Legislature(1993 - 1994)
04/26/1994 08:35 AM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 26, 1994
8:35 a.m.
TAPE HFC 94-142, Side 1, #000 - end.
CALL TO ORDER
Co-Chair Larson called the House Finance Committee to order
at 8:35 a.m.
PRESENT
Co-Chair Larson
Co-Chair MacLean Representative Martin
Vice-Chair Hanley Representative Navarre
Representative Brown Representative Parnell
Representative Grussendorf Representative Therriault
Representatives Foster and Hoffman were not present for the
meeting.
ALSO PRESENT
Robert Lohr, Executive Director, Alaska Public Utilities,
Department of Commerce and Economic Development; Tom Turner,
Anchorage Recycle Center; Larry Markley, Alaska Rural
Electric Cooperative Association.
SUMMARY INFORMATION
HB 539 "An Act extending the Alaska Public Utilities
Commission; and relating to regulation of public
utilities and to regulatory cost charges."
CSHB 539 (FIN) was reported out of Committee with
"no recommendation" and with a fiscal impact note
by the Department of Commerce and Economic
Development and with a zero fiscal note by the
Department of Revenue,DATED 4/8/94.
HOUSE BILL NO. 539
"An Act extending the Alaska Public Utilities
Commission; and relating to regulation of public
utilities and to regulatory cost charges."
Representative Brown provided members with AMENDMENT 5 (copy
on file). She explained that amendment 5 would address the
regulatory cost charge issue and implement recommendations
by Randy Welker, Legislative Auditor that all regulatory
cost charges be based on the level of effort conducted by
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the Alaska Public Utilities Commission in addressing the
various utility sectors. She noted that current statutes
use a gross revenue approach. The legislation proposes to
adjust gross revenues for only one utility sector. She
quoted Mr Welker's audit, dated April 5, 1994: "It remains
our opinion that the only way to remove these inequities is
to adjust the rates based on APUC work effort. Any other
mechanism is purely coincidental, as would be any `cost
charge' based on industry `revenues.'"
Representative Brown observed that amendment 5 would provide
that the Commission set rates by regulation. She noted that
the charge would be spread across electric, telephone,
pipeline, gas, water, sewer, refuse and cable. She
maintained that the approach outlined in amendment 5 would
be preferable to that contained in the legislation.
Representative Brown provided members with AMENDMENT 6 (copy
on file). She explained that amendment 6 would make it
possible for recycling operations to recover, through APUC
regulated rates, the value of their equity in recycling
equipment. She explained that recyclers usually have little
access to debt markets needed to finance purchases of
capital equipment. This amendment would allow recyclers to
recover some of their cash investment. She observed that
APUC statutes say that reasonable net capital and operating
costs can be recovered. However, the Commission has
interpreted that to exclude equity investment in recycling
equipment.
TOM TURNER, ANCHORAGE RECYCLING CENTER explained that the
amendment would allow a least cost option to rate payers.
He clarified that the debt and equity cost of recycling
could be recouped by the investor if the amendment is
adopted. He stated that the Commission's interpretation of
statutes would only allow a return on the debt. He noted
that garbage companies are allowed a return on the equity of
their equipment, but recyclers are not.
ROBERT LOHR, EXECUTIVE DIRECTOR, ALASKA PUBLIC UTILITIES
COMMISSION explained that the Commission has not taken an
official position on the issue of debt return on recycling
equipment investment. He noted that an active case
regarding this issue is pending before the Commission.
Representative Martin MOVED to ADOPT AMENDMENT 4. Amendment
4 was held from the House Finance Committee meeting of
4/25/94. Co-Chair MacLean OBJECTED. Representative Brown
spoke in support of amendment 4. She asserted that the
amendment is fair. She observed that the amendment would
allow the separation of monopoly regulated activities from
entrepreneurial competitive activities.
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A roll call vote was taken on the motion to adopt AMENDMENT
4.
IN FAVOR: Brown, Grussendorf, Hanley, Martin, Parnell,
Therriault, Larson
OPPOSED: MacLean
Representatives Hoffman, Navarre and Foster were absent from
the vote.
The MOTION PASSED (7-1).
Representative Brown MOVED to ADOPT AMENDMENT 5.
Representative Hanley expressed concern with the provision
to allow the Commission to set rates by regulation without
caps on gross revenues. Co-Chair MacLean echoed concerns
that the amendment would give too much authority to the
Commission to determine rates by regulation.
Representative Brown noted that section 13 on page 4 would
not be effected by the amendment. She observed that section
13 provides that lapses be identified. She noted that the
legislature can reappropriate the lapsed amount in the
following year. She suggested that the Commission could
reduce their charge for the that year by a comparable
amount. She maintained that the cap will be the amount of
the budget the legislature authorizes.
Mr. Lohr clarified that AS 42.05.253(b) requires the
Commission to limit the rate within a cap that proximately
equal the operating budget. The current rate is .4 percent
of the gross revenues of any regulated utility or pipeline
carrier.
A roll call vote was taken on the motion to adopt AMENDMENT
5.
IN FAVOR: Martin, Navarre, Brown, Larson
OPPOSED: Grussendorf, Hanley, Parnell, Therriault, MacLean
Representatives Hoffman and Foster were absent from the
vote.
The MOTION FAILED (4-5).
Representative Brown MOVED to ADOPT AMENDMENT 6. Mr. Lohr
restated that the Commission has not adopted an official
position in regards to the recycling issue.
A roll call vote was taken on the motion.
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IN FAVOR: Brown, Grussendorf, Navarre, Martin, Parnell,
MacLean, Larson
OPPOSED: Hanley, Therriault
Representatives Hoffman and Foster were absent from the
vote.
The MOTION PASSED (7-2).
Representative Brown MOVED to delete "1995 and insert "1996"
on page 5, line 16. She noted that the Commission's
testimony indicated that they preferred the delayed
effective date.
Mr. Lohr stressed that the delayed effective date would
allow the Commission a full legislature to address issues
resulting from new authorization language. He emphasized
the need to establish transitional measures to deal with any
items that have been based on the liberally construed
statutory authority. He noted that the Commission may need
to seek further legislative authority or clarification.
Co-Chair MacLean OBJECTED. Representative Navarre noted
that controversial issues are often delayed until the last
session. Representative Martin spoke in opposition to the
amendment.
LARRY MARKLEY, ALASKA RURAL ELECTRICAL COOPERATIVE
ASSOCIATION (ARECA) clarified that the ARECA and the Alaska
Telephone Association are not supportive of the delayed
fiscal note.
A roll call vote was taken on the motion to change the
effective date of section 2 to "1996".
IN FAVOR: Navarre, Brown
OPPOSED: Martin, Parnell, Therriault, Grussendorf, Hanley,
Larson, MacLean
Representatives Hoffman and Foster were absent from the
vote.
The MOTION FAILED (2-7).
Representative Martin MOVED to report CSHB 539 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes.
CSHB 539 (FIN) was reported out of Committee with "no
recommendation" and with a fiscal impact note by the
Department of Commerce and Economic Development and with a
zero fiscal note by the Department of Revenue,DATED 4/8/94.
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ADJOURNMENT
The meeting adjourned at 9:20 a.m.
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