Legislature(1999 - 2000)
05/11/1999 02:00 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
May 11, 1999
2:00 P.M.
TAPE HFC 99 - 125, Side 1
TAPE HFC 99 - 125, Side 2
TAPE HFC 99 - 126, Side 1
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 2:00 p.m.
PRESENT
Co-Chair Therriault Representative Foster
Co-Chair Mulder
Representative Austerman Representative Kohring
Representative Bunde Representative Moses
Representative J. Davies Representative Williams
Representative G. Davis
Representative Grussendorf was absent from the meeting.
ALSO PRESENT
Senator Drue Pearce; Representative Jim Whitaker; Ginny Fay,
Deputy Commissioner, Department of Commerce and Economic
Development; Eric Yould, Executive Director, ARECA,
Anchorage; Walt Wilcox, Staff, House Special Committee on
Utility Restructuring.
TESTIFIED VIA TELECONFERENCE
Jimmy Jackson, Regulatory Attorney, GCI Electric; Bob
Christenson, Chairman, Alaska Oil and Gas Conservation
Commission; Mark Vasconi, Director, Regulatory Affairs,
AT&T;
SUMMARY
HB 62 "An Act relating to the Alaska Public Utilities
Commission; and providing for an effective date."
HB 62 was heard and HELD in Committee for further
consideration.
HB 183 "An Act relating to the powers and duties of the
chair of the Alaska Public Utilities Commission;
relating to membership on the Alaska Public
Utilities Commission; and relating to the annual
report of the Alaska Public Utilities Commission."
HB 183 was heard and HELD in Committee for further
consideration.
CSSB 133(RLS) am
"An Act creating and relating to the Regulatory
Commission of Alaska and transferring to it
certain powers and duties of the Alaska Public
Utilities Commission; repealing the Alaska Public
Utilities Commission; relating to the powers of
the chair of the Regulatory Commission of Alaska;
relating to regulatory cost charges for public
utilities and pipelines; relating to the appellate
procedures of the Regulatory Commission of Alaska;
relating to the Alaska Oil and Gas Conservation
Commission; and providing for an effective date."
CSSB 133(RLS) am was heard and HELD in Committee
for further consideration.
CSSB 134(RLS)
"An Act authorizing the Alaska Oil and Gas
Conservation Commission to determine the amount of
and to collect a charge for operating wells
subject to the commission's jurisdiction, and to
allocate expenses of investigation and hearing;
authorizing the commission to employ additional
professional staff; repealing the oil and gas
conservation tax; and providing for an effective
date."
CSSB 134(RLS) was HELD in Committee for further
consideration.
CS FOR SENATE BILL NO. 133(RLS) am
"An Act creating and relating to the Regulatory
Commission of Alaska and transferring to it certain
powers and duties of the Alaska Public Utilities
Commission; repealing the Alaska Public Utilities
Commission; relating to the powers of the chair of the
Regulatory Commission of Alaska; relating to regulatory
cost charges for public utilities and pipelines;
relating to the appellate procedures of the Regulatory
Commission of Alaska; relating to the Alaska Oil and
Gas Conservation Commission; and providing for an
effective date."
SENATOR DRUE PEARCE, SPONSOR testified in support of CSSB
133 (RLS) am. She read from the sponsor statement.
Senate Bill 133 will accomplish several goals regarding the
Alaska Oil & Gas Conservation Commission (AOGCC) and Alaska
Public Utilities Commission (APUC). The APUC will be re-
pealed and re-structured under the new title of the
Regulatory Commission of Alaska (RCA). This new structure
will be more capable of addressing the current expanding
workload of the commission. Relocating to the same physical
location as the APUC will strengthen the AOGCC. Long term
efficiencies will be gained by utilizing a common building,
sharing clerical staff and record keeping facilities. In
addition, Legislative Budget & Audit (LB&A) will write a
report during the interim, which will consider the functions
of the two commissions and what structure would best serve
the states interests.
Senator Peace explained that HCS CSSB 133 (L&C) does not:
1. Does NOT combine the two commissions into one.
2. Does NOT de-regulate garbage.
3. Does NOT transfer pipeline regulation to the AOGCC.
4. Does NOT make any policy changes to either commission.
5. Does NOT transfer any function from one to commission to
the other.
6. Does NOT alter the number of commissioners on either
commission.
