Legislature(2009 - 2010)HOUSE FINANCE 519
03/29/2010 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HCR19 | |
| HB386 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 386 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HCR 19 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
March 29, 2010
1:41 p.m.
1:41:11 PM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 1:41 p.m.
MEMBERS PRESENT
Representative Mike Hawker, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Vice-Chair
Representative Allan Austerman
Representative Mike Doogan
Representative Anna Fairclough
Representative Neal Foster
Representative Les Gara
Representative Reggie Joule
Representative Mike Kelly
Representative Woodie Salmon
MEMBERS ABSENT
None
ALSO PRESENT
Representative Jay Ramras; Ted Leonard, Executive Director,
Alaska Industrial Development and Export Authority (AIDEA);
Margaret Dowling, Staff, Representative Ramras; Pat Carter,
Consultant, Delta Western; Juli Lucky, Staff, Co-Chair
Hawker; David Brower, Assistant Attorney General,
Department of Law
PRESENT VIA TELECONFERENCE
James Hemsath, Deputy Director, AIDEA; Lieutenant Kat
Peterson, Alaska State Troopers
SUMMARY
HCR 19 AIDEA REPORT ON IN-STATE FUEL STORAGE
HCR 19 was REPORTED out of Committee with
no recommendation and with previously
published fiscal note: FN1 (HL+C CMT)
HB 386 CITATIONS
CS HB 386 (FIN) was REPORTED out of
Committee with a "do pass" recommendation
and with previously published fiscal
notes: FN1 (DCED), FN2 (DLWD), and FN3 (DPS)
1:41:20 PM
HOUSE CONCURRENT RESOLUTION NO. 19
Urging the Alaska Industrial Development and Export
Authority to present a business case to the Alaska
State Legislature that includes a method for
financing, a plan to solicit proposals for a public
and private venture, and an analysis of the economic
feasibility of a state-built and privately operated
fuel storage facility that would serve the public
interest by providing Alaskans with a reliable source
of jet fuel, diesel, and gasoline at competitive
prices.
1:41:54 PM
REPRESENTATIVE JAY RAMRAS presented an overview of HCR 19,
a resolution to explore an opportunity for a third party,
who has the capacity and balance sheet, to obligate
themselves over a long term cycle to be an operator for a
lease of liquid storage. A study was commissioned and
completed on retail gas prices in Alaska that concluded
nothing illegal had been going on in gasoline refining in
the state of Alaska. The refineries charged what the market
would bear. Price regulation and gouging was rejected as a
factor, therefore the study began to look for market
courses to make the price of fuel more affordable. One of
the remedies explored was getting another refinery into the
gasoline business. Representative Ramras explained the high
prices throughout Alaska. He noted that 85 percent of
gasoline is refined in Flint Hill, Nikiski, and Tesoro
refineries. He explained how these refineries work with
extraordinarily high costs passed to the consumers. Another
option would be an expansion of the tank farm at the port
of Anchorage. HCR 19 would expand this tank farm in
Anchorage benefiting Alaskans throughout the state.
1:49:13 PM
Representative Gara contended that there are two approaches
to reduce prices for motor fuel; the price gouging bill
which he favors, and this non-binding resolution. He
questioned how the resolution will do anything and why a
resolution was needed.
Representative Ramras maintained that it is not necessary,
but argued that the people do not need the heavy hand of
government trying to set the price of gasoline with price
regulation. This resolution is not essential, but helpful
for Alaskans to look at the variety of market place
solutions.
Representative Gara clarified that the price gouging bill
does not set prices. He maintained that currently there are
private entities trying to move forward with fuel storage.
He questioned how sending a non-binding resolution to a
state agency moves things forward.
Representative Ramras expressed that it is helpful for all
Alaskans to know other available options. This resolution
would allow the people of Alaska to know that the
legislature is a pro-active not passive body. Those private
entities interested in exploring a private tank farm would
benefit from this legislation.
1:52:28 PM
Vice-Chair Thomas explained that in the smaller communities
of Southeast fuel is brought in by barges at high cost and
sometimes the fuel storage can work against them.
