Legislature(1997 - 1998)
04/06/1998 03:18 PM House L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 6, 1998
3:18 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative John Cowdery, Vice Chairman
Representative Jerry Sanders
Representative Joe Ryan
Representative Tom Brice
MEMBERS ABSENT
Representative Bill Hudson
Representative Gene Kubina
OTHER HOUSE MEMBERS PRESENT
Representative Eric Croft
COMMITTEE CALENDAR
* HOUSE BILL NO. 475
"An Act establishing a standard for determining when an injured
worker is eligible for reemployment benefits and establishing a
procedure for adopting a new, revised, or replacement standard for
determining when an injured worker is eligible for reemployment
benefits."
- MOVED HB 475 OUT OF COMMITTEE
* HOUSE CONCURRENT RESOLUTION NO. 34
Establishing a Joint Committee on Electric Utility Restructuring.
- FAILED TO MOVE CSHCR 34(L&C) OUT OF COMMITTEE
* HOUSE BILL NO. 479
"An Act relating to recognition of employers who hire Alaskans."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 475
SHORT TITLE: REHABILITATION OF INJURED WORKERS
SPONSOR(S): LABOR & COMMERCE BY REQUEST
Jrn-Date Jrn-Page Action
03/30/98 2789 (H) READ THE FIRST TIME - REFERRAL(S)
03/30/98 2789 (H) LABOR & COMMERCE
04/06/98 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HCR 34
SHORT TITLE: JT COM ON ELEC UTILITY RESTRUCTURING
SPONSOR(S): LABOR & COMMERCE
Jrn-Date Jrn-Page Action
03/30/98 2788 (H) READ THE FIRST TIME - REFERRAL(S)
03/30/98 2788 (H) LABOR & COMMERCE
04/06/98 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 479
SHORT TITLE: RECOGNITION FOR EMPLOYERS OF ALASKANS
SPONSOR(S): LABOR & COMMERCE
Jrn-Date Jrn-Page Action
04/01/98 2832 (H) READ THE FIRST TIME - REFERRAL(S)
04/01/98 2832 (H) LABOR & COMMERCE
04/06/98 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
DWIGHT PERKINS, Special Assistant
Office of the Commissioner
Department of Labor
P.O. Box 21149
Juneau, Alaska 99802-1149
Telephone: (907) 465-2700
POSITION STATEMENT: Testified in support of HB 475.
PAUL GROSSI, Director
Division of Workers' Compensation
Department of Labor
P.O. Box 25512
Juneau, Alaska 99802-5512
Telephone: (907) 465-2790
POSITION STATEMENT: Testified in support of HB 475.
CHARLIE MILLER, Lobbyist for
Alaska National Insurance Company
P.O. Box 102286
Anchorage, Alaska 99510
Telephone: (907) 563-2686
POSITION STATEMENT: Testified in support of HB 475.
ERIC YOULD, Executive Director
Alaska Rural Electric Cooperative Association Inc.
703 West Tudor Road
Anchorage, Alaska 99503
Telephone: (907) 463-3636
POSITION STATEMENT: Testified on HCR 34.
DON EDWARDS, General Counsel
Chugach Electric Association
5601 Minnesota Drive
Anchorage, Alaska 99518
Telephone: (907) 762-4637
POSITION STATEMENT: Testified on HCR 34.
ROBERT GRIMM, President
Alaska Power and Telephone Company
Address Not Provided
Telephone: 1-800-982-0136
POSITION STATEMENT: Testified in support of HCR 34.
JIM ROBERTS, General Manager
Cordova Electric Cooperative
P.O. Box 20
Cordova, Alaska 99574
Telephone: (907) 424-5555
POSITION STATEMENT: Testified in support of HCR 34.
COLLEEN GRANGER, Manager of Member Services
Copper Valley Electric Association
P.O. Box 45
Glennallen, Alaska 99588
Telephone: (907) 822-3211
POSITION STATEMENT: Testified in support of HCR 34.
NORM STORY, Manager
Homer Electric Association
3977 Lake Street
Homer, Alaska 99603
Telephone: (907) 235-3301
POSITION STATEMENT: Testified in support of HCR 34.
CHARLES WALLS, President
Alaska Village Electric Cooperative
4831 Eagle Street
Anchorage, Alaska 99503
Telephone: (907) 561-1818
POSITION STATEMENT: Testified in support of HCR 34.
