Legislature(2013 - 2014)HOUSE FINANCE 519

04/01/2013 01:30 PM FINANCE


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01:42:39 PM Start
01:42:55 PM HB4
03:27:17 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 4 IN-STATE GASLINE DEVELOPMENT CORP TELECONFERENCED
Moved CSSSHB 4(FIN) Out of Committee
<Bill Hearing Rescheduled from 9:00 Meeting>
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 1, 2013                                                                                            
                         1:42 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:42:39 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the House Finance Committee meeting                                                                     
to order at 1:42 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Lindsey Holmes                                                                                                   
Representative Scott Kawasaki, Alternate                                                                                        
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative David Guttenberg                                                                                                 
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Mike Chenault; Joe Dubler, Chief Officer                                                                         
AGDC; Rena Delbridge, Staff, Representative Mike Hawker;                                                                        
Representative Mike Hawker.                                                                                                     
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Stuart Goering, Department of Law, Anchorage; Dave Haugen,                                                                      
Project Director, AGDC.                                                                                                         
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
CSSSHB 4(FIN)                                                                                                                   
          IN-STATE GASLINE DEVELOPMENT CORP                                                                                     
                                                                                                                                
          CSSSHB  4(FIN), as  amended  was  REPORTED out  of                                                                    
          committee  with  a  "do pass"  recommendation  and                                                                    
          with  one new  fiscal impact  note from  the House                                                                    
          Finance Committee for  Fund Capitalization and one                                                                    
          new  fiscal impact  note  from  the House  Finance                                                                    
          Committee   for   Various  departments   including                                                                    
          Department   of   Law,   Department   of   Natural                                                                    
          Resources,     Department     of     Environmental                                                                    
          Conservation,  Department  of  Transportation  and                                                                    
          Public  Facilities,  and Department  of  Commerce,                                                                    
          Community and Economic Development.                                                                                   
                                                                                                                                
HOUSE BILL NO. 4                                                                                                              
                                                                                                                                
     "An  Act relating  to  the  Alaska Gasline  Development                                                                    
     Corporation;  making  the  Alaska  Gasline  Development                                                                    
     Corporation,  a   subsidiary  of  the   Alaska  Housing                                                                    
     Finance Corporation, an  independent public corporation                                                                    
     of  the state;  establishing  and relating  to the  in-                                                                    
     state  natural   gas  pipeline  fund;   making  certain                                                                    
     information  provided  to  or  by  the  Alaska  Gasline                                                                    
     Development  Corporation exempt  from  inspection as  a                                                                    
     public record;  relating to the Joint  In-State Gasline                                                                    
     Development  Team;  relating   to  the  Alaska  Housing                                                                    
     Finance Corporation;  relating to judicial review  of a                                                                    
     right-of-way lease or an action  or decision related to                                                                    
     the  development  or  construction  of an  oil  or  gas                                                                    
     pipeline  on state  land; relating  to the  lease of  a                                                                    
     right-of-way   for   a  gas   pipeline   transportation                                                                    
     corridor,  including  a  corridor  for  a  natural  gas                                                                    
     pipeline that  is a contract  carrier; relating  to the                                                                    
     cost   of  natural   resources,  permits,   and  leases                                                                    
     provided    to   the    Alaska   Gasline    Development                                                                    
     Corporation;  relating  to  procurement by  the  Alaska                                                                    
     Gasline  Development   Corporation;  relating   to  the                                                                    
     review  by  the  Regulatory  Commission  of  Alaska  of                                                                    
     natural gas  transportation contracts; relating  to the                                                                    
     regulation by  the Regulatory  Commission of  Alaska of                                                                    
     an in-state  natural gas pipeline project  developed by                                                                    
     the  Alaska Gasline  Development Corporation;  relating                                                                    
     to  the  regulation  by the  Regulatory  Commission  of                                                                    
     Alaska  of  an  in-state   natural  gas  pipeline  that                                                                    
     provides transportation by  contract carriage; relating                                                                    
     to  the  Alaska   Natural  Gas  Development  Authority;                                                                    
     relating to the procurement  of certain services by the                                                                    
     Alaska  Natural  Gas Development  Authority;  exempting                                                                    
     property of  a project developed by  the Alaska Gasline                                                                    
     Development Corporation from  property taxes before the                                                                    
     commencement  of commercial  operations; and  providing                                                                    
     for an effective date."                                                                                                    
                                                                                                                                
1:42:55 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze stated that the committee's agenda would                                                                       
address amendments to the legislation.                                                                                          
                                                                                                                                
Co-Chair Austerman MOVED to ADOPT Amendment 2, 28-                                                                              
LS0021\R.12, Bullock, 3/30/13 (copy on file):                                                                                   
                                                                                                                                
     Page 7, line 10, following "gas":                                                                                          
     Insert  ",  including  propane and  other  hydrocarbons                                                                    
     associated with natural gas other than oil,"                                                                               
                                                                                                                                
     Page  7, line  12, following  the second  occurrence of                                                                    
     "gas":                                                                                                                     
     Insert  ",  including  propane and  other  hydrocarbons                                                                    
     associated with natural gas other than oil,"                                                                               
                                                                                                                                
     Page 7, line 13, following "gas":                                                                                          
     Insert  ",  including  propane and  other  hydrocarbons                                                                    
     associated with natural gas other than oil,"                                                                               
                                                                                                                                
     Page 7, line 16, following "gas":                                                                                          
     Insert  ",  including  propane and  other  hydrocarbons                                                                    
     associated with natural gas other than oil,"                                                                               
                                                                                                                                
     Page 13, line 21, following "state":                                                                                       
     Insert  ",  including  the  delivery  of  natural  gas,                                                                    
     including  propane  and other  hydrocarbons  associated                                                                    
     with   natural  gas   other   than   oil,  to   coastal                                                                    
     communities in the state,"                                                                                                 
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
Co-Chair  Austerman  discussed  the need  to  provide  rural                                                                    
areas  the ability  to seek  alternative energy  sources. He                                                                    
pointed out  page 13, line 21.  He wished for the  option to                                                                    
transport  fuel to  coastal  communities,  allowing them  to                                                                    
benefit from the  gasline, if the project  proceeded to salt                                                                    
water.                                                                                                                          
                                                                                                                                
Co-Chair Stoltze  intended to provide opportunities  for the                                                                    
bill   sponsors   and   the   Alaska   Gasline   Development                                                                    
Corporation (AGDC) to speak to the amendments.                                                                                  
                                                                                                                                
1:45:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MIKE CHENAULT, SPONSOR  did not see a problem                                                                    
with the amendment. The intention  of the legislation was to                                                                    
provide gas to  all areas of Alaska. He  wanted residents of                                                                    
rural Alaska to know that their interests were heard.                                                                           
                                                                                                                                
Co-Chair   Stoltze   wished   to  keep   the   policy   well                                                                    
intentioned.                                                                                                                    
                                                                                                                                