SB 133 makes the following changes to the APUC:
1. Repeals the APUC and creates the Regulatory Commission of
Alaska (RCA), effective July 1, 1999. All commissioners
shall be either re-appointed or replaced. All staff
shall remain. All regulations and pending matters before
the commission shall be carried forward to the new
commission.
2. The new commission will be composed of five
commissioners. The five commissioners shall be members
of the general public with no requirement for areas of
specific expertise. I feel that requiring specific
expertise is limiting and that the public interest would
best be served by having maximum flexibility in acquiring
qualified individuals from the general public.
3. SB 133 strengthens the position of the Chairman.
The Chairman:
a) Shall have limited authority over the other
commissioners.
b) Shall have oversight of all commission staff.
c) Shall assign the work of the commission and staff.
d) Shall set timelines by which a matter shall be
resolved.
e) Shall determine when advocacy staff is required
given certain standards.
4. Streamlines the hearing process.
a) The chair shall empanel three or more commissioners
to a hearing panel to decide the case. This allows
the Chairman to assign the applicable number of
commissioners depending on the size of the case.
b) Limited the appeals process to only be considered
when a decision taken is contrary to commission
precedent.
c) Mandated that the commission promulgates timeliness
standards, depending on the complexity of the
docket, for the types of cases that come before the
commission. These regulations shall be adopted by
December 31, 1999.
d) Provided for formal hearings to be held before an
arbitrator in appropriate cases.
e) Established within the commission a separate
advocacy section to represent the public interest
when necessary.
5. SB 133 instructs the commission to adopt a time
management system to ensure accurate accounting for time
billed to each aspect of the commission's functions.
LB&A has been recommending a time management system for
the APUC in every audit since 1979. To date, the APUC
does not use industry or utility codes on payroll time
sheets and therefore workloads are approximated using
rough estimates. A time management system will provide
improved accuracy when assessing regulatory cost charges
to individual sectors of the utility industry. This will
assist in assuring that the cost causer is the cost
payer.
SB 133 makes the following changes to the AOGCC:
1. The AOGCC will physically move to the same location as
the RCA (APUC) as soon as possible, but not later than
July 1, 2000. The two commissions will share record
keeping facilities and clerical staff after that time.
2. The AOGCC shall have access to hearing officers at the
RCA (APUC) following the effective date, July 1, 1999.
SB 133 authorizes LB&A to prepare a transition report to be
delivered to the governor and the Legislature on the first
day of the second session of the 21st Legislature. The
Governor shall appoint one commissioner from each commission
to work with LB&A on the transition report. The report will
address both commissions and their functions and shall make
recommendations on changes that would serve the best
interests of the state.
SB 133 will improve our ability to protect the long-term
public interest through increased functional efficiencies of
both commissions. She noted that the Department of
Administration is in the process of moving the AOGCC. The
move is estimated to take place in September 1999. As soon
as the commissions are in the same building they would be
able to share record keeping facilities and clerical staff.
The AOGCC would have access to a RCA hearing officer
following the effective date of July 1, 1999.
Senate Pearce observed that the bill was amended in the
House Labor and Commerce Committee.
PATRICK CARTER, STAFF, SENATOR PEARCE explained that the
Regulatory Commission of Alaska would make available a
hearing officer to the Alaska Oil & Gas Conservation
Commission. The legislation adds a hearing officer to the
Alaska Oil & Gas Conservation Commission.
Mr. Carter reviewed proposed changes to the legislation. He
referred to page 9, line 30. He explained that the APUC is
authorized to act in the best interest of the state. "State"
would be changed to "public" to clarify that the commission
would act in the best interest of the public.
Representative J. Davies observed that there is an attorney
general's opinion on the difference between "state" and
"public". Mr. Carter was not aware of the opinion.
Mr. Carter observed that "inability to serve" would be
inserted on page 2, line 20. He explained that this would
allow the removal of a person who was incapacitated.
Co-Chair Mulder asked if there is a statutory definition for
"inability to serve". Mr. Carter pointed out that the
governor would have to go through due process to remove a
person that was unable to serve.
Co-Chair Therriault asked that staff provide a clarification
on the removal for cause process. He noted that currently
members could be removed with the approval of the
legislature. He thought that the current language requires a
cause. Mr. Carter stated that AOGCC language was used when a
preferred methodology could not be reached between the AOGCC
and the APUC, because the AOGCC seemed to be operating more
functionally.
