAIRMAN LEMAN: But, maybe if we are really ambitious we'll have
the RFP written and out on the streets by January 19th.
REPRESENTATIVE DYSON: (Indisc.--people talking) that's probably
more realistic and discouragingly slow, but that's probably more
realistic.
CHAIRMAN LEMAN: Well ... I think we agree then on the timing, I
will invite the APUC commissioners to react to it, but, I think
they probably have concluded the same thing as we have regarding
timing.
REPRESENTATIVE DYSON: All right.
CHAIRMAN LEMAN: Any other comments like that John that you wanted
to bring up at this time, before we go back to Fred.
REPRESENTATIVE DAVIES: I just -- I guess an over arching kind of
concern about the relationship between the sort of immediate action
that you want to take in front of our -- what sort of
recommendation we might be coming up with. ... I'm also concerned
about making a recommendation off the top of my head right now
without having a little more discussion, but, I have some concerns
about just trying to move ahead too quickly with this. I don't, I
guess my sense is, there isn't any urgency other than that, that is
being placed on us by Chugach and, I don't think that if we were to
wait a year that we would be harming the consumers, and if we were
to take some action that was precipitous, we might possibly do
that. I think we should be cautious, I guess that's my general
frame of mind here. I guess I would be more comfortable with a
time frame where we did an analysis and then recommended a pilot
program. I'm not opposed at this point necessarily to doing that,
but I just wanted to communicate to you, kind of my general frame
of mind in this whole discussion is that I don't see that there is
any burning building that we - a fire that has to be put out. I
think that we need to rather consider this issue in a very
deliberative way and be fairly cautious about the way we redo
things. I mean this has been the structure that's been in place
for 20, 30 years and if we spend two or three years figuring out
the best way to approach the changes, I don't think that's a really
safe deal.
REPRESENTATIVE DYSON: Amazingly I tend to agree. And I think our
situation is somewhat unique and you've indicated all along Loren,
it takes -- if we are going to have competition and I believe we
will at some point, it's going to be fairly limited and it doesn't
make sense in the really small communities and I don't see why we
need to be the ones making the experiments and learning the brutal
hard lessons that a couple of other states have, namely California
that you know, I'm wanting to go cautiously unless somebody else
makes mistakes and not plow the new ground here. We've got lots of
other things on our plate to deal with. We don't have to be the
ones to do the grand experiments on power restructuring and when I
talked with the consultant who was here Fox something, that guy
with the hyphenated name; he told me that 90 or 95 percent of the
savings to the consumers would come from wholesale competition
and/or economic dispatch power pooling, and I have a
disproportionate interest in proceeding with wholesale competition
ahead of the retail competition. So, I want you guys to know
philosophically that's where I'm starting.
CHAIRMAN LEMAN: Yeah, I share many of your concerns, I may be one
who is willing to be more ambitious in the schedule of at least
moving ahead with some of those things that can be moved ahead and
what I meant by my opening comments was that we just not place
barriers in the way either intended or unintended that could slow
down that potential if the legislature in its direction or if the
APUC in its action were to go ahead with some limited authority for
pilot work.
CHAIRMAN LEMAN: I wouldn't want our work, the study and the
waiting for deliverables to be used as the excuse for stalling what
could advance. Now what may result from that and what may
ultimately become - let's see the word I was looking for, become a
solution in Alaska for change, well I lost that thought, but I
don't know why that happened...
REPRESENTATIVE DYSON: You know certainly I'm committed to not
using a study as a subterfuge for torpedoing consideration and
going ahead with competition that makes sense.
CHAIRMAN LEMAN: Well, that's where I am in it, I believe that we
could today even without this study design or you know design a
pilot in at least a portion of Alaska that makes some sense and
proceed with it. I'm also concerned that it not produce erroneous
results that cannot be extrapolated and I think it is possible for
that to happen and we have heard testimony to that effect.
REPRESENTATIVE DYSON: Well my response to that is that you must
know an awful lot more about this and how to proceed and solve what
I think are some real conundrums then I do, because I don't see how
we can proceed with limited competition now without raising some
significant issues that I don't see the solutions to. And I'm
hoping that our contractor will show us how we can do that and how
other jurisdictions have done it. But, my hats off to you, ... if
you are comfortable with you know enough that we can do this now.
CHAIRMAN LEMAN: I'm not saying I know all the answers I just am
convinced that it can be resolved and it can designed in a way that
we can produce some results that will make sense but...
REPRESENTATIVE DYSON: I'm not, but I hope you're right.
REPRESENTATIVE DAVIES: Yeah, I'm not so convinced of that either
and the fundamental issue for me is I guess, I mean, Fred raised
the issue of the wholesale competition, from everybody I've talked
to says it's really an effect we don't have even the wholesale
competition at this point and that also people have said that you
really should proceed in a step like fashion, that you should walk
before you run and in this case that means wholesale competition
first and then retail competition and as Fred said most of the
benefit is already in the wholesale. It seems to me that we ought
to be focusing on that and so if that is true why would we bother
doing a pilot that looks at retail when we don't even know how that
fits in with a situation where you don't have wholesale
competition.
CHAIRMAN LEMAN: I guess my comment is that we have no prohibition
on wholesale competition. The fact that it doesn't exist or
doesn't exist to the level that we may think it should exist is
more a product of the marketplace then it is or in existing
contracts then it is of any statutes or any regulatory structures
and...
REPRESENTATIVE DYSON: I fundamentally disagree with you Loren. I
think the fact that we don't have wholesale competition is that all
these people of all these companies have been operating in a
regulated monopoly and there is no economic incentive nor is there
a good consumer watch dog looking over their shoulder that forces
them to go do the things that have saved money for the consumers
and what we have is fifty years of indolence and lack of inertia to
be imaginative about how to deliver services to the consumer.