Representative  Kawasaki asked  if the  amendment's language                                                                    
would change the work project plan submitted by AGDC.                                                                           
                                                                                                                                
1:47:15 PM                                                                                                                    
                                                                                                                                
JOE DUBLER,  CHIEF FINANCIAL OFFICER, VICE  PRESIDENT ALASKA                                                                    
GASLINE   DEVELOPMENT    CORPORATION,   stated    that   the                                                                    
amendment's  language would  not  affect the  work plan.  He                                                                    
stated that the language was  permissive and allowed AGDC to                                                                    
make   propane   available   to   entities   interested   in                                                                    
distributing propane or natural gas throughout the state.                                                                       
                                                                                                                                
Co-Chair Stoltze  discussed the optimal goals  of delivering                                                                    
energy to Alaskans.                                                                                                             
                                                                                                                                
Representative Gara  expressed concern  that AGDC  would not                                                                    
remain  true to  the  original plan.  He  recalled that  the                                                                    
elimination  of the  straddling plant  lessened the  cost of                                                                    
the   project.  He   recalled   testimony  that   additional                                                                    
infrastructure  was  necessary  to  ship  propane  to  rural                                                                    
Alaska using the river system.                                                                                                  
                                                                                                                                
1:49:04 PM                                                                                                                    
                                                                                                                                
Mr.  Dubler  responded  that  the  plan  assumed  that  3500                                                                    
barrels  per  day  of  gas[BSW1] would be shipped  down  the                                                                    
gasline, which  equaled the current  usage in the  state. If                                                                    
further  interest in  propane  developed,  a straddle  plant                                                                    
would be  necessary in  Fairbanks. The  cost of  the propane                                                                    
would then reflect the cost of the straddling plant.                                                                            
                                                                                                                                
Representative  Gara  asked  if consumers  in  rural  Alaska                                                                    
would  then  pay  for  the  additional  infrastructure.  Mr.                                                                    
Dubler replied yes.                                                                                                             
                                                                                                                                
Representative Wilson pointed  out that a large  part of the                                                                    
Fairbanks Northstar  Borough would not join  the gas system.                                                                    
She  assumed  that rural  boroughs  would  benefit from  the                                                                    
language in Amendment 2[BSW2].                                                                                                  
                                                                                                                                
Mr. Dubler  agreed. He stated  that the  Southcentral region                                                                    
of  the   state  had  an   operating  LNG   plant  supplying                                                                    
Fairbanks.  The   plant  would  have  surplus   capacity  if                                                                    
Fairbanks received  natural gas via the  instate gasline and                                                                    
might be available for shipments to other parts of Alaska.                                                                      
                                                                                                                                
1:51:23 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze WITHDREW his OBJECTION.                                                                                        
                                                                                                                                
Representative   Kawasaki   asked  about   the   amendment's                                                                    
reference to "coastal communities."  He wondered about those                                                                    
rural areas located  on a road system, but not  in a coastal                                                                    
community.                                                                                                                      
                                                                                                                                
Co-Chair  Austerman responded  that the  amendment's concept                                                                    
was forward-thinking regarding the  uses for natural gas. He                                                                    
mentioned the  idea of burning  LNG [liquid natural  gas] in                                                                    
ferries. He  wished to  lift restrictions  to the  agency if                                                                    
other opportunities became available.                                                                                           
                                                                                                                                
1:53:28 PM                                                                                                                    
                                                                                                                                
Representative  Kawasaki wondered  if the  use of  the words                                                                    
"coastal communities" might be restrictive in nature.                                                                           
                                                                                                                                
Representative  Edgmon  replied  that  HB  4  would  provide                                                                    
organized  preparation for  a gasline  solution. He  did not                                                                    
view the amendment's language as restrictive.                                                                                   
                                                                                                                                
Representative  Gara  expressed   concern  that  the  bill's                                                                    
original   promises  included   propane  and   one  or   two                                                                    
straddling plants.  He suggested  that the  reinstatement of                                                                    
the  plan   would  be  cost   prohibitive  to   the  smaller                                                                    
communities.                                                                                                                    
                                                                                                                                
Mr. Dubler clarified that propane  customers would have paid                                                                    
for the  straddle plants  under the  original configuration;                                                                    
the cost  of the propane  would have reflected  the straddle                                                                    
plants.                                                                                                                         
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
further OBJECTION, Amendment 2 was ADOPTED.                                                                                     
                                                                                                                                
1:56:48 PM                                                                                                                    
                                                                                                                                
Co-Chair   Stoltze  MOVED   to   ADOPT   Amendment  3,   28-                                                                    
LS0021\R.15, Bullock, 4/1/13 (copy on file):                                                                                    
                                                                                                                                
     Page 47, line 9:                                                                                                           
          Delete "period not longer than six months"                                                                            
          Insert "for a period not longer than 90 days"                                                                         
                                                                                                                                
Representative Gara OBJECTED for discussion.                                                                                    
                                                                                                                                
Co-Chair  Stoltze explained  the amendment.  He stated  that                                                                    
the amendment  eliminated a time  period of months  from the                                                                    
legislation. The amendment reduced the  time frame to a more                                                                    
precise manner  of specific days. He  noted that discussions                                                                    
with the  administration yielded  the opinion that  this was                                                                    
the preferred time frame.                                                                                                       
                                                                                                                                
Representative  Gara  asked  if  the reduction  to  90  days                                                                    
limited the  time allowed for  the Regulatory  Commission of                                                                    
Alaska (RCA) to determine the cost of transporting gas.                                                                         
                                                                                                                                
Representative  Holmes  stated  that the  90-day[BSW3] change                                                                   
would allow  the RCA  to review the  recourse tariff  and be                                                                    
able to suspend  it for 90 days upon motion  or complaint to                                                                    
conduct hearings and review.                                                                                                    
                                                                                                                                
2:00:05 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:00:32 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
STUART   GOERING,   DEPARTMENT   OF  LAW,   ANCHORAGE   (via                                                                    
teleconference),  responded   that  the  RCA   reviewed  the                                                                    
original proposal  and promised to follow  the direction set                                                                    
forth  by the  legislature. He  saw the  matter as  a policy                                                                    
call. While  a longer  time period  allowed more  process, a                                                                    
90-day review  period in addition  to 90 days  to adjudicate                                                                    
was viewed as reasonable.                                                                                                       
                                                                                                                                
Representative Gara  asked if the  RCA could fairly  set the                                                                    
recourse tariff if  the period was moved down  from 6 months                                                                    
to 90 days.                                                                                                                     
                                                                                                                                
Co-Chair Stoltze viewed that two  90-day periods were better                                                                    
than 30 days.                                                                                                                   
                                                                                                                                