Mr. Carter explained that "Initial Terms of Members of the
Regulatory Commission of Alaska would be change on page 12,
line 7 to "Terms and Initial Appointments". He explained
that there is some constitutional concern that the governor
would not be able to appoint persons to a commission that
does not exist. Appointments under this section would not
take effect until after July 1, 1999.
Co-Chair Therriault questioned how the fiscal note would
reflect the change. Mr. Carter clarified that appointments
would not take affect until July 1, 1999. He noted that
AOGCC commissioners are paid slightly more than APUC
commissioners are paid. Under the legislation all
commissioners would be paid the same with the exception of
the chairman. He pointed out that the chairman's duties have
been increased. Senator Pearce added that the chairman would
be paid at the current level of AOGCC commissioners.
Mr. Carter observed that "administrative law judge" would be
added on page 3, line 16, 18 page 4, line 20, and page 7,
line 8. There would be a new section 4 to clarify that
administrative law judges are partially exempt employees.
Mr. Carter discussed proposed changes on page 4, line 29. He
noted that there was lengthy discussion in the House Labor
and Commerce Committee regarding a technical amendment. The
statute citation for pipeline regulations, AS 42.06.140
would be added following "AS 42.05.171. He noted that "or if
a hearing is not required to otherwise consider" would be
added to address permit for right-a-ways, where a hearing is
not needed.
On page 5, line 3 "there is an allegation that " wold be
would be deleted and replaced with "the". "If a decision of
a hearing panel is not subject to appeal to the commission
or if the commission denies an application to appeal, the
decision of the hearing panel is a final decision for
purposes of appeal to the courts" would be deleted and
replaced with "If a decision of a hearing panel is not
subject to appeal to the commission or if the commission
denies an application to appeal, the decision of the hearing
panel is a final decision for purposes of appeal to the
courts."
Senator Pearce explained it made sense to allow a smaller
number of commissioners to be impaneled. The chairman can
impanel any number of commissioners from three and up. She
explained that the language allows an appeal to the full
commission if the panel makes a decision contrary to prior
decisions or the law has changed. The Commission has the
right to turn down a request for appeal, in which case, the
party could appeal to the courts.
Co-Chair Therriault questioned if a commissioner could
object if they felt that they were being excluded by the
impaneling of three commissioners. Senator Pearce responded
that the statute does not address objections.
Mr. Carter noted that the hearing panels would be set up in
an effort to streamline functions. A hearing panel can
consist of an arbitrator, hearing officer, administrative
law judge, or three or more members of the Commission
impaneled. The full Commission has to ratify the decision in
order for it to be an action of the Commission.
In response to a question by Co-Chair Therriault, Mr. Carter
clarified that the Commission only reviews records of the
arbitrator's decision. No new information could be entered
at that point.
Representative J. Davies asked if the Commission is limited
to procedural issues. Mr. Carter explained that the appeal
has to be based on the decision being contrary to commission
precedent or intervening law. If the appeal is granted the
case is reheard. The arbitrator would make a recommendation.
The full Commission would review the record and decide if
the decision should be ratified. If the decision taken by
the arbitrator were contrary to commission precedent then it
would go through the appeals process as a new hearing.
Vice-Chair Bunde questioned if the appeal is based on the
process not the facts. Mr. Carter stated that a decision
could be appealed if it is contrary to a proceeding decision
made by the Commission.
Mr. Carter discussed page 4, line 24. He pointed out that
there was some discussion on a separate public advocacy
section. He explained that it is not the chair's decision.
He recommended the deletion of "when the chair believes
that" and the insertion of "when participation is in
accordance with a commission policy "It is in the public
interest to do so" would be deleted and "the chair of the
commission directs it to do so under AS 42.04.070(c) would
be inserted.
Co-Chair Therriault questioned why the public advocacy
section should be restricted to when the Commission invites
them to participate. Senator Pearce explained that, at this
time, staff decides when to employ advocacy. The legislation
would require that standards be developed to rule when the
public advocacy is used. Co-Chair Therriault questioned if
it would be better to leave it to the public advocate to
decide when they should have input. Senator Pearce responded
that the separate public advocacy section came out of a
National Regulatory Research Institute (NRRI) study. The
advisor and advocate would be separated. She emphasized that
the public advocate would have the right of discovery.