ROBERT HANSEN, Chief Financial Officer
Golden Valley Electric Association
1800 Loose Moose Loop
North Pole, Alaska 99705
Telephone: (907) 488-2988
POSITION STATEMENT: Testified in support of HCR 34.
MEERA KOHLER, Representative
Anchorage Municipal Light & Power
1200 East First Street
Anchorage, Alaska 99501
Telephone: (907) 263-5202
POSITION STATEMENT: Testified on HCR 34.
RYAN KEGLEY, Legislative Secretary
to Representative Norm Rokeberg
Alaska State Legislature
Capitol Building, Room 24
Juneau, Alaska 99801-1182
Telephone: (907) 465-4968
POSITION STATEMENT: Read sponsor statement for HB 479.
ED FLANAGAN, Deputy Commissioner
Department of Labor
P.O. Box 21149
Juneau, Alaska 99802-1149
Telephone: (907) 465-2700
POSITION STATEMENT: Testified in support of the concept of HB 479.
STEVEN ROUSE, Executive Director
Trade Association, Make it Alaskan, Inc.; and
Permit Agent and Program Manager for
the Made in Alaska Program
200 West 34th Avenue, Number 600
Anchorage, Alaska 99503
Telephone: (907) 258-2878
POSITION STATEMENT: Testified on HB 479.
ACTION NARRATIVE
TAPE 98-44, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 3:18 p.m. Members present
at the call to order were Representatives Rokeberg, Cowdery, Ryan
and Brice. Representative Sanders arrived at 3:19 p.m.
HB 475 - REHABILITATION OF INJURED WORKERS
Number 0074
CHAIRMAN ROKEBERG announced the committee's first order of business
was HB 475, "An Act establishing a standard for determining when an
injured worker is eligible for reemployment benefits and
establishing a procedure for adopting a new, revised, or
replacement standard for determining when an injured worker is
eligible for reemployment benefits." He noted the bill had been
introduced at the request of his daughter who works for Alaska
National Insurance Company; he hopes he does not have a conflict of
interest there. Chairman Rokeberg stated, "There is a Senate bill,
and this is one of the amendments we were talking about on the
floor this morning. However, given that this is very similar to
the bill that I sponsored in this past last session regarding the
worker's compensation guide to - to adopt it by statute - it's in
statute now, we need to update the revised version and provide for
a mechanism of which to go forward." He confirmed there was not a
proposed committee substitute and asked if there were any witnesses
for HB 475. The sponsor statement reads:
This bill encourages government efficiency and allows the
department to stay current when a new or revised edition
of the United States Department of Labor, "Selected
Characteristics of Occupations Defined in the Revised
Dictionary of Occupations Titles" is issued.
The bill gives the board 90 days after the new edition is
published to hold and hearing and adopt the new standard.
Number 0220
DWIGHT PERKINS, Special Assistant, Office of the Commissioner,
Department of Labor (DOL), came forward to testify in support of
HB 475. He said Mr. Grossi, the director of the DOL's Division of
Workers' Compensation, was on teleconference to speak to the bill.
Mr. Perkins said the department does support the legislation and
stated, "Thank you for clearing up the request of the introduction
of the bill. We saw it on the Senate side, but we were unclear on
the House side ... we do support it, and you're absolutely right,
Mr. Chairman, it has to do, similar to the last year legislation
that you introduced with the workers' comp."
Number 0280
PAUL GROSSI, Director, Division of Workers' Compensation,
Department of Labor, testified next via teleconference from
Anchorage in support of HB 475. He commented he doesn't know there
is much more for him to say. As the chairman mentioned, HB 475 is
very similar to the bill on the AMA Impairment Rating guides
allowing for the automatic adoption by reference of the
publication. He said this deals with rehabilitation issues, to
physical and mental job requirements. The bill allows for the
automatic adoption without the need for additional legislation or
regulation, and the department looks at it as a streamlining
process. He stated, "There's not a whole lot more to say about
that, other than this one took a little bit more thinking about
because the Department of Labor sometimes doesn't just change the
edition, they change the title and so on and so forth, but we do
believe that the way the - this legislation is drafted that it'll
work just fine."
Number 0370
CHAIRMAN ROKEBERG confirmed with Mr. Grossi that the 1993 edition
which is the latest edition, would be put in the statute, but the
provision is provided in Section 2, subsection (q), of the bill for
the adoption as it is reissued in its subsequent editions ["* Sec.