Mr.  Goering responded  that  the  second 90-day  suspension                                                                    
period provided an  adequate amount of time  for the parties                                                                    
to conduct  their adversarial  process with  the RCA  as the                                                                    
adjudicative body.  He noted that  the burden  of shortening                                                                    
the  time falls  as  much on  the  parties presenting  their                                                                    
evidence. The  process will  be adjusted  to allow  time for                                                                    
the parties  to present evidence  and for the  commission to                                                                    
make  and  issue a  decision.  He  noted that  the  governor                                                                    
supported the language embodied in Amendment 3.                                                                                 
                                                                                                                                
Co-Chair  Stoltze   pointed  out  that  the   committee  and                                                                    
sponsors had  not achieved concurrence  on the issue,  so he                                                                    
wished to allow ample time for comments and concerns.                                                                           
                                                                                                                                
2:04:00 PM                                                                                                                    
                                                                                                                                
RENA   DELBRIDGE,   STAFF,   REPRESENTATIVE   MIKE   HAWKER,                                                                    
explained that the sponsors were  troubled with the addition                                                                    
of  the  suspension period.  The  sponsors  were willing  to                                                                    
extend  the initial  recourse tariff  review period  from 30                                                                    
days to  90 days, which  was represented in the  finance CS.                                                                    
The sponsor  understood the RCA's desire  to have additional                                                                    
time to  suspend a tariff,  but both the 90-day  and 180-day                                                                    
time periods were problematic.                                                                                                  
                                                                                                                                
Co-Chair  Stoltze  noted  that multiple  possibilities  were                                                                    
suggested.                                                                                                                      
                                                                                                                                
Representative Gara asked Mr. Goering  if the RCA would have                                                                    
enough time to protect the  consumer's right to a reasonable                                                                    
recourse tariff rate  with the time period  suggested by the                                                                    
amendment.                                                                                                                      
                                                                                                                                
Mr.  Goering  clarified  that   the  initial  review  period                                                                    
allowed RCA  to talk  to the pipeline  carrier and  work out                                                                    
any  filing issues.  The suspension  period was  created for                                                                    
controversies  that remain  after the  90-day review  period                                                                    
was  completed.   The  90-day   suspension  period   was  an                                                                    
opportunity for the commission  to allow interested parties,                                                                    
such as shippers and rate  payers to intervene in the action                                                                    
to test  the carrier's evidence.  The issues during  the 90-                                                                    
day period were limited under the bill, as written.                                                                             
                                                                                                                                
Mr.  Goering continued  that the  recourse  tariff had  some                                                                    
specific standards for its review.  The standards were found                                                                    
on  page  45  of  the  current  CS.  He  mentioned  specific                                                                    
requirements of  the commission that were  narrower than the                                                                    
usual  pipeline and  utility  tariffs. In  the  case of  the                                                                    
amendment, the commission  was asked to approve  or deny the                                                                    
tariff  based  on  factors found  in  AS  42.08.350(b).  The                                                                    
review during the initial 90  days and the 90-day suspension                                                                    
period was narrower than the  time period typically provided                                                                    
by the commission with respect to tariffs.                                                                                      
                                                                                                                                
2:08:36 PM                                                                                                                    
                                                                                                                                
Representative Gara  wondered if  the time suggested  in the                                                                    
Amendment  3  was  adequate  for   determining  a  just  and                                                                    
reasonable rate.  He asked if  the time period  was adequate                                                                    
for evaluating  whether the shipper's proposal  for a tariff                                                                    
met  the statutory  requirement. He  asked if  the statutory                                                                    
requirement required a just and reasonable rate.                                                                                
                                                                                                                                
Mr. Goering  replied that the  standard for  the commissions                                                                    
review evaluated  the terms and  conditions of  service. The                                                                    
standard determined  whether the  terms and  conditions were                                                                    
unduly discriminatory  and whether the rates  were supported                                                                    
by the supporting cost model.  The criteria related to rates                                                                    
of return and depreciation  methodology. The bulk of service                                                                    
was  provided  under  contract,  as  opposed  to  under  the                                                                    
recourse tariff.  In answer  to Representative  Gara's first                                                                    
question,  Mr.  Goering stated  that  the  process could  be                                                                    
adjusted to accommodate  the amount of time  available. If a                                                                    
90-day period was  allowed, the parties must  be prepared to                                                                    
present evidence sooner.                                                                                                        
                                                                                                                                
2:10:40 PM                                                                                                                    
                                                                                                                                
Co-Chair Austerman pointed out  that the language stated "no                                                                    
longer than 90  days." He interpreted that  the language did                                                                    
not require the process to utilize  all 90 days; it might be                                                                    
completed more quickly.                                                                                                         
                                                                                                                                
Mr. Goering concurred. He stated  that the entire suspension                                                                    
period was  optional. If,  at the end  of the  90-day review                                                                    
period, the  commission determined that there  was no reason                                                                    
to investigate  the tariff further  the rates would  go into                                                                    
effect on  the dates specified  in the tariff's  filing. The                                                                    
suspension  period  was  optional. The  commission  was  not                                                                    
required to utilize the entire  90-day period to issue their                                                                    
decision.                                                                                                                       
                                                                                                                                
Co-Chair Stoltze  noted that the amendment  altered the time                                                                    
period from 6 months to 90 days.                                                                                                
                                                                                                                                
Representative  Holmes  expressed  that  the  original  time                                                                    
period  of  30  days  was  too  fast,  while  the  expansion                                                                    
appeared reasonable to her.                                                                                                     
                                                                                                                                
A roll call vote was taken  on the motion to adopt Amendment                                                                    
3.                                                                                                                              
                                                                                                                                
IN  FAVOR:    Wilson, Costello,  Edgmon,  Kawasaki,  Holmes,                                                                    
Munoz, Neuman, Thompson, Austerman, Stoltze                                                                                     
OPPOSED:  Gara                                                                                                                  
The MOTION PASSED (10/1).                                                                                                       
                                                                                                                                
There being NO further OBJECTION, Amendment 3 was ADOPTED.                                                                      
                                                                                                                                
2:13:00 PM                                                                                                                    
                                                                                                                                
Representative  Kawasaki MOVED  to  ADOPT  Amendment 4,  28-                                                                    
LS0021\R.7, Nauman/Bullock, 3/28/13 (copy on file):                                                                             
                                                                                                                                
     Page 1, line 3, following "fund;":                                                                                         
     Insert "relating to a natural gas pipeline from Cook                                                                       
     Inlet to Fairbanks;"                                                                                                       
                                                                                                                                
     Page 3, line 2:                                                                                                            
     Delete "and"                                                                                                               
                                                                                                                                
     Page 3, line 12:                                                                                                           
     Delete "state."                                                                                                            
     Insert "state; and                                                                                                         
     (4)   The   Alaska  Gasline   Development   Corporation                                                                    
     construct a natural gas pipeline  to deliver Cook Inlet                                                                    
     natural gas to Fairbanks  and other communities between                                                                    
     Cook Inlet and  Fairbanks that do not have  access to a                                                                    
     natural  gas  pipeline,  as  the  first  phase  in  the                                                                    
     development of an in-state natural gas pipeline."                                                                          
                                                                                                                                
