Legislature(1993 - 1994)

05/08/1993 05:00 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                     HOUSE FINANCE COMMITTEE                                   
                           May 8, 1993                                         
                            5:00 p.m.                                          
                                                                               
  TAPE HFC 93-134, Side 2, #000 - end.                                         
  TAPE HFC 93-135, Side 1, #000 - 397.                                         
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Larson called the House  Finance Committee to order                 
  at 5:00 p.m.                                                                 
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Larson             Representative Hoffman                           
  Co-Chair MacLean            Representative Martin                            
  Vice-Chair Hanley           Representative Navarre                           
  Representative Brown        Representative Parnell                           
  Representative Foster       Representative Therriault                        
  Representative Grussendorf                                                   
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Representative  David  Finkelstein;  Mike Greany,  Director,                 
  Legislative  Finance  Division;  Mel  Kronseng,  Legislative                 
  Staff,  Representative  Barnes;  Shelby  Stastny,  Director,                 
  Office of Budget and Management.                                             
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB 106    "An Act authorizing  power transmission  interties                 
            between Anchorage and the Kenai Peninsula, between                 
            Healy and Fairbanks, and between the Swan Lake and                 
            Tyee  Lake  hydroelectric projects,  and approving                 
            the   design  and   construction   costs  of   the                 
            interties; and providing for an effective date."                   
                                                                               
            HCS CSSB 106  (FIN) was reported out  of Committee                 
            with a "do  pass" recommendation  and with a  zero                 
            fiscal  note by  the Department  of Community  and                 
            Regional Affairs and with two zero fiscal notes by                 
            the   Department   of   Commerce    and   Economic                 
            Development.                                                       
                                                                               
  SB 126    "An Act  making special appropriations  for design                 
            and construction of  power transmission  interties                 
            between Anchorage and the Kenai Peninsula, between                 
            Healy and Fairbanks, and between the Swan Lake and                 
            Tyee  Lake  hydroelectric projects;  and providing                 
            for an effective date."                                            
                                                                               
            HCS CSSB 126  (FIN) was reported out  of Committee                 
                                                                               
                                1                                              
                                                                               
                                                                               
            with "no recommendation".                                          
  SENATE BILL NO. 106                                                          
                                                                               
       "An  Act  authorizing   power  transmission   interties                 
       between  Anchorage  and  the Kenai  Peninsula,  between                 
       Healy and Fairbanks, and between the Swan Lake and Tyee                 
       Lake hydroelectric  projects, and approving  the design                 
       and construction costs of the interties;  and providing                 
       for an effective date."                                                 
                                                                               
  Co-Chair Larson  asked if the Alaska  Industrial Development                 
  and Export Authority  (AIDEA) had been contacted  in regards                 
  to CSSB 106(FIN) am(efd fld) and CSSB 126(RLS) am(efd fld).                  
                                                                               
  MEL  KRONSENG,  LEGISLATIVE  STAFF,   REPRESENTATIVE  BARNES                 
  replied  that AIDEA was contacted by  both the Department of                 
  Law and Representative Barnes' staff.  She stressed that the                 
  Alaska Energy Authority's corporation structure will be kept                 
  intact.                                                                      
                                                                               
  Representative Brown  understood that  seventy employees  of                 
  AEA would be laid  off.  She asked Ms. Kronseng  to identify                 
  the employees that  will be  eliminated as a  result of  the                 
  legislation.  Ms. Kronseng replied that approximately 35 CIP                 
  employees will be eliminated if operations are contracted to                 
  the private sector.  Transfer of the Bradley Lake project to                 
  the utilities will  result in the elimination or transfer of                 
  five employees.  Other employees  will be transferred to the                 
  Department of Community and Regional Affairs.  She indicated                 
  that the  exact number of employees who  will be transferred                 
  or eliminated is unknown.  She emphasized that there will be                 
  a six month transition period.                                               
                                                                               
  Ms. Kronseng  clarified that AIDEA  will issue  bonds.   The                 
  Alaska Energy Authority  will not  continue to issue  bonds.                 
  She stated that  Mr. Snell indicated  that AIDEA could  take                 
  over  the bond functions of AEA with  the addition of two or                 
  three employees.                                                             
                                                                               
  Representative  Brown referred to statutes being repealed by                 
  the  legislation.     Ms.  Kronseng  stated  that   statutes                 
  concerning rural  functions of  AEA are  being repealed  and                 
  transferred to  teh  Department of  Community  and  Regional                 
  Affairs.                                                                     
                                                                               
