Legislature(2007 - 2008)HOUSE FINANCE 519

08/03/2008 01:00 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB4001 APPROP: SUPP/CAP/OTHER RELATED TO AGIA TELECONFERENCED
Heard & Held
Public Testimony
+= HB4005 PCE:ELIGIB;AMTS;ELIGIBLE UTILITY DEFINED TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                       August 3, 2008                                                                                           
                         1:15 P.M.                                                                                              
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Chenault called the House  Finance Committee meeting                                                                   
to order at 1:15:24 PM.                                                                                                       
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Chenault, Co-Chair                                                                                          
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Bill Stoltze, Vice-Chair                                                                                         
Representative Harry Crawford                                                                                                   
Representative Les Gara                                                                                                         
Representative Mike Hawker                                                                                                      
Representative Mike Kelly                                                                                                       
Representative Mary Nelson                                                                                                      
Representative Bill Thomas Jr.                                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Richard Foster                                                                                                   
Representative Reggie Joule                                                                                                     
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Jay Ramras;  Representative Nancy  Dahlstrom;                                                                   
Representative   Kurt   Olson;  Suzanne   Armstrong,   Staff,                                                                   
Representative   Kevin  Meyer;   Ron  Kreher,  Chief,   Field                                                                   
Operations,  Division  of Public  Assistance,  Department  of                                                                   
Health and  Social Services;  Jon Sherwood, Director,  Office                                                                   
of Program Review, Department  of Health and Social Services;                                                                   
Sarah  Fisher-Goad,  Deputy Director  of  Operations,  Alaska                                                                   
Industrial  Development  and   Export  Authority  and  Alaska                                                                   
Energy  Authority,  Department  of  Commerce,  Community  and                                                                   
Economic  Development;  Allie Fitzjarrald,  Acting  Director,                                                                   
Division  of  Public  Assistance, Department  of  Health  and                                                                   
Social  Services;   Amanda  Ryder,   Director,  Division   of                                                                   
Administrative  Services, Department  of Commerce,  Community                                                                   
and Economic  Development; Jerry Burnett,  Director, Division                                                                   
of Administrative Services, Department of Revenue                                                                               
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Aves   Thompson,   Executive    Director,   Alaska   Trucking                                                                   
Association (ATA),  Anchorage; Paul Kendall,  Anchorage; Luke                                                                   
Hopkins,  Member,  North Star  Borough  Assembly,  Fairbanks;                                                                   
Dennis  Wheeler,   Commissioner,  Regulatory   Commission  of                                                                   
Alaska                                                                                                                          
                                                                                                                                
BILL SUMMARY:                                                                                                                 
                                                                                                                                
                                                                                                                                
HB 4001   An Act making supplemental  appropriations, capital                                                                   
          appropriations,    reappropriations,   and    other                                                                   
          appropriations;     making    appropriations     to                                                                   
          capitalize  a fund; and providing for  an effective                                                                   
          date.                                                                                                                 
                                                                                                                                
          HB 4005 was HEARD & HELD in Committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
HB 4005   An  Act   amending  the  power   cost  equalization                                                                   
          program,  repealing the exclusion  from eligibility                                                                   
          for  power  cost  equalization  for  certain  power                                                                   
          projects that  take their power  from hydroelectric                                                                   
          facilities,   and   amending  the   definition   of                                                                   
          'eligible  electric utility' as  it applies  to the                                                                   
          power  cost  equalization  program  and  the  grant                                                                   
          program  for  small   power  projects  for  utility                                                                   
          improvements; and providing  for an effective date.                                                                   
                                                                                                                                
          HB 4005 was HEARD & HELD in Committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
HOUSE BILL NO. 4001                                                                                                             
                                                                                                                                
     "An  Act  making  supplemental  appropriations,  capital                                                                   
     appropriations,     reappropriations,      and     other                                                                   
     appropriations;  making appropriations  to capitalize  a                                                                   
     fund; and providing for an effective date."                                                                                
                                                                                                                              
1:15:47 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault  convened the  portion of the  meeting that                                                                   
would  be  taking  statewide  public  testimony  on:  HB4001-                                                                   
APPROP: SUPP/CAP/OTHER RELATED TO AGIA.                                                                                         
                                                                                                                                
1:17:03 PM                                                                                                                    
                                                                                                                                
AVES   THOMPSON,   EXECUTIVE    DIRECTOR,   ALASKA   TRUCKING                                                                   
ASSOCIATION,  ANCHORAGE  testified   via  teleconference,  He                                                                   
indicated  support  for HB  4001.  House Bill  4001  provides                                                                   
$129,900,000  for gas  pipeline  structure preparation.  This                                                                   
includes  major work on  the Dalton  Highway, the  Richardson                                                                   
Highway, the Chilkat River Bridge,  and the Alaska and Haines                                                                   
Highways.  Important infrastructure  improvements must  begin                                                                   
soon. There  are not  many seasons left  between now  and the                                                                   
beginning of the  gas line construction. He  informed that if                                                                   
HB 4001 passes,  then construction can begin  next spring. He                                                                   
referenced testimony provided  the Committee. (Copy on File.)                                                                   
He urged support of the bill.                                                                                                   
                                                                                                                                