     Page 7, following line 11:                                                                                                 
     Insert a new paragraph to read:                                                                                            
     "(2)    notwithstanding  (1) of  this  section,  before                                                                    
     constructing  a  natural  gas  pipeline  to  serve  the                                                                    
     Southcentral region of the  state and other communities                                                                    
     of  the  state,  the   corporation  shall  construct  a                                                                    
     natural gas pipeline to deliver  Cook Inlet natural gas                                                                    
     to Fairbanks  and other communities between  Cook Inlet                                                                    
     and Fairbanks that do not  have access to a natural gas                                                                    
     pipeline;"                                                                                                                 
                                                                                                                                
     Renumber the following paragraphs accordingly.                                                                             
                                                                                                                                
     Page 10, following line 15:                                                                                                
     Insert a new subsection to read:                                                                                           
     "(f)   Before  constructing a  natural gas  pipeline to                                                                    
     serve the  Southcentral region of  the state  and other                                                                    
     communities of  the state, the corporation  shall plan,                                                                    
     construct,  and  finance  a  natural  gas  pipeline  to                                                                    
     deliver natural  gas from Cook  Inlet to  Fairbanks and                                                                    
     to communities  between Cook  Inlet and  Fairbanks that                                                                    
     do not have access to a natural gas pipeline."                                                                             
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Representative Kawasaki stated  that the amendment addressed                                                                    
issues  related to  Fairbanks'  diminished  air quality  and                                                                    
high cost  of energy. The  amendment stated if AGDC  were to                                                                    
begin  building   a  gasline,  the  priority   ought  to  be                                                                    
providing natural gas to  Fairbanks. The amendment requested                                                                    
prioritization  of  the Cook  Inlet  line  to Fairbanks.  He                                                                    
projected that the discussed portion  of the line would cost                                                                    
$2 billion.                                                                                                                     
                                                                                                                                
Representative Chenault  spoke to  the amendment.  He stated                                                                    
that  the legislature  must allow  AGDC and  the project  to                                                                    
determine  the  priorities.  He   understood  the  need  for                                                                    
natural gas  in Fairbanks. A  bill existed in  the committee                                                                    
to  bring LNG  to Fairbanks  within the  next two  years. He                                                                    
stated that the  project in HB 4 was projected  for 2019. He                                                                    
understood the needs  and concerns of Fairbanks,  but he did                                                                    
not  believe  that the  legislature  should  direct AGDC  in                                                                    
its[BSW4] process. He did not support the amendment.                                                                            
                                                                                                                                
2:18:32 PM                                                                                                                    
                                                                                                                                
Mr. Dubler  stressed the importance of  a compressor station                                                                    
in the  Cook Inlet area if  the amendment were to  pass. The                                                                    
compressor  station  would  incur an  additional  cost  that                                                                    
would  not  be  recoverable  for the  entire  pipeline  upon                                                                    
completion.                                                                                                                     
                                                                                                                                
Representative Wilson  understood that AGDC must  choose the                                                                    
most  economical  project.  She wondered  if  the  amendment                                                                    
would slow the project.                                                                                                         
                                                                                                                                
Mr. Dubler responded that the  proposed change would require                                                                    
a rerouting of resources,  which would potentially delay the                                                                    
project.                                                                                                                        
                                                                                                                                
Representative  Wilson  clarified  that  Fairbanks  realized                                                                    
that the  LNG trucking  solution was temporary.  She assumed                                                                    
that a south-to-north  route had been vetted  in the process                                                                    
of project establishment.                                                                                                       
                                                                                                                                
Mr.  Duber responded  that the  compressor  station in  Cook                                                                    
Inlet  was  suggested  as a  solution  to  a  south-to-north                                                                    
route. The  compressor station was  not transferable  to the                                                                    
North Slope.                                                                                                                    
                                                                                                                                
2:21:06 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze asked  if the  amendment would  complicate                                                                    
the regulatory process for the RCA.                                                                                             
                                                                                                                                
Mr.  Dubler responded  that  permits  and the  rights-of-way                                                                    
were based on  the premise that the gasline  would bring gas                                                                    
from  the north  to the  south. Turning  the gasline  around                                                                    
would require  reapplication for  those permits  and rights-                                                                    
of-way.                                                                                                                         
                                                                                                                                
Representative Kawasaki  asked about  the AGDC pipe  and its                                                                    
construction along the route.                                                                                                   
                                                                                                                                
Mr. Dubler deferred the question  to the project manager. He                                                                    
pointed out the project's logistical challenges.                                                                                
                                                                                                                                
DAVID  HAUGEN, PROJECT  MANAGER, ALASKA  GASLINE DEVELOPMENT                                                                    
CORPORATION   (via  teleconference),   asked  Representative                                                                    
Kawasaki to repeat the question.                                                                                                
                                                                                                                                
Representative  Kawasaki asked  about  the different  points                                                                    
along the gasline where construction would occur.                                                                               
                                                                                                                                
Mr. Haugen  responded that the complicated  project proposed                                                                    
in HB  4 would have  four separate spreads on  the mainline,                                                                    
with additional  spread for the  Fairbanks lateral.  In each                                                                    
case,  the  individual   spreads  would  encounter  seasonal                                                                    
constraints.  The  scheduling   process  was  elaborate.  He                                                                    
stated that  results of the  planning would be  presented to                                                                    
the legislature to further explain  the planned execution of                                                                    
the project.                                                                                                                    
                                                                                                                                
2:25:12 PM                                                                                                                    
                                                                                                                                
Representative  Kawasaki disagreed  with the  statement that                                                                    
the legislature did not want  to direct AGDC in the building                                                                    
or planning  process. He believed  that the  legislators had                                                                    
the capacity to contribute to the planning process.                                                                             
                                                                                                                                
A roll call vote was taken  on the motion to adopt Amendment                                                                    
4.                                                                                                                              
                                                                                                                                
IN FAVOR:    Gara, Kawasaki                                                                                                     
OPPOSED:     Holmes,   Munoz,   Neuman,  Thompson,   Wilson,                                                                    
     Costello, Edgmon, Austerman, Stoltze                                                                                       
                                                                                                                                
The MOTION FAILED (2/9).                                                                                                        
                                                                                                                                
2:27:17 PM                                                                                                                    
                                                                                                                                
Representative  Gara   MOVED  to  ADOPT  Amendment   5,  28-                                                                    
LS0021\R.4, Bullock, 3/28/13 (copy on file):                                                                                    
                                                                                                                                
     Page 35, line 26:                                                                                                          
     Delete "AS 42.08.320(b) - (d)"                                                                                             
     Insert "AS 42.08.320(b) - (c)"                                                                                             
                                                                                                                                
     Page 42, lines 25 - 29:                                                                                                    
     Delete  "(1) conclude  that  a  precedent agreement  or                                                                    
     related  contract negotiated  at  arm's length  between                                                                    
     the  parties   is  just   and  reasonable   unless  the                                                                    
     commission   finds   that  unlawful   market   activity                                                                    
     affected the rate  or unfair dealing, such  as fraud or                                                                    
     duress, affected the formation of the contract;                                                                            
     (2)"                                                                                                                       
                                                                                                                                