There's nothing out there pressing these guys to save more money
for the consumer or improve services, you know, and that's of
course part of the genius for the competition or the threat of it,
but I don't believe and we don't have economic dispatch and power
pooling or wholesale competition these guys don't want it, they are
sitting - it set there for fifty years with cost plus contract and
a guaranteed income no risk, and, you know our job is to find the
mechanisms to get these guys out of their comfortable little
fortresses and doing the imaginative things that will serve the
consumer and the reason we don't have wholesale competition is they
don't want it in spite of their rhetoric.
CHAIRMAN LEMAN: I'm not going to argue with you on that point
Fred, in fact, I think you are probably correct, you probably have
more experience directly in that (indisc.) and you speak from your
experience.
REPRESENTATIVE DAVIES: May I comment on that just real quickly?
CHAIRMAN LEMAN: Sure.
REPRESENTATIVE DAVIES: You know I don't disagree entirely with
what Fred said but I think there is another explanation for it too,
which is -- and I don't think that we have - I don't think there is
anything fundamental in our law or fundamental in our - in the APUC
regulatory structure that is a hindrance that prohibits that other
than the basic frame work as Fred indicated that we have a
regulated monopoly situation is just a mind set that centers around
that. It doesn't necessarily look for competition, but that
doesn't mean to say that the various utilities here haven't gone
out to bid for various things and have benefited from competition
in those ways.
REPRESENTATIVE DAVIES: And I think also though that there is
something fundamental about the small scale remote dispersed nature
of the system that we have in Alaska, it has only been -- remember
with the interties, when did we do the interties only in the last
decade or so that the interties have really been you know, where
we've had a situation where we could ship power from Chugach to
Fairbanks, so, I mean, if a situation is slowly developing I can
get -- derives mostly from the factors of geography and scales,
that's what the primary impediment to wholesale competition in my
mind.
CHAIRMAN LEMAN: We have the commissioners here and I'm going to
ask them to join us at the table and continue our discussion, but
just before we do that are there any other over arching either
concerns or comments about process before we bring them to the
table. Then we can start going through line by line with the
guidelines, anything else on the...
REPRESENTATIVE DYSON: No, go as far as I'm concerned.
CHAIRMAN LEMAN: Okay, Sam and Dwight do you want to come up here
and join us we are fairly informal and we have Fred Dyson and John
Davies on line and...
UNIDENTIFIED SPEAKER: Mr. Lohr is here to.
CHAIRMAN LEMAN: Bob, do you want to come up and join us? Just so
-- I think they probably would recognize your voice, just so they
know for sure, please say who you are and we'll -- Janet is
probably making notes and you're making notes so when we get this
tape done we'll know who is talking. Just before I do, Annette,
are you on line.
ANNETTE KREITZER, LEGISLATIVE ASSISTANT TO CHAIRMAN LEMAN: Yes.
CHAIRMAN LEMAN: Anything that you want to say before we continue.
ANNETTE KREITZER: No, I don't think so, I've been making notes.
CHAIRMAN LEMAN: Before we get into detail, Sam, Dwight, anything
just on process you want to talk about before we start getting into
the detail.
SAM COTTEN, CHAIRMAN, ALASKA PUBLIC UTILITIES COMMISSION: I had
the opportunity to speak with - is it Annette, yesterday and we
talked about some of the procedures that state government may or
may not require as far as contracting.
SAM COTTEN: And I think we may have made some progress on that and
I later had a discussion with our Executive Director as to how we
may be able to shorten up the process somewhat as a result of
government to government relations and I don't know if Annette had
a chance to talk with Phil Bennett, but I think we are making - we
are getting smarter on that subject at any rate.
ANNETTE KREITZER: I did Mr. Chairman have the opportunity to speak
with (indisc.) and relayed that conversation to (indisc.).
CHAIRMAN LEMAN: Just so everybody else is up to speed, that we are
talking about a possible government to government relationship with
the acronym NRRI, out of I think Ohio.
ANNETTE KREITZER: Ohio State sir.
CHAIRMAN LEMAN: Ohio State -- Annette why don't you just give us
a real quick thumbnail sketch of what that is and what might be
accomplished by doing that.
ANNETTE KREITZER: I spoke with Vern Jones who is the (indisc.)
director for GSA, who is from the administration. And he says that
as Mr. Lohr is well aware because he did participate in this
process, but it is possible for APUC to enter into what is called
a Intergovernmental Relation with an arm of another government, the
crux of the whole thing is that the entity has to have a direct
link to a state university or has to be a U.S. Government entity
and NRRI and I called that (Indisc.) don't remember the full name
but I do know Mr. Lohr does know...
SAM COTTEN: I can interrupt and say it's the National Regulatory
Research Institute.
ANNETTE KREITZER: That's it. And it does have a direct link to
Ohio State University and so it would qualify under governmental
relation (indisc.--coughing) operation and the APUC would have to
sign an agreement (indisc.) to sign off on that. So it does cut
down significantly on the time line for someone to actually give an
RFP to go out and get an RFP. But of course the committee and the
APUC and other comers would have to be real comfortable with what
is in that contract.
CHAIRMAN LEMAN: And what you're talking about is somebody to
actually help us review the proposed RFP and maybe provide some
input on what we should actually put out on the street for request
for proposal.
ANNETTE KREITZER: That's correct Mr. Chairman. The NRRI does have
a web site, I believe it is NRRI.Ohio-State.APU and its real...
CHAIRMAN LEMAN: Are you there?
TELECONFERENCE MODERATOR: No she just disconnected. I'll have to
call back.
CHAIRMAN LEMAN: Fred and John, are you still with us?
REPRESENTATIVE DYSON: I am.
REPRESENTATIVE DAVIES: I'm here.
CHAIRMAN LEMAN: Well then, while we are trying to reconnect with
Annette, we'll proceed. Anything else from the two commissioners
before we get into detail, Dwight?