1:18:45 PM                                                                                                                    
                                                                                                                                
PAUL  KENDALL,  ANCHORAGE testified  via  teleconference.  He                                                                   
asked if  the oil  companies' testimony  had been  requested.                                                                   
Co-Chair  Chenault  replied  that  he  had  not  called  them                                                                   
personally, but the  right to testify exists for  all who are                                                                   
interested.  Discussion  between  Co-Chair Chenault  and  Mr.                                                                   
Kendall   continued   regarding   the  bill   available   for                                                                   
testimony. Mr.  Kendall noted  his appreciation for  the work                                                                   
done by  the Governor  and her  team. He  applauded the  work                                                                   
done by Mr. Palmer. He asked to  testify on HB 4005. Co-Chair                                                                   
Chenault replied that Mr. Kendall  had testified last week on                                                                   
HB 4005.  Mr. Kendall  apologized. He  had misunderstood  the                                                                   
intention of the meeting.                                                                                                       
                                                                                                                                
1:22:23 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault stated that the public testimony on HB                                                                        
4005 was closed.                                                                                                                
                                                                                                                                
1:24:26 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault Noted that public testimony would be held                                                                     
for HB 4001 only.                                                                                                               
                                                                                                                                
1:24:56 PM                                                                                                                    
HOUSE BILL NO. 4005                                                                                                           
                                                                                                                                
     An  Act amending  the power  cost equalization  program,                                                                   
     repealing the exclusion from  eligibility for power cost                                                                   
     equalization for certain  power projects that take their                                                                   
     power  from hydroelectric  facilities, and amending  the                                                                   
     definition of 'eligible electric  utility' as it applies                                                                   
     to  the power cost  equalization  program and the  grant                                                                   
     program   for   small   power   projects   for   utility                                                                   
     improvements; and providing for an effective date.                                                                         
                                                                                                                                
Co-Chair Meyer  pointed out that  all 20 amendments  had been                                                                   
incorporated into the committee substitute.                                                                                     
                                                                                                                                
1:25:57 PM                                                                                                                    
                                                                                                                                
Vice-Chair Stoltze recommended  that the bill be clarified by                                                                   
Ms. Armstrong.                                                                                                                  
                                                                                                                                
1:26:37 PM                                                                                                                    
                                                                                                                                
Vice-Chair Stoltze  MOVED to ADOPT  work draft  version, #25-                                                                   
LS1757\M,  Kane, 8/2/08.   There being  NO OBJECTION,  it was                                                                   
adopted.                                                                                                                        
                                                                                                                                
1:27:21 PM                                                                                                                    
                                                                                                                                
SUZANNE   ARMSTRONG,  STAFF,   REPRESENTATIVE  KEVIN   MEYER,                                                                   
provided a sectional analysis.                                                                                                  
                                                                                                                                
   ·    Section 1  pertained to  the amendments  made to  the                                                                   
        bulk fuel  bridge loan  fund  increasing the  maximum                                                                   
        allowable loan from $500,000 to $750,000.                                                                               
   ·    Section 2  pertained to  the  addition of  commercial                                                                   
        customers under the  current Power Cost  Equalization                                                                   
        (PCE) calculations.                                                                                                     
   ·    Section 3 reverted to the current  formula in statute                                                                   
        that does not allow commercial customers  to be under                                                                   
        the PCE calculations.                                                                                                   
   ·    Section  4  was  the  revision  to  the  PCE  formula                                                                   
        incorporated in  amendment #1,  which is  a floor  of                                                                   
        12.83 cents  and  a ceiling  of  75  cents, and  also                                                                   
        allows calculation for residential  customers as well                                                                   
        as commercial rate adjustments.                                                                                         
   ·    Section  5 reverted  back  to  the  current  formula,                                                                   
        effective June  30,  2011  with  the floor  at  12.83                                                                   
        cents  and  the   ceiling  at  52.5   cents,  without                                                                   
        commercial customers.                                                                                                   
   ·    Section 6  pertained to  the  addition of  commercial                                                                   
        customers.                                                                                                              
   ·    Section  7  reverted  back  to  the  current  formula                                                                   
        effective June  30,  2011, again  without  commercial                                                                   
        customers.                                                                                                              
   ·    Section 8 pertained  to the bulk fuel  revolving loan                                                                   
        fund and increasing the loan amount  from $500,000 to                                                                   
        $750,000.                                                                                                               
  ·    Section 9 - There were no changes to this section.                                                                       
   ·    Section 10 included  power cost assistance,  in which                                                                   
        those individuals  who  are not  eligible Power  Cost                                                                   
        Equalization (PCE)  will qualify  for five cents  per                                                                   
        kWh for the first 500 kWh per month.                                                                                    
   ·    Sections 11 &  12 pertain to  the Federal  Low Income                                                                   
        Heating  and  Assistance   Program.  There   were  no                                                                   
        changes to these sections.                                                                                              
   ·    Section 13  pertained to the  Alaska Resource  Rebate                                                                   
        and was without  changes, except  for an  addition of                                                                   
        an "opt  out" process  for those  who wish to  refuse                                                                   
        the rebate  and changes for  certain individuals  who                                                                   
        receive federal veteran's benefits.                                                                                     
   ·    Section 14 pertained  to the suspension of  the motor                                                                   
        fuel tax, with the  one change giving  the discretion                                                                   
        to the Department  of Revenue requesting  invoices on                                                                   
        sales  and   transfers  of   gasoline,  diesel,   and                                                                   
        aviation fuel when distributers submit  their reports                                                                   
        to the Department of Revenue.                                                                                           
                                                                                                                                