(Tape Change, HFC 99 - 125, Side 2)
Senator Pearce emphasized the need for standards. The
process can be protracted. The Commission has the right to
contract out for specific expertise.
Vice-Chair Bunde suggested that the public advocacy should
remain separate. Senator Pearce observed concerns that there
is no immediate control over the staff's concept of the
public's interest and the specific direction that the
advocacy can take. She noted that the advocacy staff must
work for someone. There is no executive director. The
legislation clarifies that the staff works for the
Commission. It tells the Commission that they must adopt
standards to direct the public advocacy section. She
maintained that it is problematic that staff currently
directs the Commission.
Vice-Chair Bunde summarized that the chairman would apply
the regulations adopted by the Commission. Senator Pearce
added that the Commission adopts the policy through
regulations. The chair makes decisions based on policy of
the Commission.
Vice-Chair Bunde questioned if the Commission can appeal the
chairman's decision if it is misapplied. Mr. Carter stated
that the issue is addressed on page 4, line 24.
Representative J. Davies asked for further clarification of
page 5, lines 22 and 23. Mr. Carter explained that "it is in
the public's interest to do so" would be deleted and
replaced by "the chair of the commission directs it to do
so."
In response to a question by Representative J. Davies, Mr.
Carter pointed out that the chairman serves at the direction
of the Commission.
Mr. Carter reiterated that participation would be at the
direction of commission policy. Senator Pearce stressed that
members of the Commission do not have the time or expertise
to put the record together. She observed that the Department
of Law was not interested in added this function to their
department. Contracting was not considered due to cost
concerns. She stressed the desire for commission members to
work as a team.
Senator Pearce anticipated that testimony on proposed
qualifications for commission members would be forthcoming.
Representative G. Davis observed that staff members function
as the public advocacy. He questioned if this function is
being extended to full time. Senator Pearce responded that
the Commission's personnel estimates that 50 percent of
their work is on advisory functions and 50 percent is spent
on advocacy. She noted that there is always advisory work.
Commissioners need to receive orders in writing and have
more access to staff. The Commission would determine the
number of staff they need to deal with the workload on an
annual basis. Advocacy staff would not do advisory work.
There are currently enough decisions before the Commission
to require a number of advocates. She could not anticipate
the number of staff that would be needed for advocacy. She
added that the Commission might hire an administrative
manager to take care of on-going daily work that has to
happen. She pointed out that the legislature reviews through
the power of appropriation. She noted that the Commission
would have the option to set up their own flow chart.
Representative Foster observed that the position of
executive director is deleted under the bill. He provided
members with a letter from Alyce Hanley, dated 3/28/99 (copy
on file).
Senator Pearce observed that the present system is not
working well. The executive director position would not be
continued. The Commission could decide to hire the person
who is currently in the executive director's position. The
legislation clarifies that the staff works for the
Commission.
Vice-Chair Bunde noted that members are disqualified from
having an official connection with a public utility. He
questioned if Mr. Carter explained that the language is from
existing statute.
REPRESENTATIVE JIM WHITAKER provided information on SB 133.
He expressed concern that the AOGCC and the APUC be given
the opportunity and ability to protect the public's best
interest in regards to oil and gas resources. He referred to
a 1997 Attorney General's opinion. The opinion concluded
that the AOGCC has the authority to consider revenue and
engineering issues, not economic issues, in reservoir
management and development. Once the companies have agreed
amongst themselves and the commissioner of the Department of
Natural Resources adopts the development plan the AOGCC has
no right to review the plans to see if they protect the
public's best interest in those fields. He maintained that
independent review of the agreement is essentially blocked.
Independent review is the reason the AOGCC was established.
He urged the Committee to keep the powers of the AOGCC
intact. He questioned how the AOGCC could make
determinations without reservoir models.
Co-Chair Therriault noted that his office has received a
proposed committee substitute from Representative Whitaker.
Representative J. Davies stressed that it is critical that
the AOGCC has the capacity to understand reservoir models.
He observed that they could develop their own models, but
emphasized that it would be costly.
Representative Whitaker stated that he is not trying to
hinder the progress of the legislation.