DWIGHT ORNQUIST: One of the things using the Intergovernmental
contracting to put together an RFP and have somebody take some of
the work load away from our staff basically being able to help us
formulate and put together and RFP and even put it out on the
street for us. Would probably help us quite a bit and if we don't
have to have our staff side tracked on it, especially if it's going
to be a priority. Having a time line that backs up a little bit or
allows us more time to do a more in depth and adequate study it
makes a lot of sense and I think it would probably get support from
everybody in the commission, I know it would get my support. The
fact that we're doing such a large endeavor it's going to have a
lot of impact in the future, it would be a good idea to do as in-
depth a study as we can and hurrying it if it -- to sacrifice
quality for speed might be detrimental to a great degree for us.
So anything that we could flex on at the end of the time line would
be great.
REPRESENTATIVE DAVIES: Mr. Chairman?
CHAIRMAN LEMAN: John, go ahead.
REPRESENTATIVE DAVIES: Were Commissioner Ornquist and Sam Cotten
in the room when we had our initial discussion about timing and if
they weren't maybe you should just reiterate a little bit what our
feelings were and get a reaction from them for that.
CHAIRMAN LEMAN: Commissioner Ornquist was here and I think his
response right now is probably consistent with what we talked
about. Sam, you weren't here but, all three of us expressed some
concern about timing and whether we could even get a significant
portion of this study done in time to deliver something by the
middle of January which is when we need to have our recommendations
to the legislature by our charge and we are just concerned about
that, realistically that it can't be done. It would be unwise to
force it to be done in that time frame. I bet you could do
something.
SAM COTTEN: If you feel comfortable that there is a good product,
project underway at that time that may satisfy your requirements to
some extent.
CHAIRMAN LEMAN: And I think that is where we are. We think we're
maybe fortunate to have it under way and maybe by that time, in
full stride which is probably about as much as we can expect and at
least that's kind of where we are in it. That's probably your
thinking too.
SAM COTTEN: I just want to make one other point and that perhaps
Mr. Lohr could expand upon it, because it is a result of a
conversation I had with him that just came up, but there are two
possibilities with NRRI. I think one of them is we could pay them
to develop an RFP or we could attempt to develop an RFP ourselves
and then ask NRRI probably pro bono to review and make suggestions
as to the product we came up with. So I think you've got a couple
of choices there as well.
CHAIRMAN LEMAN: I think because we know our state better than they
know our state right now, the second approach is probably the
better approach. And that is that we take a shot at what we think
needs to be done within our constraints and then we say here you
are, give us some inputs, maybe something based on your experience
in other states that have gone into this area, what are we missing
give us some reaction and if there is a charge for it, I would
assume it would be reasonably nominal. Anything else? Annette, you
were in the middle of a sentence when you dropped off, talking
about NRRI, is there anything else on that, that you wanted to say
before we...
ANNETTE KREITZER: I don't think so, Mr. Chairman. I think
probably you had the opportunity to find out more about NRRI during
the time I slipped off line. I just wanted to say that (indisc.)
they do have a web site and we can get a lot of information.
CHAIRMAN LEMAN: Do you gentlemen have anything else that ... I'm
going to go back to -- Representative Dyson I think we'll start
with you and let's work our way through the guidelines and get your
comments and then maybe precipitate the discussion among us and if,
if there are people you want to bring in since I can't see the two
of you, just so indicate and we'll try to keep this thing as
ordered as possible, but allow you to break in whenever you need
to. Go ahead Fred.
REPRESENTATIVE DYSON: Starting down the page here,
issues/scenarios to be addressed, bullet two there, competition
potential on wholesale level, I would like to look at that a piece
of savings from economic dispatch and power pooling. And it seems
to me that we can get those wholesale savings kind of either way,
but I don't understand how they interplay and I think the study
should address that. Let's see, so that was on that one.
CHAIRMAN LEMAN: Could we just halt for a moment and I just want to
make sure I understand. Does not the Black & Veatch study have a
portion of what Fred just mentioned and as part of its charge?
DWIGHT ORNQUIST: That's the bulk of Black & Veatch's charge in
this docket is to do the study on power pooling and economic
dispatch.
CHAIRMAN LEMAN: Okay, we certainly wouldn't intend to redo it, but
I think we may want to highlight how this study interacts with the
other and make sure we are very clear on that as something being
worked. Fair enough Fred?
REPRESENTATIVE DYSON: Yeah, but I want to learn from our efforts
here what we can do for the consumer or where the potentials, what
we can do for the consumer going either one of those two routes.
Wholesale competition or power pooling or perhaps some combination
and I don't understand how those interact and I would like the
study to inform us on that issue.
REPRESENTATIVE DAVIES: Can I break in here?
REPRESENTATIVE DYSON: Sure.
REPRESENTATIVE DAVIES: Real quickly, you raised a really important
issue, which is the economic analysis that attaches to that. And
I guess my question is, is Black & Veatch charged to do the
economic analysis? In other words from Black & Veatch can we
answer the question what percentage of the eventual savings to the
consumer will result from each one of these options?
DWIGHT ORNQUIST: I think what we will find is this is an
engineering analysis and they probably will address costs, but I
imagine it will be more on the level of to the utilities
themselves. The overall cost of generating power now and the cost
that the utilities will incur if we use economic dispatch and power
pooling.
REPRESENTATIVE DAVIES: So I guess, Fred it seems to me that what
we would want in the study that we are talking about doing an RFP
for would be to take the Black & Veatch as an input kind of at the
engineering level and ask them to do the economic analysis with
that as a basis, does that make sense to you.
REPRESENTATIVE DYSON: Yeah, I certainly anticipated it as Senator
Leman indicated that this study would take advantage of what we
learned from the Black & Veatch study and so I've said all I have
to say on that.
CHAIRMAN LEMAN: I think I understand the point and we will work at
incorporating that thought into the redraft we will have for our
meeting in Fairbanks. Next point.
REPRESENTATIVE DYSON: Down under stranded investment what
transmission facilities does the state now own?