1:30:32 PM                                                                                                                    
                                                                                                                                
Representative  Nelson asked  about Section  11, Page  5. She                                                                   
thought  that the program  was correctly  termed the  Federal                                                                   
Low Income  Home Energy  Assistance Program, which  qualified                                                                   
for air  conditioning in other  states. Ms. Armstrong  stated                                                                   
that she would  amend this section to accurately  reflect the                                                                   
title of the program.                                                                                                           
                                                                                                                                
1:32:38 PM                                                                                                                    
                                                                                                                                
Representative Gara referenced  Page 6, Line 8, regarding the                                                                   
Low  Income   Heating  Energy  Assistance   Program  (LIHEAP)                                                                   
program. The point system is done  by regulation. It is based                                                                   
on  how  much  money is  allocated  by  the  legislature.  He                                                                   
thought  that  Line  8  should not  be  adopted  by  statute,                                                                   
because the policy is driven by the appropriation.                                                                              
                                                                                                                                
Ms. Armstrong  explained  that the section  is in  uncodified                                                                   
law; the  dollar figure will not  be in statute.  In drafting                                                                   
the  bill, the  intended  direction was  to  ensure that  the                                                                   
point would double.                                                                                                             
                                                                                                                                
1:34:47 PM                                                                                                                    
                                                                                                                                
Representative Gara reiterated the question.                                                                                    
                                                                                                                                
RON  KREHER,  CHIEF,  FIELD OPERATIONS,  DIVISION  OF  PUBLIC                                                                   
ASSISTANCE,  DEPARTMENT   OF  HEALTH  AND   SOCIAL  SERVICES,                                                                   
commented that technically the  point system is driven by the                                                                   
amount of funding that is available.  The point system stands                                                                   
alone. Historically, the federal  funding amount was used and                                                                   
the size of  the population was estimated.  That relationship                                                                   
drove the dollar value per point.                                                                                               
                                                                                                                                
1:36:30 PM                                                                                                                    
                                                                                                                                
Representative Gara  suggested allocating a  different amount                                                                   
of funding every  year. He asked if there was  a down-side to                                                                   
creating a point system. Mr. Kreher  responded that there has                                                                   
never  been a  statutory reference  to the  dollar value  per                                                                   
point.                                                                                                                          
                                                                                                                                
1:37:22 PM                                                                                                                    
                                                                                                                                
JON SHERWOOD, DIRECTOR, OFFICE  OF PROGRAM REVIEW, DEPARTMENT                                                                   
OF HEALTH  AND SOCIAL  SERVICES, stated  that the purpose  of                                                                   
putting the point  in statute came about in  discussions with                                                                   
Legislative Finance.  One option was to determine  the points                                                                   
and then putting  them into regulation. The  other option was                                                                   
to make an  indefinite appropriation adequate to  pay a fixed                                                                   
point value. The Department does  not have a preference as to                                                                   
which approach the legislature takes.                                                                                           
                                                                                                                                
Representative  Gara provided  a hypothetical situation.  Mr.                                                                   
Sherwood  stated that  it would  fix the point  value and  if                                                                   
more individuals applied, LIHEAP  could still pay out at that                                                                   
point  value. To  raise  the point  value,  a  change to  the                                                                   
uncodified law would be required.                                                                                               
                                                                                                                                
Representative  Gara asked  if the legislature  could  fund a                                                                   
certain amount without adopting  a point system. Mr. Sherwood                                                                   
affirmed  that the  point  value  would be  set  based on  an                                                                   
estimate of applications.                                                                                                       
                                                                                                                                
1:39:41 PM                                                                                                                    
                                                                                                                                
Representative  Crawford wondered  if the federal  government                                                                   
changed the amount, would that  mean that the state would run                                                                   
the risk of a  surplus or possibly a lack of  funds for needy                                                                   
applicants. He asked if the Department needed flexibility.                                                                      
                                                                                                                                
Mr. Kreher  clarified that the  point system does  not change                                                                   
and that  the state could be  in a situation and  the federal                                                                   
government  could  restrict  what  a household  is  paid.  He                                                                   
assumed that  the state  could not go  above 127  dollars per                                                                   
point.                                                                                                                          
                                                                                                                                
Representative  Crawford  asked if  $127.50  was the  maximum                                                                   
restriction.  He  asked  what  would happen  if  the  federal                                                                   
government program  was funded at  $5 million instead  of $10                                                                   
million. Mr.  Kreher informed  that the  dollar value  sets a                                                                   
maximum amount.                                                                                                                 
                                                                                                                                
Representative  Crawford asked if  this meant less  money per                                                                   
household. Mr.  Kreher acknowledged  that the dilemma  was to                                                                   
either  serve fewer households  or give  each household  less                                                                   
money.                                                                                                                          
                                                                                                                                
Representative  Crawford understood  and hoped  to serve  all                                                                   
households at a lesser amount.                                                                                                  
                                                                                                                                
1:42:59 PM                                                                                                                    
                                                                                                                                
Representative Nelson  asked about the emergency  contingency                                                                   
funds. Mr.  Kreher explained  that the emergency  contingency                                                                   
fund  portion  is  uncertain.  The  federal  government  does                                                                   
appropriate a fixed amount and  this is divided among states.                                                                   
Typically,  Alaska  waits  until   the  end  of  the  heating                                                                   
assistance year and then issues supplemental payments.                                                                          
                                                                                                                                
1:44:20 PM                                                                                                                    
                                                                                                                                
Representative Nelson  asked if the Department  would find it                                                                   
easier to  administer the program  without the  dollar figure                                                                   
included. She supposed that the  cap might limit the benefit.                                                                   
She asked  if the  Department  would prefer  that the cap  be                                                                   
removed. Mr.  Sherwood thought that  it could be  done either                                                                   
way  and  both  would have  complications  depending  on  the                                                                   
actions of Congress.  He stated that the department  has more                                                                   
experience in managing without  a maximum limit, but they can                                                                   
manage the fund with either approach.                                                                                           
                                                                                                                                