2. AS 23.30.041 is amended by adding a new subsection to read: (q)
..."].
MR. GROSSI answered in the affirmative.
CHAIRMAN ROKEBERG said the language in subsection (q) was like the
language in the guide last year for the public notice and hearings
to establish the date, so that everyone had ample notice it was
going to be adopted.
MR. GROSSI confirmed that was correct.
Number 0414
CHAIRMAN ROKEBERG asked if this particular dictionary of
occupational titles was in any way controversial within the area of
workers' compensation.
MR. GROSSI replied not that he knows of, commenting he has never
heard that.
CHAIRMAN ROKEBERG asked if there were two competing publishers with
similar publications.
MR. GROSSI said this is published by the United States Department
of Labor, and he does not believe there is any competitor for this
particular publication.
CHAIRMAN ROKEBERG said, "Not as we find with the plumbing code, for
example."
MR. GROSSI answered in the negative.
CHAIRMAN ROKEBERG noted Mr. Perkins said the administration
department supports this, asking if that was correct.
MR. GROSSI answered in the affirmative.
CHAIRMAN ROKEBERG asked if he recalled the age of the existing
edition.
Number 0486
MR. GROSSI said the department is currently using a 1981 edition;
HB 475 would automatically adopt the most current edition, the 1993
edition, and allow for adoption of future publications.
CHAIRMAN ROKEBERG said he suspected there have been a lot of
different job categories created in those almost 17 years.
MR. GROSSI said that was correct, commenting there have been
changes in the existing jobs.
Number 0525
REPRESENTATIVE TOM BRICE asked Mr. Grossi what this dictionary is
specifically, requesting he expand a bit.
MR. GROSSI replied it basically describes the physical and mental
requirements of a job, and allows an administrator or adjudicator
to determine what would be the appropriate retraining plan.
REPRESENTATIVE BRICE said, then, it basically sets out the
requirements of somebody's job prior to an injury and whether or
not that person is capable of fulfilling those duties again after
an injury.
MR. GROSSI answered that was correct.
Number 0595
REPRESENTATIVE JOHN COWDERY said he wasn't sure if this was a
related question but would like to receive an answer at some point.
He asked "Say, in a scenario where you have -- the main wage earner
of a family gets injured substantially, and say is recouping for a
year or two after the injury, and say one member of his family say
falls out of a tree or something and breaks an arm ... 18 months
after his injury, is that child, since he's been on workman's comp
or injured, is he - that child covered (indisc.) injury?"
Number 0647
MR. GROSSI indicated the question was not really relevant to
HB 475, but added the child would not be covered through the
workers' compensation insurance policy. He stated, "It would
depend on whether the person had a ... health insurance policy that
covered the child."
REPRESENTATIVE COWDERY indicated he would pursue an answer further.
Number 0694
CHARLIE MILLER, Lobbyist for Alaska National Insurance Company,
came forward to testify in support of HB 475. He said the bill was
similar to the one the previous year that satisfies the public
notice requirement for the new editions, and puts in the 1993
edition by statute so it does not have to go through that process
for this transfer. Mr. Miller stated Alaska National Insurance
Company supports HB 475, indicating he cannot see any reason why
the most up-to-date edition should not be used. He said the
company does not have any problems with the bill. The only concern
last year was that the company have sufficient time to make the
transfer; he said the 90 days seems adequate to the people in the
company he has talked to. Mr. Miller confirmed that, because there
is no effective date, it would take place in 90 days, giving the
company the same 90-day period to make sure it had the editions in
house.
CHAIRMAN ROKEBERG asked Mr. Miller if he wanted a more immediate
effective date.
MR. MILLER said they think the 90 days is adequate to get editions
and get their people "on board" with the new edition.
Number 0790
REPRESENTATIVE JOE RYAN made a motion to move HB 475 out of
committee with the attached committee zero fiscal note and
individual recommendations. There being no objections, it was so
ordered.