DWIGHT ORNQUIST: I believe that the transmission facilities that
the state owns, well owns, I think they finance the transmission
lines and most of them are owned and operated by Chugach Electric,
but the financing I believe came from the state. Now if somebody's
got a better understanding of it than that I would certainly give
into that.
SAM COTTEN: Yeah, I think the northern intertie that, wasn't that
fully funded? Jim might even know on that.
JIM PATRAS, HOMER ELECTRIC: Yes, that's...
SAM COTTEN: That's state owned right.
JIM PATRAS: Yes, that's state owned.
SAM COTTEN: Is that the only one that's...
JIM PATRAS: I believe so.
CHAIRMAN LEMAN: Okay, in case you didn't hear that the answer was
the northern intertie is fully state owned and the others were
either fully or partially financed by the state and owned by others
and there is some contract for pay back.
REPRESENTATIVE DYSON: Okay.
CHAIRMAN LEMAN: Those are answers, I think the answers do exist
(indisc.--coughing) appropriate to have that documented and spelled
out even in the study so a reader will know clearly what we are
talking about.
REPRESENTATIVE DYSON: And I think the stranded investment issue is
a significant one. My sense is that the ultimate result of some of
the competition over ten years from now is going to be the big guy
eating the little guys. My concern is about what happens to the
long term contract and the debts that the little guys own and I'm
not particularly interested in a state made one, and the people of
Alaska being left holding the sack here on that obviously. Under
reliability, probably it is implied here it says assess how to
preserve reliability under competition scenarios. And I would just
add safety as well. So it is reliability/safety. Then on the
second bullet assess possible handling of peak loads particularly
in the winter, I don't see that problem it is hardly even being
worth addressing in the study. We have so much over generation
capacity in the areas that I see that we would probably have
competition out of -- somebody would have to explain to me how that
needs to have that much attention here.
REPRESENTATIVE DAVIES: I think there is a concern about that and
I think it is easily handled, but I think it needs to be explicitly
handled and it is the issue of maintaining the appropriate -- it
has to do with peak loads and maintaining appropriate spinning
reserve and how you when you have basically people are moving into
the market that are just resellers, how you barely attribute the
(indisc.) resellers cost structure the requirement of maintaining
the spinning load. Now I think that's all doable but it's
absolutely imperative that it become in a transparent way so that
everybody knows that they are picking up their fair share of
maintaining the same reserves that are required for peak loads.
REPRESENTATIVE DYSON: (Indisc.) taking up their fair share of the
cost of main .somebody maintaining a spinning reserve and stand by.
REPRESENTATIVE DAVIES: That is exactly what I mean.
CHAIRMAN LEMAN: What we heard from previous testimony from I think
it was Mary Ann Pease with Aurora Power, was that they would
provide that through contracts and are providing, but we just want
to make sure that that is being done to the extent that it needs to
be and I think that's what you mean, that's what we mean by that
second bullet.
REPRESENTATIVE DYSON: Okay, all right.
CHAIRMAN LEMAN: Annette did you have anything on that as to why
that bullets there. Is that -- are we interpreting correctly?
ANNETTE KREITZER: Yes, Mr. Chairman you are, and some of the
things are overt and are there for discussion purposes whether or
not they should be in there. I'm sure (Indisc.) has some comment
on some issues (indisc.) you can interpret several different ways.
I guess the important thing is for us to understand from a staff
perspective exactly what the committee consensus is on each
(indisc.).
CHAIRMAN LEMAN: I think and I understand the direction we are
given there. I tend to agree that we can handle it but I think we
need to figure out how to explicitly address it in the way that
we've just already discussed. So I think you probably reword it to
accomplish that. Anybody else have any comment on that point. If
you do get it to us. Go ahead Sam.
SAM COTTEN: Just generally on this page? Any of these?
CHAIRMAN LEMAN: Well, Fred was -- we've covered those two
sections, now Fred was going to move to another one and then....
SAM COTTEN: I'll wait.
CHAIRMAN LEMAN: Okay, go ahead Fred.
REPRESENTATIVE DYSON: I'm -- under the affordability, really the
thing that jumps out here is the public policy call on universal
public service, universal services and that's absolutely a public
policy issue and that's one that the legislature if we're ever I
think we have a (indisc.) agreement here that we're gonna provide
some kind of affordable service, you know, everybody except the
very most remote people, as long -- but I think that we as a
legislature need to be faced with that decision. Are we going to
maintain that position that we are going to make power available.
And then the decision that falls on that one once we decide the
affirmative on that and decide to go ahead with some kind of
competition particularly retail competition. Who is going to be
the provider of last resort? And that one gets to be a
significantly more complicated decision, so I would insert after
the universal services the provider of last resort. I would like
to hear Sam comment on that. Sam.
SAM COTTEN: Sure, well it's an interesting issue and we are dealing
with it right now when it comes to telecommunications and there is
a specific statutory provision that allows the commission to set up
a universal service fund for telecommunications, so that's a way to
get there. If you really wanted to get into universal service you
could do that instead of power cost equalization for example, and
that would require some sort of a surcharge, like we do with
telephones right now. I'm not sure if that's the direction you are
heading but that's a way to get there that would be a different
path then is now followed with this general fund appropriations for
PCE. As far as provider of last resort, that is an issue that you
must deal with, but I don't know that its automatically going to be
a problem here if you for example, if you have a company that
provides service in a specific area they have to provide service to
everybody in that area.
REPRESENTATIVE DYSON: Who says?
SAM COTTEN: Well that's typically the condition of a certificate
that we issue.
REPRESENTATIVE DYSON: That's right. But are we deemed -- are we
in danger of moving in a direction here with competition (indisc.)
a condition of doing business?
SAM COTTEN: Yeah, we might have to be depending on the ability of
a provider. For example if a person wanted to provide electricity
on a competitive basis, but didn't have enough to sell to
everybody, it is pretty obvious that they wouldn't be able to hit
every customer yeah it could be.