1:46:53 PM                                                                                                                    
                                                                                                                                
Representative  Gara asked  about the  technical change  that                                                                   
would occur in  the CS by deleting the last  sentence on Page                                                                   
6, Line  7. Mr. Kreher affirmed  that the change  would serve                                                                   
the intended purpose.                                                                                                           
                                                                                                                                
1:47:53 PM                                                                                                                    
                                                                                                                                
Ms. Armstrong pointed  out that the intent of  Section 11 and                                                                   
12 was  to address  the issue  of assisting individuals  with                                                                   
high heating  costs and to attempt  to design a  package, the                                                                   
PCE changes  were made to  enhance the home heating  program.                                                                   
This was the  way to double the assistance  to individuals in                                                                   
the 0  to 225% poverty  guideline. It  does apply  October 1,                                                                   
2008 to June 30, 2011.                                                                                                          
                                                                                                                                
1:49:14 PM                                                                                                                    
                                                                                                                                
Representative  Crawford commented that  if the point  system                                                                   
is set  at $127.50  and something does  happen to  change, it                                                                   
would be  unacceptable  to leave some  people unassisted.  He                                                                   
thought it  should be leveled  out so  that some aid  gets to                                                                   
everyone  in that  condition.  He  did not  want  to see  the                                                                   
heating cost point set in statute.                                                                                              
                                                                                                                                
Ms. Armstrong clarified  that this will be in  uncodified law                                                                   
for 2.5  years; it can  be amended. It  is to implement  home                                                                   
heating and  energy assistance  programs. The allocation  may                                                                   
not exceed $127.50.  If there were insufficient  funds on the                                                                   
federal level, then the allocation  could be brought down and                                                                   
pro rated.  Households will not  be cut out because  money is                                                                   
unavailable. The dollar assistance may be smaller.                                                                              
                                                                                                                                
1:51:40 PM                                                                                                                    
                                                                                                                                
Representative   Crawford   heard   that   there   would   be                                                                   
circumstances in which fewer households  would be served. Mr.                                                                   
Kreher  mentioned  that  when   funding  is  restricted,  the                                                                   
choices are to pay fewer homes,  or to reduce payments so all                                                                   
could  be served.  There is  the  risk of  not having  enough                                                                   
funds to make a payment to every eligible household.                                                                            
                                                                                                                                
1:53:01 PM                                                                                                                    
                                                                                                                                
Mr.  Sherwood clarified  that applications  are accepted  and                                                                   
payments  are made  in November,  but  individuals can  apply                                                                   
through April. Payments  are made prior to knowing  the total                                                                   
amount of eligible individuals.  Initially the department may                                                                   
pay less  and then make  a supplement  payment if there  is a                                                                   
surplus.                                                                                                                        
                                                                                                                                
1:53:50 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Stoltze  was  encouraged   by  the  approach.  He                                                                   
thought  it would  help  the state  control  the budget.  Mr.                                                                   
Kreher offered that the situation  is tenuous because now the                                                                   
President is proposing a 22% cut to LIHEAP funding.                                                                             
                                                                                                                                
1:55:02 PM                                                                                                                    
                                                                                                                                
Representative Gara  commented that setting the  heating cost                                                                   
point  in  statute  reduces  flexibility.  The  policy  would                                                                   
remain  the same.  He guessed  that a  simple regulation  may                                                                   
take a long time.  He asked how long it would  take to change                                                                   
the regulation.  Mr. Kreher anticipated that  the legislation                                                                   
for emergency regulations were  in the works at this time. If                                                                   
a maximum  payment amount  were regulated,  the change  could                                                                   
happen relatively quickly.                                                                                                      
                                                                                                                                
1:57:51 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Stoltze noted  an  example where  Alaska  Housing                                                                   
Finance   Corporation    (AHFC)   prepared    for   emergency                                                                   
regulations and made necessary changes quickly.                                                                                 
                                                                                                                                
Co-Chair Chenault  commented that  the last budget  cycle was                                                                   
the first time that state money  was allocated for the LIHEAP                                                                   
program.                                                                                                                        
                                                                                                                                
1:59:07 PM                                                                                                                    
                                                                                                                                
Representative Hawker applauded  the fiscal analysis provided                                                                   
by  the department  and  the complex  process  that had  been                                                                   
undertaken.   Next   year,  the   budget   subcommittee   can                                                                   
reevaluate the  transaction. He  did not feel  that it  was a                                                                   
burden to  use the  benefit level  to drive the  calculation,                                                                   
which is evidenced by the adult  dental program. He commended                                                                   
the approach.  Mr. Kreher pointed  out that there would  be a                                                                   
revised fiscal note coming to members.                                                                                          
                                                                                                                                
2:01:23 PM                                                                                                                    
                                                                                                                                
Representative  Hawker clarified  the  revision which  stated                                                                   
that  16 new  personnel  would be  necessary  to operate  the                                                                   
program when the fiscal note was based on five.                                                                                 
                                                                                                                                