MARK VASCONI, DIRECTOR, REGULATORY AFFAIRS, AT&T testified
via teleconference. He recommended changes to SB 133. He
noted that AT&T has proposed four changes to the
legislation. The first would occur on page 2, line 2. He
stressed that there is an ambiguity of whether a new
governor can appoint a new chairman prior to the expiration
of the chair's four-year term. To balance the for cause
removal provision and reduce politicization and enhance
independence the new governor would have to wait till the
current four year term expires before appointing a new
chair. He suggested that "whenever the position becomes
vacant" be added on page 2, line 2 to clarify that the
governor would have to wait for the chairman to retire.
The second amendment would occur in Sec. 42.04.020(a). He
suggested that the following language be added:
"To qualify for appointment as a commissioner, a person
must be a member in good standing of the Alaska Bar
Association or have a degree from an accredited college
or university with a major in engineering, finance,
economics, accounting, business administration, or
public administration. Actual experience for a period
of five years in the practice of law or in the field of
engineering, finance, economics, accounting, business
administration, or public administration is equivalent
to a degree."
The amendment would require that the commissioner be in good
standing with the Alaska bar and have a degree in public
administration. Commissioners could come from a broad
background.
Senator Pearce questioned if someone who had served at least
five years as a member of the board of a regulated utility
would qualify if their degree were in anthropology. Mr.
Vasconi replied that person would qualify.
Mr. Vasconi noted that the third suggested amendment applied
to Sec. 42.04.080(b). He observed that AT&T Alascom
continues to believe that the internal appeals procedure is
unnecessary and should be deleted. It will add an
additional layer to the decision making process, which will
result in delays and add to the commissioners workload. He
recommended that this section be deleted.
The last suggested amendment pertained to Sec. 42.04.150.
Mr. Vasconi noted that AT&T Alascom prefers the current
system of designating a staff advocacy team on a case by
case basis. He suggested that Sec. 42.04.150 be harmonized
with Sec. 42.04.070(c) to assure that the chairman
determines when it is appropriate to involve the public
advocacy section. In the two sections of the act, the two
should be the same so that there will not be potential
disputes.
JIMMY JACKSON, REGULATORY ATTORNEY, GCI, addressed the
public advocacy section of the bill. He maintained that the
current system works and now would not be a good time to
change it. Presently, staff acts as a party to represent
the public interest in cases of rate increases. The current
system has been in place for many years and it works. SB
133 proposes to change this structure by creating an
advocacy staff. It is a structure that is used by some
other commissions. The change would require a significant
increase in personnel. He did not believe that the change
would work without an increase in cost that would be passed
on to the utilities and their consumers. If the change were
made, the present level of the regulatory cost charge (RCC)
would have to be raised over 1%. He reviewed the current
system.
The Commission currently makes the decision to appoint staff
in an advocacy role. Mr. Jackson maintained that it would
be a bad idea to combine the change in the advocacy role at
this time. Time will be needed to allow the new commission
to get up to speed. He encouraged an amendment to maintain
the existing role of staff.
Co-Chair Mulder questioned the additional costs for the
advocacy section. Mr. Jackson guessed that personnel would
need to be increased by 50%.
(Tape Change, HFC 99 - 126, Side 1)
Senator Pearce explained that each staff member has a
different expertise and that they all work 50/50 on advisory
vs. advocacy issues. She disagreed that it would require a
50% increase in staff. She pointed out that it would take
some time to develop additional expertise in some areas. She
stressed that there is no consumer protection agency within
the Department of Law. She reiterated that the NRRI report
recommended that the attorneys that handle advisory and
advocacy activities for the Commission be separated. Many
states have separate public advocacy sections. She
acknowledged that there would be separate costs but
questioned if the cost would be as high as estimated. The
Administration and utilities with the exception of AT&T and
GCI support a separate public advocacy section.
GINNY FAY, DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCE AND
ECONOMIC DEVELOPMENT spoke in support of the legislation.
She maintained that the changes outlined by Mr. Carter are
relatively minor technical adjustments.
Co-Chair Therriault questioned the level of staffing and
funding in the current budget. Ms. Fay stated that the NNRI
recommendations have been reviewed. She emphasized that it
is the sponsor's intent to improve public protection through
the advocacy section by not having staff change back and
forth between advocacy and advisory functions. The
department's fiscal note identifies some cost savings
through efficiencies in administrative functions. She noted
that the legislation was originally crafted to contract out
the public advocacy functions. She stressed that the
administration felt that it was more appropriate to have in
house advocacy staff. She acknowledged that it might be
necessary to have a combination of in house expertise and
contractual staff to meet demand.