SAM COTTEN: [TAPE 1, SIDE B] by design be limited as opposed to a
provider coming and proposing to serve an area and again we
typically require them to serve anybody that asks for service if
they have a certificate.
REPRESENTATIVE DYSON: Yeah, and so what we are looking to you, is
we'd like (indisc.) be here. What should we impede when we/if we
allow a pilot should we be requiring the competitors to take
anybody that asks for it? Power?
SAM COTTEN: I'm not going to respond to that right now, we --
there is an active case in front of the commission, there is an
application to institute a pilot program and I don't think I want
to express any opinions on it at the moment.
REPRESENTATIVE DYSON: Yeah.
SAM COTTEN: I apologize for that.
CHAIRMAN LEMAN: But, I think that's fair and I think you should...
Dwight.
DWIGHT ORNQUIST: One of the things that comes up under universal
service is what's required for that and in the electric industry
the biggest requirement or the biggest hindrance to universal
service is the construction of the infrastructure so depending on
how exactly we structure, you know how we build, if we have
competition, how we build it. If that infrastructure the wires can
be still be put out there and somehow covered by the costs then
we'll have the same coverage as we do now, in fact we might have
better penetration for universal service if we incorporate larger
areas. It is a valid concern and it is one that can be addressed
and in the RFP that certainly should be one of the items that they
address, but just to let you know there are ways to take care of
it.
REPRESENTATIVE DYSON: And that's really different, I probably have
more concern because I represent lots of people who are quite a few
people who are quite a ways from the main urban centers and it will
certainly be an issue on the edges of the service areas.
REPRESENTATIVE DAVIES: Can I break in for just a second?
REPRESENTATIVE DYSON: Sure.
CHAIRMAN LEMAN: Go ahead, John.
REPRESENTATIVE DAVIES: Another example occurs to me in the context
that you are talking about in terms of provider of last resort is
the situation where you might have a large enterprise that can
generate electricity as co-generation doing some other activities,
power or something else. And where they would then have a
significant amount they contribute, but clearly they are not
designing their operations to be a major supplier, so and quite a
-- I guess questions come in that context of how you barely pay
them and how you provide that you distribute the benefit of that,
possibly lower costs power coming onto the grid. But clearly, they
are going to be limited in their scope.
REPRESENTATIVE DYSON: All right last page, under the financial
issues I would like you to add another bullet that says how to
deal, I'm thinking that here in the wholesale competition business,
how to deal with present long term power purchase contracts.
ANNETTE KREITZER: Mr. Chairman?
CHAIRMAN LEMAN: Annette.
ANNETTE KREITZER: When I talked to earlier, I did tell you that I
had to leave at 10:00 a.m. off the teleconference, and I didn't
think the operator knew that.
CHAIRMAN LEMAN: And I announced that I have to leave at 10:30
a.m., so we are gonna -- at the most have a half hour more of this
work session. Okay, Fred I understand your comment, we have that
down.
REPRESENTATIVE DYSON: All right, thanks.
CHAIRMAN LEMAN: Okay, John did you have anything you wanted to add
now to our discussion?
REPRESENTATIVE DAVIES: I don't want to go .I think Fred raised
most of the detailed issues, I guess I'm still mostly concerned
with kind of a more broad scale disposition about time scales and
then what/how do we decide as a sub committee or committee I think
we are going to need to have more discussions in our meeting here
in Fairbanks about which direction we are headed in terms of
recommendation and what kind of recommendations to the legislature.
And I guess my -- I'm still on the frame of mind that I indicated
earlier that I think that we have in place the laws and regulations
that allow application for example, we have one pending right now
for a pilot project. And I don't think anything we've done in the
past or are doing now hinders the APUC in looking at that request,
and so I vote that we don't get too much wrapped around -- I don't
see a big need for real rapid action on the part of the legislature
right now, I think we - rather what I see is the need for really
careful consideration of what we are doing. And so I guess my
recommendation and I hope that we have a .that we can have a
recommendation to the legislature which is a little bit more long
term outlook and not so much any kind of knee jerk short term
reaction.
CHAIRMAN LEMAN: John are you talking about the overall product of
the joint committee or are you talking about this particular RFP
and its scope of work?
REPRESENTATIVE DAVIES: Well I guess I have a hard time separating
the two, but I was really talking about the overall recommendation
but, still I'm assuming that has an implication then for what we
are doing on the sub committee and that would be that I hope that
our recommendations of the subcommittee is to put together a very
credible RFP process that will have a longer time frame then
certainly January, as we have kind of -- I think we have all agreed
as a sub committee pretty much that it's going to .that we are
going to be lucky if we get a really quality RFP out of this - on
the street by the end of December, so I guess that's kind of my
recommendations on the sub committee level and I think it
anticipates a recommendation to the legislature from the full
committee that this is a bigger issue then can be dealt with in six
months and that the legislature is going to have to deal with it
over several terms I believe.
CHAIRMAN LEMAN: Well, I think that is consistent with the
legislature's track record so far. Anything else before we go to
Commissioner Cotten. Okay, Sam.
SAM COTTEN: I just want to make one comment, and I spoke about
this with Annette, and it had to do with, under on your guidelines,
issues, scenarios to be addressed; the second to the bottom there
on power cost equalization question. My suggestion, thought, idea
on it was that perhaps that could be worded differently to
determine the benefits that might accrue as a result of
restructuring. But, the way it is worded now it sounds like its
sort of a separate question hanging out there all by itself, to
assess the benefits of getting rid of the power cost equalization
program. And it may be that we could examine the possibility of
lesser need for a program like that if you had restructuring, that
would tie into what we are talking about here. I think it was good
that Fred brought up that business about universal service, because
that's another angle that the legislature would be involved with if
there was a new direction to take there. The concept of universal
services widely held in the United States when it comes to
telecommunications and in Alaska we really have a form of it with
the power cost equalization and that the attempt is to somehow
assure that people have affordable electricity. The way we are
doing it right now is with those general fund appropriations and
that's almost an indirect recognition of the need for universal
service. Glad to see it on the agenda. As you may or may not know
the Governor appointed a task force on power cost equalization and
I'm a member of that task force and so very much aware that the
legislature - the funds that the legislature set aside for that
program are almost gone, you will be faced with decisions in that
arena this year as well.