Representative  Kelly asked if  the personnel positions  were                                                                   
to implement  what was done  last year. Mr. Kreher  responded                                                                   
that  it  would  be  to  manage   the  additional  staff.  He                                                                   
estimated  that the  department  would be  serving more  than                                                                   
anticipated.   He  stated   that   he  was   addressing   the                                                                   
equivalents  of  those  positions,  because the  plan  is  to                                                                   
contract  with  Tribal  organizations.   Some  administrative                                                                   
funds  would be  transferred to  those  tribal entities.  The                                                                   
total staff would be eight or nine staff.                                                                                       
                                                                                                                                
Representative  Kelly  questioned  the contract  with  tribal                                                                   
organizations.  Mr. Kreher  responded that  the intent  is to                                                                   
contract with  tribal organizations  that have been  approved                                                                   
by  the  federal  government  to  operate  tribal  assistance                                                                   
heating programs.                                                                                                               
                                                                                                                                
Representative  Kelly reiterated  that the contract  comports                                                                   
with  the  requirement  that  was passed,  but  it  does  not                                                                   
involve contracting with new entities. Mr. Kreher affirmed.                                                                     
                                                                                                                                
LUKE HOPKINS, MEMBER, NORTH STAR  BOROUGH ASSEMBLY, FAIRBANKS                                                                   
testified via teleconference. He indicated support for the                                                                      
additional funding for the Alaska Gasoline Inducement Act                                                                       
(AGIA) and transportation projects  in the Fairbanks area. He                                                                   
noted concern that construction  might not be facilitated. He                                                                   
urged extra funding to HB 4001  for Fairbanks to prepare bids                                                                   
for necessary road projects.                                                                                                    
                                                                                                                                
2:07:08 PM                                                                                                                    
                                                                                                                                
Vice-Chair Stoltze asked if Fairbanks had an Interstate                                                                         
Maintenance (IM) program. Mr. Hopkins replied that they do                                                                      
and the program is being submitted  through the Department of                                                                   
Environmental Conservation (DEC). He hoped that it would be                                                                     
a low level maintenance plan if  the Environmental Protection                                                                   
Agency (EPA) accepts the plan.                                                                                                  
                                                                                                                                
RECESS:      2:08:36 PM                                                                                                       
Reconvened: 3:09:08 PM                                                                                                        
                                                                                                                                
DENNIS  WHEELER,   COMMISSIONER,  REGULATORY   COMMISSION  OF                                                                   
ALASKA testified  via teleconference.  He addressed  concerns                                                                   
with the  current M version of  the bill and two  areas where                                                                   
the addition of  commercial customers will have  an impact on                                                                   
the Regulatory Commission of Alaska (RCA.)                                                                                      
                                                                                                                                
   ·    The first concern was in respect to calculating the                                                                     
        actual  rate  located  on  Page   2,  Line  13.  When                                                                   
        calculating consumption  the  customer  rate will  be                                                                   
        factored  in.  Many  utilities  have  a  tiered  rate                                                                   
        system where the commercial cost  is broken down into                                                                   
        small and  large customers,  which will provide  some                                                                   
        additional work.  He did not  think this  would prove                                                                   
        too difficult.                                                                                                          
   ·    The second concern was located on Page 3, Lines 5 &                                                                     
        6, where  the base  rate calculations  were done.  He                                                                   
        interpreted the structure of the  sentence and stated                                                                   
        that  a   base   rate   calculation   was   preformed                                                                   
        separately  from   a   base  rate   calculation   for                                                                   
        retail/commercial  customers.  The second  base  rate                                                                   
        would involve averaging to account for small and                                                                        
        large commercial users and industrial users. He did                                                                     
        not know how to average it.                                                                                             
                                                                                                                                
Mr. Wheeler thought  that the issues could be  worked out but                                                                   
                  stst                                                                                                          
not  by October  1.  He  recommended that  January 1be    the                                                                   
effective date for that aspect of the bill.                                                                                     
                                                                                                                                
3:12:36 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer  anticipated that the effective  date could be                                                                   
                    st                                                                                                          
changed to January 1.  Representative Thomas agreed.                                                                            
                                                                                                                                
Representative Hawker recommended  that the change be adopted                                                                   
as a formal amendment.                                                                                                          
                                                                                                                                
3:13:23 PM                                                                                                                    
                                                                                                                                
Representative Thomas  MOVED to CHANGE the effective  date of                                                                   
                                    st                                                                                          
commercial PCE portion  be January 1,  2009.   There being NO                                                                   
OBJECTION, it was adopted.                                                                                                      
                                                                                                                                
3:14:11 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer asked  how the changes would  be overseen. Mr.                                                                   
Wheeler responded  that it would be a challenge  to implement                                                                   
changes, which has been addressed  in a fiscal note. With the                                                                   
intent  of passing  a  credit  to customers,  rate  regulated                                                                   
utilities  can be  adequately monitored.  For utilities  that                                                                   
are not regulated, RCA does not  have control of what will be                                                                   
passed on to the customers.                                                                                                     
                                                                                                                                
3:16:11 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Stoltze asked  if there  was a  reduction in  the                                                                   
natural  gas  subsidy,  would   approval  through  Regulatory                                                                   
Commission of  Alaska be required. Mr. Wheeler  answered that                                                                   
RCA regulates  Enstar but not  Fairbanks Natural Gas.  If the                                                                   
program was similar to PCE, the  expectation would be to have                                                                   
Enstar file a tariff sheet with RCA.                                                                                            
                                                                                                                                
 3:17:26 PM                                                                                                                   
                                                                                                                                
Co-Chair  Meyer  asked  how  many  people  in  Fairbanks  use                                                                   
natural gas. Representative Kelly responded 1,100.                                                                              
                                                                                                                                