Representative Ramras agreed and mentioned other villages
with similar problems. He maintained that fuel storage may
not work if it is possible to deliver cheaper from Cherry
Point. He related that existing refineries may drop their
price to meet bulk storage prices. He asserted that there
needs to be a third party operator with a significant
balance sheet involved. He talked of the big box stores
using unbranded fuel and if prices are lowered then the
third party operator would be at risk. AIDEA, in building
their business case, will search for an operator with a
strong balance sheet.
1:56:13 PM
TED LEONARD, EXECUTIVE DIRECTOR, ALASKA INDUSTRIAL
DEVELOPMENT AND EXPORT AUTHORITY (AIDEA) indicated that he
was available to answer questions. He shared that AIDEA has
been going through many internal changes. One of AIDEA's
goals is to serve as a central resource in looking at the
feasibility for economic incentives and infrastructure.
This project could be a state or AIDEA owned or can be a
shared facility. AIDEA would develop a business case for
the legislature.
1:59:01 PM
JAMES HEMSATH, DEPUTY DIRECTOR, AIDEA (via teleconference),
presented a PowerPoint slide presentation. He referred to
Slide 2, HCR 19 Fuel Storage Business Case:
Urging the Alaska Industrial Development and Export
Authority to present a business case to the Alaska
State Legislature that includes a method for
financing, a plan to solicit proposals for a public
and private venture, and an objective analysis of the
economic and business feasibility of a state-built and
privately operated fuel storage facility that would
serve the public interest.
Slide 3, AIDEA's Role:
‚Provide an objective analysis examining both the
economic development impact and feasibility of a
storage facility as well as the long term viability of
the project.
‚As part of the analysis identify potential private and
public sector users of the facility
‚In conjunction with EconOne, look all aspects of the
fuel supply system in the State and the impact
additional storage would have for the different
regions.
‚Examine possible ways of financing this project which
could include AIDEA financing through ownership as a
Development Finance Project (AS 44..88).
‚As a possible owner of the storage facility, act as a
consolidator for multiple users and demands assuring
open access to storage.
2:04:12 PM
Mr. Hemsath presented Slide 4, Action Plan:
‚Market Analysis
‚Continuation of last years efforts by EconOne
‚Military
‚Long term Air Cargo
‚Fuel supply reliability
‚Engineering Layout and Cost Estimate
‚Space constraints
‚Multiple tanks, vapor recovery, additives, labs
‚Schedule
‚Establish Basic Business Case Model
‚Competition
‚Market risks
‚Economic impact
2:06:03 PM
Mr. Hemsath continued with Slide 5, AIDEA Business Case:
‚Open access
‚AIDEA owned - contracted operator
‚Generate revenue
‚Market and market risk
‚Competition
‚Economic development
‚Job creation/diversification
‚Open Season
Slide 6 showed the different transportation routes of fuel
supply in the state: marine, river, air, road and rail. Mr.
Hemsath moved to Slide 9 Moving Forward, with a statement
of AIDEA's mission: The mission of the Alaska Industrial
Development and Export Authority is to promote, develop and
advance economic growth and diversification in Alaska by
providing various means of financing and investment. Mr.
Hemsath continued with Slide 10, Development Finance
Program with exerts of program statute which has the
ability to acquire:
‚An interest in a project as necessary or appropriate
to provide financing for the project
‚Manage and operate projects as the authority considers
necessary or appropriate to serve a public purpose
‚Equip, operate, maintain, construct, or install
facilities that will enhance the competitiveness of
the international airports (AS 44.88.080)
2:08:42 PM
Mr. Hemsath moved to Slide 11, Development Finance Program:
‚Under AS 44.88, the project must be endorsed by the
local government
‚The project and its development must be economically
advantageous to the state and to the general public
welfare and will contribute to the economic growth of
the state;
‚The project applicant is financially responsible
‚The project is economically and financially feasible
and able to produce revenue adequate to repay the
bonds or loans with which it is financed.