     Page 43, lines 6 - 15:                                                                                                     
     Delete all material.                                                                                                       
                                                                                                                                
     Reletter the following subsection accordingly.                                                                             
                                                                                                                                
     Page 43, line 16:                                                                                                          
     Delete "If a precedent agreement or related contract                                                                       
     is not arm's length, the"                                                                                                  
     Insert "The"                                                                                                               
                                                                                                                                
     Page 43, lines 18 - 21:                                                                                                    
     Delete  "normally applied  under  AS 42.06.140. If  the                                                                    
     commission  is reviewing  a  precedent agreement  under                                                                    
     (c)(2)  of this  section, the  commission may  consider                                                                    
     the  in-state natural  gas pipeline  carrier's approved                                                                    
     recourse  tariff, including  the  cost data  underlying                                                                    
     that tariff"                                                                                                               
     Insert "applied under AS 42.06.140"                                                                                        
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
Representative Gara  explained that the  amendment addressed                                                                    
costs  that   consumers  would  pay  for   natural  gas.  He                                                                    
explained  that  transportation  costs  would  comprise  the                                                                    
majority  of   consumer  costs.  He  stated   that  the  RCA                                                                    
communicated to the pipeline company  that they could have a                                                                    
fair  return  on  their  tariff.   He  quoted  AS  42.06.140                                                                    
allowing  the  RCA the  power  to  require just,  fair,  and                                                                    
reasonable rates. A reasonable  profit could be estimated at                                                                    
10  to  14  percent.  He  stated  that  HB  4  removed  that                                                                    
standard.                                                                                                                       
                                                                                                                                
Representative  Gara  stated  that the  consumer  protection                                                                    
agency's power to  require a just and  reasonable rate would                                                                    
be eliminated  and replaced  by the language  on page  43 of                                                                    
the bill.  He explained  that page  43 outlined  the process                                                                    
following  the establishment  of  the  recourse tariff.  The                                                                    
parties would  create their own  rate, as stated on  line 9.                                                                    
The standard  for setting the  rate for consumers was  not a                                                                    
fair  price. Instead,  if the  parties were  not affiliated,                                                                    
the  price  would  go into  effect,  barring  collusion.  He                                                                    
feared that  the two parties  would not have  the consumer's                                                                    
interest at heart.  The pipeline builder would  hope to earn                                                                    
ample profits  and were  exempt from  the rule  stating that                                                                    
rates must be just and reasonable.                                                                                              
                                                                                                                                
2:31:05 PM                                                                                                                    
                                                                                                                                
Representative Gara  continued to elaborate on  Amendment 5.                                                                    
He  stated  that  the  passage   of  HB  4  would  eliminate                                                                    
competition for  another project and allow  a pipeline owner                                                                    
to charge  as much as they  could get away with.  He claimed                                                                    
that  the  producer   would  also  be  able   to  charge  an                                                                    
exorbitant amount  without an agency  to determine  the just                                                                    
and  reasonable   rate.  Amendment  5  requested   that  the                                                                    
regulatory statute,  AS 42.06.140 remain in  place. He hoped                                                                    
for Alaska consumers to pay just and reasonable rates.                                                                          
                                                                                                                                
Representative  Gara  noted   that  other  states  sometimes                                                                    
relaxed   the  standards,   which  encouraged   competition.                                                                    
Competition would  eliminate the need for  the standard, but                                                                    
Alaska required  the regulations. Otherwise  companies would                                                                    
establish  prices  on their  own  and  the prices  would  be                                                                    
approved by the  RCA unless collusion was  proven. He stated                                                                    
that monopolies led  to high prices and  without the statute                                                                    
AS 42.06.140,  the parties would  pay more for  natural gas.                                                                    
He believed that  the bill would be stronger  with the added                                                                    
protection of the statute.                                                                                                      
                                                                                                                                
Representative   Gara  explained   that   the  language   in                                                                    
Amendment 5 restated the original statute.                                                                                      
                                                                                                                                
2:34:42 PM                                                                                                                    
                                                                                                                                
Ms. Delbridge  responded that the  sponsors were  opposed to                                                                    
the amendment. She clarified that  the RCA would continue to                                                                    
determine just and  reasonable rates in the  bill before the                                                                    
committee. The  language supporting her statement  was found                                                                    
multiple times  on page 42  and 43. She noted  the sponsor's                                                                    
desire   to  ensure   that  rates   were  deemed   just  and                                                                    
reasonable, however,  the standard in the  CS was different.                                                                    
The new standard  would honor the ability of  two parties to                                                                    
freely enter into an agreed upon price.                                                                                         
                                                                                                                                
Ms. Delbridge  continued that the RCA  reviewed contracts at                                                                    
a  higher  level.  She  mentioned   the  bill's  checks  and                                                                    
balances  designed to  moderate the  prices. She  noted that                                                                    
recourse tariff must have all  costs disclosed. A reasonable                                                                    
rate of  return, capital structure, and  depreciation method                                                                    
would  be set  on  the pipeline,  which  would prohibit  the                                                                    
massive  profits  and  extraordinarily high  prices.  People                                                                    
will be able  to negotiate the rates  for long-term shipping                                                                    
contracts.                                                                                                                      
                                                                                                                                
Ms.  Delbridge pointed  to page  51  of the  bill where  the                                                                    
triennial reports were  addressed. Upon pipeline completion,                                                                    
the  carrier must  revisit the  RCA to  submit current  cost                                                                    
data.  The RCA  would then  ensure that  the rate  of return                                                                    
earned  was allowable.  If the  rate of  return was  greater                                                                    
than the allowable amount, the  funds would be redirected to                                                                    
a  segregated  operating  reserve fund  to  address  revenue                                                                    
shortfalls in future  years. The fund must  equal 20 percent                                                                    
of the  annual average  operating cost. Excess  profit would                                                                    
pay down rates of the contractual shipper.                                                                                      
                                                                                                                                
Co-Chair Stoltze asked Mr. Goering to comment.                                                                                  
                                                                                                                                
Mr. Goering did  not have any remarks. He  was available for                                                                    
questions.                                                                                                                      
                                                                                                                                
Representative Gara did not want  people to get confused. He                                                                    
explained that  Ms. Delbridge  discussed the  recourse rate,                                                                    
which  would probably  not apply.  He directed  attention to                                                                    
page 43, line  8 of the legislation related  to the recourse                                                                    
tariff. He  stated that page  9 clarified that  the recourse                                                                    
tariff  was not  enforceable. He  questioned the  applicable                                                                    
standard,  if  a  company  chose not  to  use  the  recourse                                                                    
tariff. If  the parties  were not affiliated,  collusion was                                                                    
the only applicable  factor. He argued that  the bill lacked                                                                    
a requirement that the price  be reasonable and fair for the                                                                    
protection  of   consumers.  The  only  standard,   in  that                                                                    
circumstance,  was  that  the  parties  did  not  engage  in                                                                    
illegal conduct.                                                                                                                
                                                                                                                                