Representative  Gara asked  if PCE  would extend  to the  new                                                                   
entrants in  the commercial  portion. Co-Chair Meyer  replied                                                                   
that  there  would  be  no commercial  in  the  non  PCE.  He                                                                   
reiterated "no commercial in the non PCE."                                                                                      
                                                                                                                                
3:18:46 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  requested  Mr. Wheeler  address  the  fiscal                                                                   
note.  Mr. Wheeler  explained  that regulatory  cost  charges                                                                   
for the utilities are regulated.  He informed that PCE has 70                                                                   
utilities  that are  not regulated.  The regulated  utilities                                                                   
subsidize the work  done for the PCE program.  He recommended                                                                   
that General Fund money be used to support the positions.                                                                       
                                                                                                                                
Co-Chair  Chenault  asked  for   the  number  of  charges  to                                                                   
administer  the  PCE program  in  current form.  Mr.  Wheeler                                                                   
hesitated to guess. He stated  that the Regulatory Commission                                                                   
of Alaska has two positions that  work in the PCE program. He                                                                   
offered to provide specifics in the future.                                                                                     
                                                                                                                                
3:21:37 PM                                                                                                                    
                                                                                                                                
SARAH  FISHER-GOAD,  DEPUTY DIRECTOR  OF  OPERATIONS,  ALASKA                                                                   
INDUSTRIAL  DEVELOPMENT  AND   EXPORT  AUTHORITY  AND  ALASKA                                                                   
ENERGY  AUTHORITY,  DEPARTMENT  OF  COMMERCE,  COMMUNITY  AND                                                                   
ECONOMIC DEVELOPMENT,  addressed the fiscal  notes associated                                                                   
with  the  Alaska  Energy  Authority.  She  stated  that  the                                                                   
estimated capitalization  of the PCE fund for  the changes in                                                                   
this  program   is  $130  million  dollars.   She  added  the                                                                   
commercial estimates  will adjust  that number downward.  For                                                                   
the PCE staff, two new employees  will be required to process                                                                   
invoices  for the addition  of commercial  customers  and the                                                                   
power cost  assistance  program. The personnel  costs  of the                                                                   
Alaska Energy  Authority's (AEA) fiscal  note show up  as two                                                                   
new positions for interagency receipt funded positions.                                                                         
                                                                                                                                
3:23:54 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer  summarized that $130 million  would cover the                                                                   
PCE proposal that was passed.  Ms. Fisher-Goad concurred, but                                                                   
pointed out that there is already  $28 million in the program                                                                   
for FY09.  In January  2009, the rate  increases and  new PCE                                                                   
levels will be known.                                                                                                           
                                                                                                                                
3:25:12 PM                                                                                                                    
                                                                                                                                
Representative  Kelly referenced  the  note and  asked if  it                                                                   
reflected  the  increase  in  the program  only,  or  did  it                                                                   
include  the endowment?  Ms.  Fisher-Goad  informed that  the                                                                   
note included  money to  capitalize the  program but  not the                                                                   
endowment.                                                                                                                      
                                                                                                                                
Representative  Kelly requested  the current  annual cost  of                                                                   
the program.  Ms. Fisher-Goad  responded that the annual cost                                                                   
for the  program is $37  million. Representative  Kelly asked                                                                   
how many households  would be served in the  PCE program. Ms.                                                                   
Fisher-Goad replied 25,797 households.                                                                                          
                                                                                                                                
Representative Kelly requested  the number of businesses that                                                                   
might apply.   Ms. Fisher-Goad estimated that  6,400 would be                                                                   
the largest expectation.  She  indicated that the information                                                                   
regarding commercial customers was over 10 years old.                                                                           
                                                                                                                                
3:27:36 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer imagined that the  $130 million would decrease                                                                   
slightly  because the  commercial  aspect would  not go  into                                                                   
effect until later.  Ms. Fisher-Goad commented  that it could                                                                   
be divided in  half. The number will change  with the average                                                                   
PCE level.                                                                                                                      
                                                                                                                                
3:28:22 PM                                                                                                                    
                                                                                                                                
Representative Thomas indicated  that the fiscal note covered                                                                   
both  PCE   and  non   PCE.  Ms.   Fisher-Goad  agreed;   she                                                                   
recommended  that  the fiscal  notes  be refined.  The  House                                                                   
approach is different  from the Senate; $67  million would be                                                                   
allocated  for  the  non  PCE   portion  of  the  power  cost                                                                   
assistance  and   $91  million  dollars  allocated   for  the                                                                   
traditional  PCE  communities  which will  be  adjusted  when                                                                   
there is more information regarding commercial customers.                                                                       
                                                                                                                                
3:29:23 PM                                                                                                                    
                                                                                                                                
Representative  Kelly asked if  the current program  would be                                                                   
the $37  million, if the  supplemental passed, moving  to $67                                                                   
million dollars.  Ms. Fisher-Goad noted Page 2  of the fiscal                                                                   
note  which  indicates  the breakdown  of  the  $158  million                                                                   
dollars for  PCE classic and  the new program  which includes                                                                   
commercial applicants.                                                                                                          
                                                                                                                                
3:30:20 PM                                                                                                                    
                                                                                                                                
Vice-Chair   Stoltze  did   not   understand  the   mechanics                                                                   
regarding separate  meters for  home businesses.  Ms. Fisher-                                                                   
Goad understood that  there would be separate  meters and the                                                                   
utilities do distinguish between  those customers. Typically,                                                                   
there would be  two meters, one for commercial  and the other                                                                   
for residential. Home businesses  in PCE eligible communities                                                                   
are considered residential, up to 500 kWh.                                                                                      
                                                                                                                                