CHAIRMAN LEMAN: The money is going to that self help pool that --
what the -- namely the project down in the Wrangell area, is
taking....
SAM COTTEN: Well the legislature you set aside some funds a few
years ago that funded this program. Now there will be about five
or six million dollars left in that fund this year, but an
additional source of funds could be the revenue from the Four Dam
Pool. But, some of those are going toward the Southeast Intertie
deal and some are available for power cost equalization unless the
Four Dam Pool people oppose self-help. They'll say we need those
funds for our own maintenance activities, et cetra, so that would
remove them from the table. But even that's going to maybe 25
percent of the requirements for PCE, that's only four or five
million dollars, that would be available....
CHAIRMAN LEMAN: So, what happened to the other moneys that we had
projected that the moneys would be available at the level of what
seventeen million dollars a year. Then that may have even been
when you where in the legislature.
SAM COTTEN: No that was right after I left. Yeah, I think you
guys did that in '83.
CHAIRMAN LEMAN: '93.
SAM COTTEN: '93.
CHAIRMAN LEMAN: What happened?
SAM COTTEN: Well the fund is just depleted now.
CHAIRMAN LEMAN: How did it get depleted?
SAM COTTEN: Well, seventeen million dollars a year times how ever
many years it was, that was all that was in there.
CHAIRMAN LEMAN: But hadn't we projected that it could last
indefinitely, or it never was the projection.
SAM COTTEN: No you didn't fund it to that level -- your statement
from the legislature was that the program should continue through
the year 2013, but the actual cash that was put on the table
didn't/wasn't expected to last that long.
CHAIRMAN LEMAN: I'll get into that....
SAM COTTEN: That's a separate question, I'm sorry to divert your
attention from what's on the table today, I think it is a good, it
could be an important element of your deliberations.
REPRESENTATIVE DAVIES: Loren?
CHAIRMAN LEMAN: Yes, John.
REPRESENTATIVE DAVIES: I guess, maybe we should move the
discussion right now, because you've got to leave here pretty soon
to what our next step should be, and how do we get the RFP going.
It seems like we had, I agreed with your earlier comment that we
should construct a draft RFP and have the NRRI outfit evalu -- you
know, plus the APUC of course evaluate that draft. How do we get
to the stage of having a draft?
CHAIRMAN LEMAN: I think we can take a crack at it and have
something done in time for us to look at in Fairbanks on the 16th.
REPRESENTATIVE DAVIES: We means you and Annette?
CHAIRMAN LEMAN: And Janet, and staff to Representative Rokeberg
and the APUC staff.
SAM COTTEN: We volunteer our staff to assist in the project.
CHAIRMAN LEMAN: And we accept the offer. I may be an engineer and
a consulting engineer but this area is - it stretches me to the
limits of my capabilities.
REPRESENTATIVE DYSON: Loren.
CHAIRMAN LEMAN: Yes, sir.
REPRESENTATIVE DYSON: My former staff member Pat Harman is really
quite knowledgeable in this area. He's now moved down the hall and
working for Representative Pete Kott, but I volunteer him to help
as well.
CHAIRMAN LEMAN: Okay, well and I accept that. So what we are
saying is that here in the next eleven days we need to get these
inputs in and get it reworded and it may not, it still won't be a
final version at that time, but we will incorporate it -- some or
our concerns and comments from today and whatever else people have
and have a draft that the full committee can see and I think the
intent is that we have it even distributed before that meeting in
Fairbanks so then we can discuss it in Fairbanks. Commissioner
Ornquist.
DWIGHT ORNQUIST: Just a couple of things I would like to put out
or pro-offer (ph) for inclusion in the RFP as well, of course
anything that we do we want to consider the safety, reliability,
quality, sustainability of service, all of that just like we do
now. But, in addition, when we go out to do the RFP the overall
question is going to be how can Alaska benefit from restructuring
the electric industry. In thinking of that we need to review the
existing system and the RFP needs to address the fact or be very
specific that there may not be one structure, one competitive
structure for the entire state that in some cases or maybe in all
cases the existing regulatory structure might be correct, I don't
think we will find much of that and I think competition has a role,
but the study should address it I believe and look at various forms
of competition and various structures. I agree on the long term
power contracts need to be addressed specifically, we might want to
consider performance-based regulation in lieu of full-blown
competition. I believe the legislature will be very interested in
having the study address what kind of regulatory oversight it will
want to have us doing after competition or after restructuring.
Probably a portion to address definition, measurement and recovery
of stranded costs.
DWIGHT ORNQUIST: That in mind is just because something isn't used
after restructuring occurs doesn't mean its necessarily stranded
cost automatically. And we need to define what fits in that. I
think anybody we choose or if the RFP should probably for
qualifications of the bidders we might want to make them large
enough so they have had international, national and state level all
three and the reason I say that is at the international level a lot
of different countries have addressed restructuring and competition
in electric way before the United States began looking at it. So
companies that have been helping other countries probably have a
head start on seeing the benefits and pit falls. And maybe -- well
that is probably good enough there. One of the other items I think
is very important would be to address the impact that new
technology has had, will have and would have immediately on
restructuring. We may find that if we restructure one way, we
won't see new technology coming in and if we restructure other ways
it will encourage new technology to come in as soon as it is
economically viable. The point made about universal service is a
good one I think that is a state call, the -- at the ... in the
telecommunications industry there is a Congressional Mandate from
the Telecommunications Act of 1934 and it was carried forward in
the Telecommunications Act of 1996. In the electric industry we
don't have such a mandate at the congressional level, so it is a
state call on that and that is something the legislature should and
does have complete authority to define what should be occurring.