He  argued  that the  existing  law  stated that  the  price                                                                    
should  be just  and  reasonable according  to  the RCA.  He                                                                    
stressed  that  the  project  would  result  in  a  monopoly                                                                    
pipeline  and consumers  would not  have options.  He agreed                                                                    
with Ms.  Delbridge's statements about the  recourse tariff,                                                                    
but he worried that companies were not mandated to use it.                                                                      
                                                                                                                                
2:41:37 PM                                                                                                                    
                                                                                                                                
Representative  Gara stated  that the  policy would  lead to                                                                    
higher  gas  prices  for  Alaskans.  He  believed  that  the                                                                    
language in  the CS did not  hold the companies to  just and                                                                    
reasonable tariffs.                                                                                                             
                                                                                                                                
A roll call vote was taken  on the motion to adopt Amendment                                                                    
5.                                                                                                                              
                                                                                                                                
IN FAVOR:  Gara, Kawasaki                                                                                                       
OPPOSED: Munoz, Neuman,  Thompson, Wilson, Costello, Edgmon,                                                                    
Holmes, Stoltze, Austerman                                                                                                      
                                                                                                                                
The MOTION FAILED (2/9).                                                                                                        
                                                                                                                                
2:43:08 PM                                                                                                                    
                                                                                                                                
Representative  Gara   MOVED  to  ADOPT  Amendment   6,  28-                                                                    
LS002\R.10, Bullock, 3/30/13 (copy on file):                                                                                    
                                                                                                                                
     Page 1, line 3, following "fund;":                                                                                         
          Insert "allowing the legislature to consider                                                                          
          disallowing an in-state natural gas pipeline                                                                          
          project;"                                                                                                             
                                                                                                                                
     Page 10, following line 15:                                                                                                
          Insert a new subsection to read:                                                                                      
     "(f)   The corporation  or other  person may  not start                                                                    
     construction  of  an   in-state  natural  gas  pipeline                                                                    
     developed   by  the   corporation  without   presenting                                                                    
     details  of   the  project  to  the   legislature.  The                                                                    
     legislature  shall have  60 days  during a  legislative                                                                    
     session to  decide whether to  disallow the  project as                                                                    
     proposed."                                                                                                                 
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
Representative  Gara explained  that  the amendment  allowed                                                                    
for public notice  of the gas pipeline  project including 60                                                                    
days during a legislative session  to review the project. If                                                                    
the  legislature  approved  or   failed  to  disapprove  the                                                                    
project, within  the 60-day time  period, the  project would                                                                    
continue as planned.                                                                                                            
                                                                                                                                
Representative Gara suggested that  the state might be faced                                                                    
with another gasline proposal in  the future. He opined that                                                                    
the limitations of  the pipeline proposed in  the bill might                                                                    
be  countered   by  another   project  utilizing   a  larger                                                                    
pipeline. He stated  that a larger pipeline  would mean less                                                                    
expensive gas for Alaskans.                                                                                                     
                                                                                                                                
2:48:47 PM                                                                                                                    
                                                                                                                                
Representative Gara felt  that a larger pipeline  was in the                                                                    
best  interest of  Alaskans. He  pointed out  that a  larger                                                                    
pipeline  would lead  to further  exploration  on the  North                                                                    
Slope,  which would  lead to  joint oil  and gas  fields. He                                                                    
proposed  that better  options might  be available  when the                                                                    
project gets  to open  season. He  believed that  the public                                                                    
had the right to review the project.                                                                                            
                                                                                                                                
Co-Chair Stoltze appreciated the discussion.                                                                                    
                                                                                                                                
2:50:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MIKE  HAWKER,  SPONSOR,  believed  that  the                                                                    
amendment grossly mischaracterized the  bill. He opined that                                                                    
the  amendment implied  that  the  bill would  strategically                                                                    
cause problems  for the  consumer by  inflating costs  for a                                                                    
project that  was not in  the best interest of  Alaskans. He                                                                    
disagreed with  the assumptions  because many  controls were                                                                    
incorporated into the legislation.                                                                                              
                                                                                                                                
Representative Hawker discussed  the sponsors' objectives to                                                                    
initiate a  gasline project. He  stated that  every possible                                                                    
project was  halted by a  government process and  a changing                                                                    
of  directions.   He  mentioned  the  policy   objective  of                                                                    
minimizing  future government  interference in  the business                                                                    
decisions required  to move the  project forward.  A project                                                                    
would  move forward,  under the  proposed legislation  if it                                                                    
was   backed  by   a  market-based   transaction.  Statutory                                                                    
obligations were provided for  AGDC regarding their approach                                                                    
to  a  market-based  transaction.  The  obligation  included                                                                    
providing gas to Alaskans at the least possible cost.                                                                           
                                                                                                                                
Representative  Hawker continued  to explain  that a  viable                                                                    
project  would proceed  only with  backing from  commitments                                                                    
from   third-party   shippers.    Without   the   commercial                                                                    
transactions,  the   legislature  had  the   opportunity  to                                                                    
revisit  the  projects.  He  opined  that  the  state  would                                                                    
benefit from  the initiation of  an Alaska  gasline project.                                                                    
The  state  must invest  money  to  support the  design  and                                                                    
development of the project.                                                                                                     
                                                                                                                                
2:55:30 PM                                                                                                                    
                                                                                                                                
Representative Hawker  furthered that the  legislature would                                                                    
continue  to have  authority of  spending. He  heard further                                                                    
mischaracterizations  about  the   project  and  information                                                                    
brought forward  in the base  case analysis. He  stated that                                                                    
the maximum price of gas was  the price that the state would                                                                    
pay  to import  LNG overseas.  He pointed  out that  Alaskan                                                                    
utilities  were exploring  the  import  options. The  import                                                                    
option was  explored because  utilities were  concerned that                                                                    
the project  proposed in the  legislation would not  come to                                                                    
fruition.                                                                                                                       
                                                                                                                                
Representative  Hawker suggested  that interjecting  delays,                                                                    
politics,   and   market    uncertainty   also   interjected                                                                    
additional  costs.   With  the  proposed   legislation,  the                                                                    
legislature would  retain adequate  checks and  balances. He                                                                    
pointed  out  that  the  passage   of  the  bill  would  not                                                                    
compromise a  larger pipeline project. If  a larger pipeline                                                                    
project  was  proposed, AGDC  would  have  an obligation  to                                                                    
proceed with the project.                                                                                                       
                                                                                                                                