3:32:26 PM                                                                                                                    
                                                                                                                                
Representative  Kelly  asked direction  to  the $158  million                                                                   
dollar reference  in the fiscal note. Ms.  Fisher-Goad stated                                                                   
that she had  provided the information and would  ensure that                                                                   
it got to the committee.                                                                                                        
                                                                                                                                
3:34:09 PM                                                                                                                    
                                                                                                                                
Mr. Sherwood  addressed  three fiscal  notes prepared  by the                                                                   
Department of  Health and Social  Services. The first  is for                                                                   
LIHEAP and the Alaska Heating  Assistance Programs. The total                                                                   
cost  is  just  over  $10  million  dollars  which  will  pay                                                                   
$9,772,000   including  $300,000   for  administration.   The                                                                   
programs  using  the maximums  in  the  bill would  cost  $30                                                                   
million, with $20.7 million already  appropriated for the two                                                                   
programs. The  average benefit  under LIHEAP using  13 points                                                                   
would  be $1,657  per person  and  Alaska Heating  Assistance                                                                   
with five points per household would be $637.50.                                                                                
                                                                                                                                
3:36:45 PM                                                                                                                    
                                                                                                                                
Mr. Sherwood  explained that the  next fiscal  note addresses                                                                   
the permanent  fund hold harmless program, which  is affected                                                                   
by the  increased  Permanent Fund  Dividend (PFD)  component.                                                                   
This hold  harmless program  amounts to $400,000.  Additional                                                                   
funds have  been received  in anticipation  of a larger  hold                                                                   
harmless program.                                                                                                               
                                                                                                                                
Representative  Hawker  understood  that  the  administration                                                                   
level is adequate.  Lost benefits are sourced out  of the PFD                                                                   
hold  harmless category.  He  asked if  that  was correct  or                                                                   
would additional  General Funds be needed to  charge the fund                                                                   
first. Mr. Sherwood requested that Ms. Fitzgerald testify.                                                                      
                                                                                                                                
ALLIE  FITZJARRALD,  ACTING  DIRECTOR,   DIVISION  OF  PUBLIC                                                                   
ASSISTANCE,  DEPARTMENT   OF  HEALTH  AND   SOCIAL  SERVICES,                                                                   
addressed the query.                                                                                                            
                                                                                                                                
3:40:28 PM                                                                                                                    
                                                                                                                                
Mr.   Sherwood  addressed   a  hold   harmless  benefit   for                                                                   
veterans'. The  estimate is $1.2 million required  to provide                                                                   
these  hold  harmless  benefits. Additional  staff  would  be                                                                   
necessary with  funds to support them. Some  veterans receive                                                                   
their benefit based on a priority  level. The pension benefit                                                                   
is estimated  at about $1000 per  person and $831,000  is the                                                                   
estimated  cost of  providing  medical benefits  for the  500                                                                   
veterans receiving medical assistance.                                                                                          
                                                                                                                                
3:42:44 PM                                                                                                                    
                                                                                                                                
Representative  Thomas asked  if  the Senate  version of  the                                                                   
bill  would  involve  the  same expense  to  the  state.  Mr.                                                                   
Sherwood responded  that the  other proposal involves  paying                                                                   
both  a  dividend  and  fuel  assistance  and  the  Veterans'                                                                   
Administration  would count  the fuel  assistance as  income.                                                                   
The  Senate proposal  would cost  more money  to replace  the                                                                   
lost Veterans' benefits.                                                                                                        
                                                                                                                                
Co-Chair Meyer understood that  the other proposal was fluid.                                                                   
                                                                                                                                
Ms.  Fitzjarrald  commented  on  the other  version  and  the                                                                   
Veterans' piece possibly making  up the high end of the cost.                                                                   
There is not enough information  to accurately gage the cost.                                                                   
                                                                                                                                
3:44:46 PM                                                                                                                    
                                                                                                                                
Representative  Gara mentioned  the hold harmless  provisions                                                                   
and the  classes of people  affected. The payment  should not                                                                   
be counted  as income,  meaning they  might lose  eligibility                                                                   
for  public  housing. He  asked  if  all of  the  individuals                                                                   
currently  protected  by  the hold  harmless  provision  were                                                                   
still protected. Ms. Fitzjarrald  responded that the programs                                                                   
operated  by HESS  are still  protected. Representative  Gara                                                                   
understood that  because the resource  rebate was a  one year                                                                   
payment, it would not count as income.                                                                                          
                                                                                                                                
Representative  Gara  questioned   whether  individuals  with                                                                   
subsidized payments  at the Pioneer Home would  be allowed to                                                                   
keep their payments. Ms. Fitzjarrald said yes.                                                                                  
                                                                                                                                
3:47:29 PM                                                                                                                    
                                                                                                                                
AMANDA RYDER, DIRECTOR, DIVISION  OF ADMINISTRATIVE SERVICES,                                                                   
DEPARTMENT OF  COMMERCE, COMMUNITY AND ECONOMIC  DEVELOPMENT,                                                                   
addressed  the two fiscal  notes provided  by the  Department                                                                   
for  the  bulk   fuel  bridge  loan  fund.   The  first  note                                                                   
capitalizes the  fund at $2,518,000.  The  appropriation from                                                                   
the fund for administrative costs  is $18,000. The $2,518,000                                                                   
is due to the raised cap of $500,000 to $750,000.                                                                               
                                                                                                                                