  Representative   Parnell   expressed    support   for    the                 
  legislation.    He  expressed concern  with  the  affect the                 
  legislation could have on bonds issued by AEA.  He suggested                 
  that a  written opinion stating  that the bond  capacity and                 
  authority of the AEA and AIDEA will not be impaired.                         
                                                                               
                                                                               
                                2                                              
                                                                               
                                                                               
  Co-Chair  Larson reiterated the motion  to move HCS CSSB 106                 
  (FIN) from  Committee  (made  by  Representative  Therriault                 
  during the  5/08/93 a.m., House Finance  Committee meeting).                 
  There being NO OBJECTION, it was so ordered.                                 
                                                                               
  HCS CSSB 106 (FIN) was reported  out of Committee with a "do                 
  pass"  recommendation  and with  a zero  fiscal note  by the                 
  Department of Community  and Regional  Affairs and with  two                 
  zero fiscal notes by the Department of Commerce and Economic                 
  Development.                                                                 
  SENATE BILL NO. 126                                                          
                                                                               
       "An Act making  special appropriations  for design  and                 
       construction  of  power transmission  interties between                 
       Anchorage  and the Kenai  Peninsula, between  Healy and                 
       Fairbanks,  and  between the  Swan  Lake and  Tyee Lake                 
       hydroelectric projects; and  providing for an effective                 
       date."                                                                  
                                                                               
  Ms.  Kronseng  pointed out  that the  appropriation includes                 
  funding for the Department of Community and Regional Affairs                 
  to cover expenses of  the functions being transferred.   She                 
  expected that a portion of the appropriation will lapse.                     
                                                                               
  Co-Chair  Larson   provided   members   with   AMENDMENT   1                 
  (Attachment 1).   Ms. Kronseng explained that  the Amendment                 
  was requested by bond  counsel to make AIDEA partner  to the                 
  contracts.  She  clarified that the language  is specific to                 
  the Northern and Southern intertie grants.   Co-Chair Larson                 
  MOVED to ADOPT  AMENDMENT 1.   There being NO OBJECTION,  it                 
  was so ordered.                                                              
                                                                               
  Representative  Brown  provided  members  with  AMENDMENT  2                 
  (Attachment 2).  The Amendment was offered by Representative                 
  Brown on behalf of Representative  Finkelstein.  Amendment 2                 
  would  appropriate  $8.0   thousand  dollars  for   "ongoing                 
  residential  and  business  energy   efficiency  improvement                 
  programs."                                                                   
                                                                               
  REPRESENTATIVE  DAVID FINKELSTEIN  provided  members with  a                 
  memorandum,   dated   5/08/93,   explaining    Amendment   2                 
  (Attachment 3).   He reviewed  Attachment 3.   He  concluded                 
  that energy conserved  is the same  as energy produced.   He                 
  emphasized that  retrofitted and energy  efficient buildings                 
  would result in  lower operating costs  by 20 to 30  percent                 
  annually.   He maintained  that costs  would be  recouped in                 
  approximately three years.                                                   
                                                                               
  Representative   Brown   MOVED   to   ADOPT   AMENDMENT   2.                 
  Representative Martin OBJECTED.  Co-Chair MacLean noted that                 
  there is a $17  million dollar capital appropriation  to the                 
                                                                               
                                3                                              
                                                                               
                                                                               
  Alaska   Housing   Finance  Corporation   (AHFC)   for  home                 
  improvements.  Representative Finkelstein stressed that  the                 
  demand for the low income weatherization program in AHFC far                 
  exceeds the amount of  money available.  He stated  that the                 
  Department of  Transportation and  Public Facilities  cannot                 
  afford to retrofit state buildings.                                          
                                                                               
  A roll call vote was taken on the motion to  adopt Amendment                 
  2.                                                                           
                                                                               
  IN FAVOR: Brown                                                              
  OPPOSED:  Grussendorf,  Navarre,  Foster,   Hanley,  Martin,                 
                 Parnell, Therriault, MacLean, Larson                          
                                                                               
  Representative Hoffman was not present for the vote.                         
                                                                               
  The MOTION FAILED (1-9).                                                     
                                                                               
  Representative  Brown  provided  members  with  AMENDMENT  3                 
  (Attachment 4).  Amendment 3 would appropriate $15.0 million                 
  dollars  to  the  Department  of Transportation  and  Public                 
  Facilities   for   institutional    facilities   demand-side                 
  management programs.  Representative Navarre spoke  in favor                 
  of Amendment 3.                                                              
                                                                               
  SHELBY STASTNY,  DIRECTOR, OFFICE  OF MANAGEMENT  AND BUDGET                 
  agreed that expenditures on energy efficiencies would result                 
  in savings.   He acknowledged the legislature's  prerogative                 
  to decide how the state's money is spent.                                    
                                                                               