Mr. Hemsath indicated that Slide 12 reflected some of the
current Development Projects:
‚DeLong Mt. Transportation System
‚FedEx Maintenance Facility
‚Snettisham Hydroelectric Project
‚Ketchikan Shipyard
‚Skagway Ore Terminal
Healy Clean Coal Project
Slide 13 Port of Anchorage Fuel Terminal shows that if the
project is viable and if no private entities would be
willing to take up this role and it was appropriate for
AIDEA, then:
‚500,000 to 1,000,000 barrels of fuel storage capacity
‚Open access
‚Product transferred by pipeline, barge, truck and
railcar
‚Enhance the statewide fuel system
‚AIDEA contract with operator
‚Open season for storage commitment
‚Estimated cost $75 - 100 million
2:10:15 PM
Representative Austerman commented that AIDEA would be
using AIDEA receipts for this project. Mr. Leonard
commented that there is money in their budget to do the
feasibility studies that would benefit the state and AIDEA.
Representative Austerman suggested that natural gas be
considered in this resolution.
Representative Gara remarked that AIDEA normally decides
what the most promising projects are and does not usually
wait for the legislature to decide which projects to work
on. Mr. Leonard replied that in the past usually there is a
reactive mode or a business will come in before looking at
a project. Through this strategic plan AIDEA would take on
an advisory role. This has not gone through AIDEA yet to
see if AIDEA is interested. If the legislature believes
there is a need for an economic infrastructure project,
then AIDEA would advise them.
2:12:43 PM
Representative Gara asked, under AIDEA's current rules, if
they thought a project was worthy then AIDEA would proceed
without the legislature. Mr. Leonard replied that was
correct. Representative Gara asked if AIDEA has been in
contact with interested private parties. Mr. Leonard
replied there have been some parties who have expressed an
interest. Representative Gara inquired if these private
parities presented a promising case would AIDEA work on it
without waiting for a legislative resolution. Mr. Leonard
explained that in the normal course of things they would
look at the feasibility, but maybe not on a stateside
basis. This resolution looks across the state.
Representative Gara asked if a private entity comes
forward, AIDEA would look at the proposal and if it is
viable then would work on it no matter if the resolution is
passed or not. Mr. Leonard replied that was correct.
2:15:47 PM
Representative Doogan remarked that the idea is there is a
possibility that someone can make money by building and
maintaining a storage facility which could hold lower price
gas that is able to roll out and complete against others
without this facility. Mr. Leonard responded that it is
about more than just gasoline; there is jet fuel, security
and aviation fuel, and military fuel.
2:18:06 PM
Representative Doogan noted that there are already
companies that supply these fuels and inquired if this
would negatively affect their operations. Mr. Leonard
observed that is part of what a study would substantiate.
There needs to be a verification of the capacity needed for
all sorts of fuel storage.
Mr. Hemsath answered that the short answer was yes, but
also not entirely sure. The demand of fuel and supply needs
to be better understood. There are some who believe that
the ability to share liquid products on the open market
would make the price more competitive. In addition, the
security of jet fuel is important in the state. There is
also the aspect of peak demands. The question is if this
storage would add sufficient security to the state and how
would that impact other businesses in state that are
already producing.
Mr. Leonard interjected that AIDEA is not a proponent of
this project at this time, but only providing an economic
impact analysis. He added that AIDEA would return to House
Finance to ask for bonding capability in order to move
forward.
2:22:46 PM
Representative Doogan mentioned that this seems like a
solution looking for a problem. If the problem is not being
able to get the fuel, then there may be a need for more
storage, but it could be a pricing problem. He expressed
confusion on what problem is trying to be solved and why a
study would solve it.
2:24:54 PM
MARGARET DOWLING, STAFF, REPRESENTATIVE RAMRAS, noted that
Pat Carter, representing Delta Western, was available to
speak and answer questions.
Representative Joule asked what would be the impact on
local refineries in the state. Mr. Leonard stated that the
state would not build this facility without being paid for
it. He stressed that there would be a price over 20 years
that whoever used the tank farm would pay for the full cost
of the facility plus a rate of return.
2:26:25 PM
PAT CARTER, CONSULTANT, DELTA WESTERN, observed that there
has been a steady demand for fuel, but a decrease in
production of in-state refined materials. There has also
been a steady decrease in Jet-A fuel. The concept of the
fuel storage is to bring in large volume tankers to
Anchorage to obtain better prices.
Representative Gara inquired if Mr. Carter's prime goal was
to use the storage for Jet-A fuel. Mr. Carter replied it
would be for all fuels sold.