2:59:31 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Neuman spoke  to the  amendment. He  pointed out                                                                    
the  first line  "the corporation  or other  person may  not                                                                    
start  construction  of  an in-state  natural  gas  pipeline                                                                    
developed by  the corporation without presenting  details of                                                                    
the project." He  pointed to page 10, subsection  (e) of the                                                                    
legislation and  the mention of  reports to  the legislature                                                                    
in the event  of a firm transportation  agreement. Without a                                                                    
successful  open season,  the fiscal  note would  not extend                                                                    
enough funds to proceed  without revisiting the legislature.                                                                    
He sincerely  hoped that  Alaska would  have enough  gas for                                                                    
two pipelines.                                                                                                                  
                                                                                                                                
3:01:53 PM                                                                                                                    
                                                                                                                                
Representative Wilson asked if  the amendment pertained only                                                                    
to a private company wishing to fund the entire project.                                                                        
                                                                                                                                
Representative Hawker  interpreted that the  amendment spoke                                                                    
about the corporation or other  person moving forward with a                                                                    
project.   He  believed   that  if   the  corporation   were                                                                    
successful and handed the project  over to a private entity,                                                                    
the project would require review from the legislature.                                                                          
                                                                                                                                
Representative  Wilson asked  about any  company that  would                                                                    
fund the project if it was not deemed economical.                                                                               
                                                                                                                                
3:04:19 PM                                                                                                                    
                                                                                                                                
Representative   Chenault   discussed   the   Stranded   Gas                                                                    
Development  Act.  He  recalled  that the  Act  required  20                                                                    
percent ownership  by the state.  The project  was projected                                                                    
to  cost $40  billion. He  stated that  the legislators  had                                                                    
responsibility  for  appropriating  money beyond  the  funds                                                                    
approved in the legislation.                                                                                                    
                                                                                                                                
3:05:34 PM                                                                                                                    
                                                                                                                                
Representative Gara stated that  the project would return to                                                                    
the legislature if it required  a state subsidy. He recalled                                                                    
testimony  by Mr.  Dubler regarding  realistic scenarios  in                                                                    
which  AGDC   would  not  require  additional   funding  and                                                                    
legislative  oversight would  cease. The  public would  then                                                                    
cease to  have input. He  asked if  a provision in  the bill                                                                    
stated otherwise.                                                                                                               
                                                                                                                                
Representative Gara pointed out  the "prefinding" on page 37                                                                    
stating that the  project was in the  state's best interest,                                                                    
which  was the  last  opportunity  for legislative  approval                                                                    
barring the need for state subsidy.                                                                                             
                                                                                                                                
3:07:14 PM                                                                                                                    
                                                                                                                                
Representative  Gara  understood   that  the  project  would                                                                    
return to the legislature if  it required state subsidy. The                                                                    
legislature must  consider the issue. He  noted Mr. Dubler's                                                                    
testimony  that  AGDC  might not  require  additional  state                                                                    
funding.  If AGDC  does not  return to  the legislature  for                                                                    
additional  funding, the  approval would  not be  necessary,                                                                    
eliminating the avenue for  public and legislative approval.                                                                    
He pointed out page 37 and  the claim that the project would                                                                    
serve the  state's best interest  despite the fact  that the                                                                    
details were unknown.                                                                                                           
                                                                                                                                
Representative Gara wished for  public review because of the                                                                    
lack of consumer protection stating  that the tariff must be                                                                    
just and  reasonable. He believed that  parties would choose                                                                    
appropriate gas prices if they  were prepared for public and                                                                    
legislative  project  review.   He  expressed  concern  that                                                                    
passage  of   the  bill  would  provide   final  legislative                                                                    
approval for an unknown project.                                                                                                
                                                                                                                                
3:09:17 PM                                                                                                                      
                                                                                                                                
Co-Chair  Stoltze discussed  the  painful  agony of  dealing                                                                    
with the Stranded Gas Act in committee.                                                                                         
                                                                                                                                
A roll call vote was taken  on the motion to adopt Amendment                                                                    
6.                                                                                                                              
                                                                                                                                
IN FAVOR: Gara, Kawasaki                                                                                                        
OPPOSED:   Neuman,  Thompson,   Wilson,  Costello,   Edgmon,                                                                    
Holmes, Munoz, Austerman, Stoltze                                                                                               
                                                                                                                                
The MOTION FAILED (2/9).                                                                                                        
                                                                                                                                
                                                                                                                                
Representative   Gara  MOVED   amendment  7,   28-LS002\R.9,                                                                    
Bullock, 3/29/13 (copy on file):                                                                                                
                                                                                                                                
     Page 1, line 3, following "fund;":                                                                                         
     Insert "requiring legislative approval for the                                                                             
     transfer of certain interests in an in-state natural                                                                       
     gas pipeline project;"                                                                                                     
                                                                                                                                
     Page 7, line 21, following "may":                                                                                          
     Insert ", subject to (f) of this section,"                                                                                 
                                                                                                                                
     Page 8, line 10, following "(6)":                                                                                          
     Insert "subject to (f) of this section,"                                                                                   
                                                                                                                                
     Page 10, following line 15:                                                                                                
     Insert a new subsection to read:                                                                                           
     "(f) The  corporation may not  enter into  an agreement                                                                    
     with another person for joint  ownership of an in-state                                                                    
     natural gas  pipeline developed  by the  corporation or                                                                    
     transfer or otherwise dispose of all or part of an in-                                                                     
     state natural gas pipeline project developed by the                                                                        
     corporation without legislative approval."                                                                                 
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
3:11:06 PM                                                                                                                    
                                                                                                                                
Representative  Gara  discussed  Amendment  7.  He  noted  a                                                                    
circumstance in  the legislation  where AGDC  could transfer                                                                    
the project  to a private company.  He noted representations                                                                    
over  the years  where the  tariff would  reflect the  state                                                                    
investment  allowing  the  consumers  to  benefit  from  it.                                                                    
Amendment   7  would   ensure  that   if  the   project  was                                                                    
transferred  to  a  private  party,  the  legislature  would                                                                    
participate.  He  planned  to   withdraw  the  amendment  in                                                                    
committee, but would bring it to the House Floor.                                                                               
                                                                                                                                
Representative Gara WITHDREW Amendment 7.                                                                                       
                                                                                                                                
Ms. Delbridge  clarified that AGDC  could manage  its assets                                                                    
including transferring or disposing  in conjunction with the                                                                    
duty  of bringing  gas to  Alaskans at  the lowest  possible                                                                    
rates. The  upfront investment  made by  the state  could be                                                                    
reflected in  the tariffs with  long-term contracts  if they                                                                    
were  signed  prior  to  transferring  the  project  to  the                                                                    
private  sector.  During  the  transfer  process,  different                                                                    
methods of  negotiating the highest  value at that  point in                                                                    
time for  the state's  investment existed. The  bill allowed                                                                    
the flexibility  for determination of the  highest value for                                                                    
Alaskans.                                                                                                                       
                                                                                                                                
Mr.  Dubler added  that  AGDC  was governed  by  a board  of                                                                    
directors appointed  by the governor. Having  the ability to                                                                    
acquire  and dispose  of assets  was enjoyed  by most  state                                                                    
corporations without legislative approval.                                                                                      
                                                                                                                                