  Representative Navarre asked Mr.  Shelby to investigate cost                 
  savings  which  would  be  generated  by  retrofitting state                 
  facilitates for energy efficiency.                                           
                                                                               
  Representative Martin asked Mr. Shelby to develop a  list of                 
  priorities  for  state  facilities.   Representative  Hanley                 
  recommended  that a comprehensive  plan for increased energy                 
  efficiency   be   developed.     Representative  Grussendorf                 
  suggested that a deferred maintenance list be included.                      
                                                                               
  A roll call vote was taken on the motion to  adopt Amendment                 
  3.                                                                           
                                                                               
  IN FAVOR: Brown, Grussendorf, Navarre                                        
  OPPOSED:  Foster,  Hanley,   Martin,  Parnell,   Therriault,                 
                 MacLean, Larson                                               
                                                                               
  Representative Hoffman was not present for the vote.                         
                                                                               
  The MOTION FAILED (3-7).                                                     
                                                                               
  Representative  Brown  provided  members  with  AMENDMENT  4                 
                                                                               
                                4                                              
                                                                               
                                                                               
  (Attachment 5).  Amendment  4 would delete section 15.   She                 
  stated that the  intent is  to allow the  separation of  HCS                 
  CSSB 106(FIN) and CSSB 126(RLS) am(efd fld).  Representative                 
  Navarre spoke  in support of Amendment  4.  He  felt that it                 
  would be bad  policy to  base the passage  of CSSB  126(RLS)                 
  am(efd fld) on HCS CSSB 106(FIN).                                            
                                                                               
  Ms. Kronseng  stressed that authorization language is needed                 
  to execute the bonding package.                                              
                                                                               
  Representative   Brown   MOVED   to   ADOPT   AMENDMENT   4.                 
  Representative Hanley OBJECTED.  A roll call  vote was taken                 
  on the motion.                                                               
                                                                               
  IN FAVOR: Brown, Grussendorf, Hoffman, Navarre, Therriault                   
  OPPOSED:  Foster, Hanley, Martin, Parnell, MacLean, Larson                   
                                                                               
  The MOTION FAILED (5-6).                                                     
                                                                               
  Representative  Brown  provided  members  with  AMENDMENT  5                 
  (Attachment 6).  She explained that Amendment 5 incorporates                 
  suggestions made by residents in the Sutton/Glennallen area.                 
  The  amendment   mandates  that   feasibility  studies   are                 
  completed prior to the dispersion  of funds.  Representative                 
  Martin  objected  to  the  amendment.    He  felt  that  the                 
  restrictions placed by the amendment would be costly.                        
                                                                               
  Representative Brown WITHDREW AMENDMENT 5.   Co-Chair Larson                 
  noted  that  Amendment  5  reflects  the  concerns  of  area                 
  residents.                                                                   
                                                                               
  Representative   Navarre   asked  for   further  information                 
  regarding  the Tazimina  River hydroelectric  power project.                 
  Co-Chair  Larson  pointed  out  that  the  project  is  also                 
  contained in the capital budget.                                             
                                                                               
  Ms. Kronseng explained that  the intent is to build  a small                 
  generator at the base  of a waterfall located on  the River.                 
  She observed  that feasibility studies  have been  completed                 
  and  the project  is  ready  for  construction.   The  total                 
  project cost is estimated at $10.0 million dollars.  It will                 
  serve NewHalen and Nondalton.   She added that six  or seven                 
  other communities could be served.                                           
                                                                               
  Representative Brown asked  who would pay for  the interties                 
  to connect other  communities.   Mr. Stastny explained  that                 
  three  or  four communities  would  be connected  without an                 
  additional intertie.   There  are two  or three  communities                 
  that would  be connected with the addition  of one intertie.                 
  Co-Chair MacLean  noted that the project is on AEA's project                 
  list.                                                                        
                                                                               
                                                                               
                                5                                              
                                                                               
                                                                               
  Representative Brown stressed that projects contained in HCS                 
  CSSB 126  (FIN) are not  economically efficient uses  of the                 
  state's money.                                                               
                                                                               
  Representative Hoffman  expressed concern that AEA  is being                 
  "dismantled".  He stated that money would be better spent on                 
  solving fuel storage tank problems in Western Alaska.                        
                                                                               
  Representative Therriault MOVED to report HCS CSSB 126 (FIN)                 
  out of Committee with individual recommendations.                            
                                                                               
  HCS CSSB 126  (FIN) was reported  out of Committee with  "no                 
  recommendation".                                                             
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 6:30 p.m.                                           
                                                                               
                                                                               
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