2:28:55 PM
Representative Kelly inquired about what the volume
discount would be. Mr. Carter replied that he did not know.
He explained that there are different purchases from
different locations that vary daily.
Representative Kelly asked Mr. Leonard what the cost would
be for the agency to get to the first milestone in this
project. He also wondered if a resolution would be looked
at as a suggestion or a definite decision to do it. Mr.
Leonard responded that if there is a resolution from the
House, then the study would be done.
Mr. Hemsath interjected that AIDEA's cost would be about
$30,000 for an engineering study. He remarked that the
potential exists that there could be a 20 cent discount
with a larger tanker load.
2:32:23 PM
Representative Gara asked Mr. Carter if Delta Western was
already looking at this project. Mr. Carter said that Delta
Western had initiated this in response to questions from
the legislature regarding the high price of fuel around the
state. One of the primary points listed was the lack of
fuel storage. Delta Western met with AIDEA, former governor
Sheffield, Representative Ramras and the port of Anchorage.
Representative Gara asked if this project could move
forward without the $30,000 study from AIDEA. Mr. Carter
responded that if Delta Western built it, it would not
solve the problem. Historically there has been a 10 to 15
cent price difference between Alaska and Seattle; now it is
one dollar. There is eight-five cents on the table,
therefore if Delta Western became the proprietary storage,
they would take the eighty-five cents. If it is third party
storage with independent operation, then the money would
trend down to lower price.
2:35:31 PM
Representative Kelly questioned how many barrels arrive in
Anchorage and the amount that would be placed in this tank
storage facility. Mr. Carter replied that new tankers could
hold about 1/2 to 1 million barrels. Representative Kelly
asked if that would be a tank sizing thing. Mr. Carter
responded that the storage would have to have the open
seasons prior to construction. Therefore based on the
success of the open season, that would drive the new fuel
storage. Representative Kelly judged that there would be no
way of knowing before the study what the barrels in and
barrels out would be. Mr. Carter thought many other groups
might want to buy storage, but it was impossible to know
until the study was completed.
2:38:38 PM
Co-Chair Stoltze reiterated that the fiscal note was zero,
but $30,000 was budgeted to generate the study and report.
Mr. Leonard reported that he did not know how much EconOne
would be paying, but $30,000 would be AIDEA's share.
Co-Chair Stoltze asked for public testimony.
Co-Chair Stoltze closed public testimony.
Representative Fairclough disclosed that she was supportive
of resolution, but voiced concern that Anchorage has been
moving storage outside the Government Hill location and
that the community and neighborhood have been opposed to
increases in tank farm storage in that area. She noted
adding storage would be a reverse of the past trend to
remove storage fuel facilities. She inquired if there would
be any land use issues overriding local law in the
placement of storage in the community. She remarked that a
local community has had an adverse impact in regard to
storage tanks close to their homes.
Mr. Hemsath returned to Slide 8 with a map of the Anchorage
port showing the location of the new tank storage. He
indicated that the yellow area was completed with the red
area indicating water. The storage tank and fuel loading
facilities would be away from the Government Hill area.
Representative Fairclough agreed that appeared to address
some of the immediate neighborhood concerns, but wondered
if the land being developed could hold some of the existing
storage facilities or is the placement determined by tanker
access.
Mr. Hemsath stated that this is space where the port has
available space and where they want the fuel loading ships
brought in. He emphasized that there has been no study on
reconfiguring the existing storage tanks. Representative
Fairclough asked for some help on Slide 8 in finding where
the tankers would come in. Mr. Hemsath indicated that it
would be to the right of three large white storage tanks.
This area could hold five storage tanks.
2:45:11 PM
Co-Chair Hawker MOVED to report HCR 19 out of Committee
with individual recommendations and the accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
HCR 19 was REPORTED out of Committee with a no
recommendation and with previously published fiscal note:
FN1 (HL+C CMT)
2:46:00 PM AT EASE
2:50:38 PM RECONVENED
2:50:53 PM
HOUSE BILL NO. 386
"An Act establishing a uniform format and procedure
for citations for certain violations of state law;
relating to the form, issuance, and disposition of
citations for certain violations; relating to certain
crimes and penalties for noncompliance with citations;
and providing for an effective date."