I believe that is a policy call that the legislature will want to
be making. The last thing that I can think of right off hand is
defining and identifying what we call cherry picking. In reality
if we are doing our job right as regulators there are no cherries
out there, because we'll have the costs or the price for service
down to the cost as close as possible for every one. In reality,
we probably have a number of implicit subsidies, those should
probably be identified and maybe at that point the legislature
needs to decide if we want subsidies do we want them explicit or
implicit. Maybe the legislature would decide to oversee and take
care of subsidizes or perhaps hand them down to us, but it should
be something that's addressed, and all the information there for
you to make your decisions. That's all I have and I will scribble
this stuff I scribbled it up now, but I'll type it up I guess and
hand it out, the stuff that I have down here, to anybody who is
interested in having it.
CHAIRMAN LEMAN: If you could get that to us, it will help us
integrate some of those topics into this/these guidelines. Go
ahead Fred.
REPRESENTATIVE DYSON: Or in the committee members Dwight brings up
several significant questions that we owe discussion here, because
I think he just eloquently in about three breathes widely expanded
the scope of what we are going to do here. Every one of the issues
he raised I think are significant, interesting and some of them
have profound implications but I think they expand the scope of
what we are talking about here, beyond the competition thing. If
our scope is what we are going to do long term in restructuring the
power industry I guess he's exactly right those are all the issues
that we need to deal with, but boy what I heard him just say makes
this a bigger job.
CHAIRMAN LEMAN: Probably what we should be doing and we maybe
hearing back from our friends at NRRI and other friends in the
industry is that this scope of work is far to large for the funds
that we have available and the time that we are expecting results
so that's probably going to be the reaction and I fully expect it
to be.
REPRESENTATIVE DYSON: I'm also interested with the incentive, what
do you call it...
BOB LOHR, APUC: Performance-based.
REPRESENTATIVE DYSON: Performance-based incentive. And I'm also
quite interested in how do we get - if the threat of competition
doesn't get these folks really motivated to do all the innovative
things they can do to better serve their customers cheaper, what
does, as Dwight very properly brought up that question and it is
one that I was, have been kind of pursuing but somewhat separately
and I have thought of linking it into this contract. I think it is
a very valid one for us to work on, but I think we need to make a
policy call here on whether to put it into this study at this time,
and I think the right on the money may be unlimited for us.
REPRESENTATIVE DAVIES: Can I comment on that?
CHAIRMAN LEMAN: Go ahead John.
REPRESENTATIVE DAVIES: I think at this stage of game we ought to
be putting everything down on a piece of paper that people raised.
I would hope, Loren, as you guys put this together that you err(ph)
on the side of putting more into it rather than less and I agree
that we are going to have to pare it back, but I think we ought to
have on some of these more major issues, I think we ought to make
the full committee aware that these are points that we need to
make.
CHAIRMAN LEMAN: I have some questions I'm going to throw out that
are fairly basic, but I think it really impacts how this is
conducted. First one is who is the owner? Who is the project
director for the study? Is it the legislature? Is it the APUC?
How do we work that out, because we want to make sure whoever the
consultant is knows who their, essentially who their boss is, who
they report to and that is something we need to figure out.
Whether the APUC will take the lead, the legislature, that's not
necessarily something we need to decide today, but it's I think it
is a very important question. The second thing is timing for all
of this, we have touched on it, but we haven't fully agreed and nor
necessarily do we need to decide today, we need to address that
somehow and the funding level is another issue, we've kind of
talked around it and we've talked in generalities and something of
this magnitude may cost what the numbers (indisc,) what one hundred
fifty to two hundred thousand dollars I think is what one expert
said last time. And then the last item is the process for
selection of a consultant if we go through a process where we have
them submit statements of qualifications and pare that down to a
short list that actually receives the detailed RFP and respond to
that and what we have interviews, what's the schedule and the
selection committee the whole process for selection and how we get
there is an important one, because if we are asking every
interested entity in the world that might mention that they are
here to prepare a detailed response and there's a dozen who do,
there's a big investment just in responding to the RFP and maybe we
want to have a process that pares that down so it makes our job
easier and it makes their job easier. Anyway, those are my
comments.
REPRESENTATIVE DYSON: Well said.
REPRESENTATIVE DAVIES: I agree with all of that stuff. Can I
offer a couple other little specific things?
CHAIRMAN LEMAN: Go ahead.
REPRESENTATIVE DAVIES: Back to the issue of stranded investment,
one of the things I think we need to explicitly deal with in the
RFP is the issue of depreciation, on the part of the various
utilities that own existing plants and distribution structures.
And that gets to the question of how you, how do you actually
calculate what this investment is, but the issue of depreciation is
a major one. Some of these plants have been in place for 30 or 40
years and others are more recent and that there has to be some
recognition of that as opposed. The other big issue I think that
comes into play in that context is the issue of states investment
and should (indisc.) state put into the interties or the Four Dam
Pool, those kinds of things, there are all these legal issues that
are already in place but just as a policy issue it should be
(indisc.--other people talking) stranded investment.
REPRESENTATIVE DAVIES: And now I guess I would like to go back to
Fred's' question about do we need explicit Legislative action on
the issue of universal service and I would like to put that
question to Sam and Commissioner Ornquist, could you comment on
that do you think that's something that the committee should
recommend should that be a full Legislative determination someway.
Should it be a recommendation of the full committee what kind of
Legislative action do we need on ... the question of universal
service?
SAM COTTEN: Mr. Chairman.
CHAIRMAN LEMAN: Commissioner Cotten.
SAM COTTEN: My only point there was I think that if you wanted to
create a universal service fund, then that would require specific
Legislative action. Right now, as I mentioned the concept of
universal service is sort of - is being handled obliquely through
your funding of the power cost equalization program. Now if you
want to talk about universal service in a different setting I don't
really -- I guess I'm not sure how it might apply in for example in
the Railbelt. Right now, I mean Dwight points out there are
implicit subsidies right now, if you live right next to the power
plant, it is cheaper to deliver you power. If you live 10 miles
out in South Anchorage or Eagle River or where ever your -- it's
inherently going to cost more to deliver you power so they charge
one rate for each service area probably, I guess I'm not clear as
to what other universal service applications you are interested in.