Co-Chair Therriault, Ms. Fay stated that the fiscal note
reflects the Governor's request for the year 2000, which
includes addition of staff. She recommended that adjustments
be made after staff is shared.
ERIC YOULD, EXECUTIVE DIRECTOR, ARECA, ANCHORAGE spoke in
support of the legislation. He noted positive elements of
the legislation. He emphasized that the legislation:
1. Adds a new time tracking system for staff;
2. A management information system that would be
accessible through the Internet;
4. Expanded use of hearing officers and arbiters;
5. Timelines established by the commission for
hearing dockets;
6. More authority for chair to exercise authority
over staff; and
7. Allocation of RCC based level of effort by the
industry sector and the development of the
independent public advocacy section.
He emphasized that the legislation would allow dockets to be
issued in a timely manner. He noted that there would be
transitions.
In response to a question by Representative Williams, Mr.
Yould stated that ARECA supports a separate public advocacy
section within the APUC. He stressed that it needs to be
properly funded and staffed. He felt that sufficient work
exists to warrant full-time staffing. The APUC has nine
vacant positions. He suggested that these positions, if
filled, could take care of the advocacy staff. He suggested
that the new commissioners could do their own internal audit
to discern staff needs.
CSSB 133 (RULS) was HELD in Committee for further
consideration.
CS FOR SENATE BILL NO. 134(RLS)
"An Act authorizing the Alaska Oil and Gas Conservation
Commission to determine the amount of and to collect a
charge for operating wells subject to the commission's
jurisdiction, and to allocate expenses of investigation
and hearing; authorizing the commission to employ
additional professional staff; repealing the oil and
gas conservation tax; and providing for an effective
date."
SENATOR DRUE PEARCE, SPONSOR spoke in support of SB 134. She
noted that SB 134 addresses the issue of funding for the
Alaska Oil and Gas Conservation Commission (AOGCC) It
appeals the existing Oil and Gas Conservation tax and
institutes a stable funding source to assure that the
Commission is capable of carrying out their objectives of
protecting the public interest. The AOGCC's primary goal is
to ensure that no hydrocarbons are wasted and that
operations are conducted in manner that provides maximum
recovery of the resource.
The original intent of the Legislature was to have the oil &
gas industry pay for the function of the Commission through
the Oil & Gas Conservation Tax. While this system may have
been adequate in the past, it is no longer sufficient to
cover the costs associated with the operation of the
Commission. The conservation tax is directly proportional to
production with 4 mils per barrel fee rate. The work of the
Commission, however, is not proportional to the production
of oil and gas. Production is declining but the work of the
Commission is not.
SB 134 creates a program receipt system in which the
regulatory cost charge is directly associated with the total
volume of fluids produced or injected. This type of system
more accurately reflects the factors directly associated
with the workload of the Commission. SB 134 also contains a
provision to provide for recovery of costs associated with
an investigation or hearing. These costs would be allocated
to the parties involved.
Senator Pearce noted that the Commission experienced budget
difficulties in the past, even when tax proceeds exceeded
annual appropriations. The AOGCC is currently encountering
budget difficulties that are directly related to the decline
in oil production. Some members of the oil and gas industry
have raised concerns about the program receipt budgets not
being given the same level of scrutiny by the legislation as
budgets based on the general funds. She felt that these
concerns were unfounded. The AOGCC is strengthened by the
addition of four staff. This addition would improve the
level of institutional knowledge at the AOGCC. The bill
creates a stable funding source that will enable the AOGCC
to provide the monitoring services necessary to protect the
future of Alaskan interests.
Co-Chair Therriault asked how the additional new staff would
increase the institutional knowledge. Senator Pearce
observed that the current Commission is composed of three
members. One member is required to be petroleum geologist,
one is required to be a petroleum engineer and one is a
public member. There is also technical staff. The
legislation authorizes the Alaska Oil and Gas Conservation
Commission shall to employ, in addition to currently
authorized professional staff, one petroleum engineer, one
reservoir engineer, one petroleum geologist, and one
inspector in FY00 (section 8 page 4, line 30).