Co-Chair Hawker MOVED CSHB 386 (FIN), 26-LS1525\E,
Luckhaupt, 3/25/10 as a working document.
Co-Chair Stoltze OBJECTED for discussion.
Co-Chair Hawker referred to page 8, line 23, there is a
small clarification that adds the words "be in writing" to
make sure the citations involved have a written paper trail
behind them.
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
further OBJECTION, CSHB 386 (FIN) was adopted as a working
document.
Co-Chair Hawker, the sponsor of the bill, explained that
this is the first hearing of the bill in house finance.
This legislative request was brought by the Department of
Public Safety in regard to their efforts in recent times to
identify how they can establish uniformity and simplify the
procedure for the processing of citations for "violations."
Across the state there has been a lack of consistency and
an increase in inefficiency and cost, especially as the
agencies have been attempting to adapt to electronic
processing of these citations. This bill is intended to be
unification and standardization of citations.
2:53:13 PM
JULI LUCKY, STAFF, CO-CHAIR HAWKER presented a short
overview of the bill. This bill sets up a uniform citation
format which is established by the commissioner of Public
Safety by regulation. It also establishes a uniform
citation process with standard reasonable deadlines,
standard penalties, and standard record keeping
requirements.
LIEUTENANT KAT PETERSON, ALASKA STATE TROOPERS (via
teleconference) added that state troopers and the
Department of Public Safety have tried to push through to
fix some of the law identified for a standardized format of
the citations for all statewide law enforcement. This would
apply to both paper and electronic formats. The goal is to
be more efficient, effective and cheaper for the
departments.
2:56:27 PM
Representative Gara inquired if this bill turns anything
into a crime that was not previously a crime. Lt. Peterson
responded no. Representative Gara inquired if there is a
new warrant provision. Ms. Lucky responded no.
2:57:51 PM
Co-Chair Stoltze asked for any questions.
Representative Fairclough noted that Section 44 of the
Overview Section allows citations to be given for
violations in the Knik River Public Use Area which may have
not been previously allowed.
DAVID BROWER, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW
declared that no new crimes are created with this bill.
3:00:03 PM
Representative Salmon referred to page 1, line 8 of the
bill and asked for the definition for an "established
village."
Mr. Brower responded the definition was in current law.
This bill would not change anything.
Representative Salmon questioned what the term "established
village" refers to.
Co-Chair Stoltze expounded that it is in existing law.
Mr. Brower assumed the term was defined somewhere in law.
Co-Chair Stoltze asked for public testimony.
Co-Chair Stoltze closed public testimony.
3:02:06 PM
Co-Chair Hawker reported zero fiscal notes with no new
amendments.
Co-Chair Hawker MOVED to report CS HB 386 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 386 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with previously published zero
fiscal notes: FN1 (DCED), FN2 (DLWD), FN3 (DPS)
3:03:09 PM AT EASE
3:03:53 PM RECONVENED
ADJOURNMENT
The meeting was adjourned at 3:04 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| AIDEA Port of Anchorage Liquid Storage Facility - Wh paper.pdf |
HFIN 3/29/2010 1:30:00 PM |
HCR 19 |
| Sponsor statement HCR 19.pdf |
HFIN 3/29/2010 1:30:00 PM |
HCR 19 |
| 01 HB386 Sponsor Statement[1].pdf |
HFIN 3/29/2010 1:30:00 PM |
HB 386 |
| HB386 Overview.pdf |
HFIN 3/29/2010 1:30:00 PM |
HB 386 |
| HB 386 CS WORKDRAFT 26-LS1525 E 0327.pdf |
HFIN 3/29/2010 1:30:00 PM |
HB 386 |
| AIDEA HCR 19 Testimony 3-29-10 PowerPoint HCR 19.ppt |
HFIN 3/29/2010 1:30:00 PM |
HCR 19 |
| HCR 19 AIDEA fact sheet 3-29-10.doc |
HFIN 3/29/2010 1:30:00 PM |
|
| HB 386 Summary of Changes HFC.pdf |
HFIN 3/29/2010 1:30:00 PM |
HB 386 |