Representative  Hawker expressed  agreement  with the  fiscal                                                                   
note. He  clarified that  the money  would increase  the bulk                                                                   
fuel bridge loan fund. He had  not seen a fiscal note for the                                                                   
bulk  fuel revolving  loan  fund which  is  submitted by  the                                                                   
Alaska Energy  Authority (AEA.)  Co-Chair Meyer asked  if the                                                                   
Committee   was   expecting   a   fiscal   note   from   AEA.                                                                   
Representative  Hawker  reiterated  that  the  committee  had                                                                   
raised  both Bulk  Fuel Bridge  loan fund and  the Bulk  Fuel                                                                   
Revolving Loan Fund and he expected  a comparable fiscal note                                                                   
from AEA. He asked if AEA had adequate funding authority.                                                                       
                                                                                                                                
Ms. Ryder stated that an additional  $3 million dollars would                                                                   
be required for the fiscal note.  It is being worked on in an                                                                   
appropriation bill. She had not  signed a fiscal note for the                                                                   
Bulk Fuel Revolving Loan Fund.                                                                                                  
                                                                                                                                
3:51:44 PM                                                                                                                    
                                                                                                                                
JERRY   BURNETT,   DIRECTOR,   DIVISION   OF   ADMINISTRATIVE                                                                   
SERVICES,  DEPARTMENT  OF  REVENUE,   referenced  two  fiscal                                                                   
notes. The first note concerned  the Resource Rebate or $1000                                                                   
per  PFD eligible  individual at  an amount  of $620  million                                                                   
dollars, with $100,000 for administrative expenses.                                                                             
                                                                                                                                
Mr.  Burnett did  not  anticipate  putting the  General  Fund                                                                   
through  the Department  of  Revenue  for the  hold  harmless                                                                   
provision. The  payment would be identified  separately, even                                                                   
though it is on the same check.  If a college student were to                                                                   
request financial  aid, then a  request to the  financial aid                                                                   
advisor  must be made  so that  the one  time payment  is not                                                                   
considered income.                                                                                                              
                                                                                                                                
3:54:24 PM                                                                                                                    
                                                                                                                                
Representative Hawker  asked if the cash  distribution stream                                                                   
was taken  into consideration  for needs  based programs.  If                                                                   
there is another big cash distribution  next year, will money                                                                   
be  collected  then?  Mr.  Burnett did  not  expect  that  to                                                                   
happen.   Representative   Hawker  asked   if   it  was   the                                                                   
administration's  position  that  this  is  a  one-time  only                                                                   
payment. Mr. Jerry  Burnett affirmed that this  is a one-time                                                                   
only payment.                                                                                                                   
                                                                                                                                
3:56:17 PM                                                                                                                    
                                                                                                                                
Representative Gara asked why  the student was responsible to                                                                   
communicate to  the financial aid advisor when  hold harmless                                                                   
was  automatic.  Mr.  Burnett   explained  that  federal  law                                                                   
requires  that  with a  one-time  payment, the  student  must                                                                   
request that the university not  consider it income, which is                                                                   
true of any kind of federal payment.                                                                                            
                                                                                                                                
Representative Gara did not think  that it would be simple to                                                                   
notify students  about this federal  law. The only way  to do                                                                   
it  would  be to  have  Universities  flag  applications  for                                                                   
financial aid.                                                                                                                  
                                                                                                                                
Mr. Burnett  reported that in  Juneau, where his wife  is the                                                                   
director  of  financial  aid, applications  will  be  handled                                                                   
appropriately.                                                                                                                  
                                                                                                                                
Representative  Gara  asked  if   intent  language  would  be                                                                   
helpful  to ensure  that Universities  address  this need  on                                                                   
financial aid applications.                                                                                                     
                                                                                                                                
Mr.  Burnett did  not know,  because many  of these  students                                                                   
will be attending schools throughout the United States.                                                                         
                                                                                                                                
Representative Gara  planned to talk to Legislative  Legal or                                                                   
the University  about that.  Representative Nelson  suggested                                                                   
the Alaska  Post Secondary  Commission  be contacted  on this                                                                   
note.                                                                                                                           
                                                                                                                                
3:58:36 PM                                                                                                                    
                                                                                                                                
Mr. Burnett  said  the second  fiscal note  is for the  motor                                                                   
fuel tax suspension. This includes  a reduction in revenue of                                                                   
$33,250,000  in FY09 and  $39 million in  FY10 and  FY11. The                                                                   
appropriation bill  included $150,000 for shared  taxes which                                                                   
was noted in the fiscal note for municipalities.                                                                                
                                                                                                                                
Co-Chair Meyer  was given the  fiscal note prepared  by Sarah                                                                   
Fisher-Goad  regarding  the Bulk  Fuel Revolving  Loan  Fund.                                                                   
Representative Thomas stated that she had explained the note                                                                    
to the committee earlier.                                                                                                       
                                                                                                                                
Co-Chair Meyer stated that the total of all the fiscal notes                                                                    
was $750 million.                                                                                                               
                                                                                                                                
                                                                                                                                
Co-Chair Meyer suggested that since the Senate was farther                                                                      
along with their bill, House Finance could hold this bill                                                                       
for now until the Senate bill passes.                                                                                           
                                                                                                                                
4:02:54 PM                                                                                                                    
                                                                                                                                
HB 4005 was HELD in Committee for further consideration.                                                                        
#                                                                                                                             
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 4:03 PM                                                                                            
                                                                                                                                
                                                                                                                                

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