Senator Pearce noted that the fiscal note accompanying SB
134 would fund the AOGCC for fiscal year 2000. The AOGCC is
not funded in the House or Senate operating budgets.
Representative J. Davies questioned why the language is
specific to fiscal year 2000. Senator Pearce explained that
since the additional personnel are not in the Senate or
House operating budgets that the language is needed to carry
the fiscal note in the conference committee.
Vice-Chair Bunde recognized the need for increased staff and
program receipts, but asked what would be the provision for
downsizing. Senator Pearce observed that the regulatory cost
charge would be brought to the Office of Management and
Budget. The Office of Management and Budget would bring it
to the legislature for approval. The budget can be reduced
at any point in the process. She noted that the Division of
Oil and Gas, Department of Natural Resources are showing
increased production coming on line.
Senator Pearce observed that industry came forward with some
concerns regarding to the tax rate. Industry was interested
in increasing the tax rate. The House Labor and Commerce
Committee did not make a change in the tax rate. He
maintained that funding should follow the level and type of
work as opposed to a straight tax rate. The industry also
asked if there could be some step in the process to allow
review of the budget in order to prevent complaints about
the way the money is being spent. Industry wanted to impanel
a group to review the budget prior to submission to the
legislation. She recommended that a letter be sent to those
paying the RCC prior to the submission of the budget to the
Office of Management and Budget. This would give those that
pay the RCC an opportunity to make comments before the
budget is submitted.
Co-Chair Therriault reiterated concerns that the monitors on
the wells do not lend themselves to the monetary charge.
Senator Pearce observed that the Commission monitors the
injection of the liquids. There has never been a metering of
the cost charges. She observed that they do allow the
testing of wells. She referred to the commingling of oil
from facilities in Prudhoe Pay. A decision was made and
placed in to regulations to allow testing of wells on an
interim basis, so that oil would not have to be measured
from each site on a daily basis. She maintained that
accommodation could be found through averaging testing
results. Co-Chair Therriault pointed out that a method was
found to resolve the commingling issue. Senator Pearce gave
further examples utilizing general testing.
Representative J. Davies questioned what the fees would be
and what share of the total cost of the Commission do they
represent. Senator Pearce noted that the fee was based on
the AOGCC's expectation of costs. A rebate could be given if
there is excess or a reduction could occur in the subsequent
year. Representative J. Davies noted that the RCC is in
addition to the fee. Senator Pearce added that there is also
a separate fee for the well permit that is considered as
statutory designated program receipts. Co-Chair Therriault
added that the fiscal note takes into consideration the
statutory designated program receipts.
Representative G. Davis clarified that the Senate did not
fund the AOGCC.
Representative J. Davies clarified that the fiscal note has
$2.454 million dollars in the statutory designated program
receipts category. Co-Chair Therriault explained that the
funds could be taken out of the operating budget.
BOB CHRISTENSON, CHAIRMAN, ALASKA OIL AND GAS CONSERVATION
COMMISSION testified via teleconference in support of the
legislation. He stressed that it would provide a more stable
funding mechanism. He maintained that it is a fair system
that takes into account the difference between Cook Inlet
and the North Slope.
In response to a question by Co-Chair Therriault, Mr.
Christenson stated that fee system has been working.
CSSB 134 (RLS) was HELD in Committee for further
consideration.
HOUSE BILL NO. 183
"An Act relating to the powers and duties of the chair
of the Alaska Public Utilities Commission; relating to
membership on the Alaska Public Utilities Commission;
and relating to the annual report of the Alaska Public
Utilities Commission."
WALT WILCOX, STAFF, HOUSE SPECIAL COMMITTEE ON UTILITY
RESTURCTURING provided information on HB 183. He noted that
HB 183 is similar to SB 133, with the exception of a clause,
which placed a limitation of no more than two commissioners
from the same political party. He added that HB 183 did not
deal with the AOGCC. House Bill 183 would have established
ethics standards for members of the APUC. The advocacy issue
was not addressed in HB 183. He maintained that the balance
of HB 183 fits nicely into SB 133. In response to a question
by Representative J. Davies, he also observed that HB 183
did not provide a raise for the chair. The general idea of
accountability and responsibility is accomplished in SB 133.
This was also a goal of the Utility Restructuring Committee.
HB 183 was heard and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting adjourned at 4:20 p.m.
House Finance Committee 16 5/11/99 p.m.
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