REPRESENTATIVE DAVIES: Well I guess what I'm concerned about is
the -- you do now as Commissioner Ornquist indicated when you get
a certificate and start to operate in the area you -- there is an
explicit requirement that you serve everybody in that area and that
your prices are controlled by the regulatory group. If we were to
move toward deregulating that or restructuring that it seems to me
that that's a question of what are those requirements going to be
in future are you going to allow if you are closer to the power
plant are you going to have lower prices. You almost -- if you
imagine going to the smaller and smaller power plants one of
the and smaller, smaller service areas, clearly that's going to be
something that's going to come into play, that you can offer a
cheaper price if your just trying to serve a very small homogeneous
area. How do we handle those things and how do we handle those in
the context of universal service? And my specific question is do
you think that we need explicit Legislative consideration that
policy issue at this stage or is that something we should put off
for the future or does the existing structure handle it okay?
SAM COTTEN: I think the existing structure handles it. If the
legislature changes the structure or requires a change to the
structure, then I believe you have to have -- that has to be a
point that considered and dealt with, how you deal with it I
wouldn't speculate at this point, but if you change it and don't
require people to just to serve in their areas or somehow change
the existing structure, you can't let that idea just be forgotten.
At the moment, I don't think you need any change.
CHAIRMAN LEMAN: Just so I understand, currently, in a service area
requiring to serve but they are not required to charge the same
price. For example if I wanted service at the end of a quarter
mile road and you needed four poles or averaging (indisc.) takes
then the utility has the right to charge me for the replacement of
those poles being in service and somebody else (indisc.--coughing)
transformer then that would be a different cost. Is that
essentially how it operates today and that's consistent with
universal service?
SAM COTTEN: They have to file a tariff and so one of the tariffs
that they'd file that would be applicable would be the line
extension policy. And so, therefore, you'd be charged a certain
amount if they had to expend certain capital resources, but I
believe that they still have to -- in a service area still pay the
same amount per kilowatt hour. So you pay the operating, the bill
is the same but you want them to put a big bunch of poles out to
your property?
CHAIRMAN LEMAN: Then you pay for that.
SAM COTTEN: Yes, essentially, that's the case.
DWIGHT ORNQUIST: And if I may throw in there, that's actually not
consistent with universal service, as we know it generally
speaking. Because generally speaking with universal service you'd
get connected up for the same rate, but in electric you would
charge more for certain. The idea is different classes of
customers pay different rates and I think that's where we find the
most implicit subsidies and that's where we find the most creation
if you can say cherries to be picked.
CHAIRMAN LEMAN: But a lot of that comes about because of either
the size or the timing of the load or things that create certain
benefits to providing through out the cent a kilowatt hour for a
certain type of customers because of what the impact then they have
on generating system or something else.
DWIGHT ORNQUIST: Absolutely.
CHAIRMAN LEMAN: Okay, we are running out of time, I want to make
sure in the next three minutes we can at least get whatever
direction to us and our staff so we can take another shot at this.
Any other comments on anything we ought to get into this?
BOB LOHR: Mr. Chairman I haven't heard mention the geographic
scope of this study and I'd like the committee to grapple with
whether it should be Railbelt with the most immediate promise for
potential benefits for competition might be or whether it should be
state wide which again affects the cost, the timing, et cetera.
CHAIRMAN LEMAN: That's a very good question. My opinion is
eventually, and I agree with John that have everything on our plate
and then decide okay we're not going to be able to address
everything but start peeling back things we can't address. That
would be an area where I would see would be pretty obvious. The
initial study in my opinion ought to focus on the areas of the
highest potential and clearly there are areas of Alaska that are at
least in my opinion clearly that are not candidates for
competition. But there are other areas in my opinion that are. We
differ on each on that for example Anchorage I would say ought to
be at the higher end of that list and I would suggest that McGrath
probably should not be, just to point out a couple. Anything else?
SAM COTTEN: Your next meeting is in Fairbanks?
CHAIRMAN LEMAN: Yes, we next meet in Fairbanks on Wednesday,
September 16th, at 10:00 am, at the LIO.
JANET SEITZ: Fairbanks LIO.
CHAIRMAN LEMAN: Fairbanks LIO and the schedule is that we will
take public testimony and I believe testimony from various
utilities that have been invited and we are going to discuss this
draft RFP issue.
SAM COTTEN: Are you going to have - attempt to have a straw man
there for people to shoot at? A draft RFP?
CHAIRMAN LEMAN: I hope so, I hope that we'll have -- well we can
at least have this with the inputs that we got from today and can
at least have that and maybe take a shot at some of the other
things in it, in the overall synopsis. Any other issues for the
good of the order? Thanks for participating and we will -- if you
have any other inputs, I'm going to be traveling a fair amount next
week, I think I leave on Tuesday, I'm not sure if it's Tuesday
evening or Tuesday morning, but if you have anything else you need
to give to me call me on Monday, otherwise Annette on my staff and
I'll be calling in from wherever I am and checking with her and she
can handle some of that for the rest of the week. And the
following week I'll be back in town and we can work it at lease
coming up with a good final draft. Thanks, have a good day guys.
ACTION
The committee took no action.
ADJOURNMENT
The meeting adjourned at 10:30 a.m.
NOTE:
The meeting was recorded and handwritten log notes were taken. A
copy of the tape(s) and log notes may be obtained by contacting the
House Records Office at 130 Seward Street, Suite 211, Juneau,
Alaska 99801-1182, (907) 465-2214, and after adjournment of the
second session of the Twentieth Alaska State Legislature, in the
Legislative Reference Library.
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