3:13:25 PM                                                                                                                    
                                                                                                                                
Representative  Gara  clarified  Ms.  Delbridge's  statement                                                                    
that AGDC must  get gas to consumers at  the lowest possible                                                                    
rate, which  he considered  non-binding language.  He stated                                                                    
that the  binding language  on the  tariff stated  that just                                                                    
and  reasonable  rates were  not  required.  He asked  about                                                                    
binding  language regarding  delivery of  gas at  the lowest                                                                    
possible rates.                                                                                                                 
                                                                                                                                
Ms. Delbridge responded  that the language found  on page 7,                                                                    
lines 4  through 17 was  considered somewhat  binding, "they                                                                    
shall  to  the  fullest  extent possible  advance  this  gas                                                                    
pipeline and develop these gas  pipelines in the future that                                                                    
make  gas  available  at the  lowest  possible  rates."  She                                                                    
agreed  with   Mr.  Dubler  that  the   board  of  directors                                                                    
represented  commissioners  of  the  state.  The  board  was                                                                    
accountable to the public.  The legislation required greater                                                                    
thresholds of votes on the  board for a transfer or disposal                                                                    
of  property. She  clarified that  the recourse  tariff must                                                                    
meet particular  standards, but negotiations would  often be                                                                    
lower,  meaning that  public utilities  would  get a  better                                                                    
deal than  that approved  by the RCA  as the  default tariff                                                                    
price.                                                                                                                          
                                                                                                                                
3:16:55 PM                                                                                                                    
                                                                                                                                
Co-Chair  Austerman  discussed  a   new  fiscal  note  dated                                                                    
4/01/13,  which  changed  the  requested  amount  from  $330                                                                    
million to  $225 million and  adjusted the $225  million out                                                                    
of  the Alaska  Housing Capital  Corporation. An  additional                                                                    
$25 million  would be  derived from  the capital  budget for                                                                    
the project.                                                                                                                    
                                                                                                                                
Representative  Gara understood  that  the appropriation  of                                                                    
$225  million from  the Alaska  Housing Capital  Corporation                                                                    
and the  $25 million from  the capital budget were  from the                                                                    
same funding source.                                                                                                            
                                                                                                                                
Co-Chair   Stoltze  explained   the   intent  of   retaining                                                                    
sufficient funds  to ensure forward  progress for  the bill.                                                                    
He stated that the total appropriation was $250 million.                                                                        
                                                                                                                                
Co-Chair  Austerman  noted   the  discussion  regarding  the                                                                    
desire for another approval from  the legislature. He opined                                                                    
that HB  4 allowed the  opportunity to move forward  with an                                                                    
instate gasline.  He stated that  an additional  $80 million                                                                    
would be required to complete  the remainder of the work. He                                                                    
believed  that further  conversation  would occur,  possibly                                                                    
regarding the supplemental budget.                                                                                              
                                                                                                                                
3:19:55 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Neuman  MOVED to  REPORT  CSSSHB  4(FIN) out  of                                                                    
committee,  as amended  with individual  recommendations and                                                                    
the accompanying fiscal  notes. Representative Gara OBJECTED                                                                    
for discussion.                                                                                                                 
                                                                                                                                
Representative  Gara believed  that  despite his  objections                                                                    
and amendments, he advocated for  moving ahead with the bill                                                                    
and  the   project.  His  amendments   were  an   effort  to                                                                    
communicate  his   point  of  view.   He  opined   that  gas                                                                    
exploration  in   Cook  Inlet  might  be   advantageous.  He                                                                    
advocated  for  the  governor's project,  which  included  a                                                                    
large-diameter pipeline. He noted  that the extra income and                                                                    
development along with  a lower cost of gas  made the large-                                                                    
diameter pipeline  appealing. He  hoped that  his statements                                                                    
were not mischaracterized. He stressed  that the state would                                                                    
benefit  from   forward  progress  with   multiple  pipeline                                                                    
options.                                                                                                                        
                                                                                                                                
Representative Gara stated  that he had not  received a good                                                                    
reason  why the  RCA could  not retain  its power  to ensure                                                                    
that the shipping  price was just and  reasonable. He argued                                                                    
that the statement that the  bill would result in the lowest                                                                    
possible prices  was a statement  of purpose.  He considered                                                                    
language  on page  43 of  the bill  binding language,  which                                                                    
specified  that if  the  parties did  not  use the  recourse                                                                    
tariff  set by  the RCA  they  could come  up with  whatever                                                                    
price for  shipping they want.[BSW5] He stated that the bill                                                                    
was drafted in a manner  that did not protect consumer rates                                                                    
as well as it could. He  clarified that he did support a gas                                                                    
pipeline project, but  preferred a bill that  was drafted in                                                                    
the consumer's best interest.                                                                                                   
                                                                                                                                
Representative Gara WITHDREW his OBJECTION.                                                                                     
                                                                                                                                
3:24:56 PM                                                                                                                    
                                                                                                                                
Vice-Chair Neuman  believed that  Amendment 3  addressed the                                                                    
issue by adding an additional  90 days if the recourse rates                                                                    
were   not  agreed   upon.  He   added  that   the  proposed                                                                    
legislation moved  AGDC's project, while other  projects and                                                                    
opportunities for exploration were occurring in tandem.                                                                         
                                                                                                                                
Vice-Chair  Neuman clarified  the  committee's intention  to                                                                    
adopt two  [new] fiscal notes:  one note with  OMB component                                                                    
number 3019 and  a second note dated  4/1/13[the second note                                                                    
did not include an OMB component number].                                                                                       
                                                                                                                                
CSSSHB  4(FIN), as  amended was  REPORTED  out of  committee                                                                    
with  a "do  pass" recommendation  and with  one new  fiscal                                                                    
impact  note  from  the House  Finance  Committee  for  Fund                                                                    
Capitalization  and  one new  fiscal  impact  note from  the                                                                    
House  Finance Committee  for Various  departments including                                                                    
Department   of  Law,   Department  of   Natural  Resources,                                                                    
Department  of  Environmental  Conservation,  Department  of                                                                    
Transportation  and  Public  Facilities, and  Department  of                                                                    
Commerce, Community and Economic Development.                                                                                   
                                                                                                                                
3:27:17 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 3:27 p.m.                                                                                          

Document Name Date/Time Subjects
HB 4 Amendments 2 - 8.pdf HFIN 4/1/2013 1:30:00 PM
HB 4
HB 4 Legal Opinion AG.pdf HFIN 4/1/2013 1:30:00 PM
HB 4
HB 4 NEW FN Fund Capitalization.pdf HFIN 4/1/2013 1:30:00 PM
HB 4
HB 4 NEW FN Various 4-1-13.pdf HFIN 4/1/2013 1:30:00 PM
HB 4
HB 4 CS FIN FINAL.pdf HFIN 4/1/2013 1:30:00 PM
HB 4