HCR 34 - JT COM ON ELEC UTILITY RESTRUCTURING
Number 0829
CHAIRMAN ROKEBERG said the next order of business before the
committee was HCR 34, Establishing a Joint Committee on Electric
Utility Restructuring. He noted this legislation was being
introduced as a House Labor and Commerce Resolution to establish a
joint committee of this body [the House] with the Senate to take up
and review the needs for statutory changes within the Alaska
regulatory scheme on the whole issue of electric utility
restructuring, which in some parlance is called deregulation, but
it really isn't because it's not perceived to necessitate a
complete repeal of all regulation and oversight of the electric
utilities. He explained that HCR 34 would allow a joint committee
to review any proposals for those statutory changes to allow either
all or a part of what's called retail wheeling or retail
competition for electrical power in the state. He further stated,
"We currently now have, as is nationally, what's called wholesale
wheeling or the ability to take power and sell it on a wholesale
basis across the state, which is done in the railbelt area, to
various power sources, primarily Chugach Electric Association who
wholesales power to virtually everybody along the railbelt power
grid and so forth." The issue currently is whether or not Alaska
should adopt any changes to allow this for retail competition.
CHAIRMAN ROKEBERG further stated the legislature debated and held
hearings on HB 235 last year, which would have basically stopped
any potential retail wheeling because of a very high standard
contained in the legislation, which in his opinion, essentially
would have fundamentally been impossible to reach. He said the key
area around the state is the apparent desire on the part of Chugach
Electric Association to be able to provide retail competition for
the Municipal Light and Power in the Anchorage area. He noted
there's been some proposed legislation to undertake some types of
statutory changes in the Senate and it's his opinion this area
needs to be researched further. Based on his studies of the issue,
he has determined that in the opinion of legal counsel, the Alaska
Public Utilities Commission (APUC) and the attorney general of the
state of Alaska, the APUC does have the power to grant competition
and certificates of convenience for competition in Alaska. He
remarked the committee may hear testimony to the contrary about the
ability of the APUC to do that. Nevertheless, currently Chugach
Electric Association has endeavored to supply power in the area of
ML&P and there's a current docket before the APUC on the issue. He
said, "The important thing to think about and remember about retail
restructuring and what this means to retail competition is, as
inviting as this is for a very free market-type of individual
philosophically, such as I am, is that we will ... I believe that
we need to take down some barriers to provide a (indisc.) of a free
market place to potentially lower some of the costs to the
consumers of the state. On the other hand, Alaska's very unique of
all 50 states - or at least 49, or for the south 48 - inasmuch as
we do share with Hawaii uniqueness - we're not on a national grid.
We're not connected with the other grids for wholesale receipt of
power and ability of an electrical retailer to be able to take
power and move it from one area to (indisc.) to supply power along
the power lines in a particular location. That's unique."
CHAIRMAN ROKEBERG pointed out that Alaska's Senator Frank Murkowski
is the Chairman of the Committee of Energy in the U.S. Senate which
has the oversight and responsibility to move on national
legislation regarding this issue. He believed that Senator
Murkowski was waiting for the various 50 states in the union to
take up the matter and provide some direction for the national
policy. He asked committee members to give their attention to this
particular issue because it's of major importance to the economic
well-being of the state.
Number 1215
REPRESENTATIVE RYAN commented that he, too, has done a lot of
research on this issue and comes from a free market standpoint, but
as Chairman Rokeberg said, Alaska is a horse of a different color.
He said if Chugach Electric is allowed to move in and cherry pick
Municipal Light and Power, the people in Anchorage who are not
(indisc.) Chugach will have to pay the infrastructure costs for the
municipal light and power and when the cherry picked customers are
gone, those costs will rise appreciably. He said there doesn't
seem to be a way to factor this in, and he wondered who will pay
for the lights, poles, generators and the rest of the debt service
while someone else is taking the cream off the top. He personally
didn't see an equitable solution to the problem and so necessarily,
it's going to be a hard sell to convince him this should be allowed
to happen. In fact, conversely, he personally would say the APUC
should be instructed to ensure that it doesn't happen. The
situation is ripe for Chugach Electric to do a possible takeover of
Anchorage Municipal Light & Power (AML&P) simply by taking the
cream off the top, lower the price, then drive the costs up for
AML&P and Chugach Electric could take it over at their price, thus
decreasing the competition.
Number 1314
CHAIRMAN ROKEBERG pointed out the current phenomena called
"resalers" and these activities are occurring right now without
real regulatory control or any statutory framework for it. He
added it's important to keep in mind what's happening in terms of
technology. One is that right now, the (indisc.) corporation will
deliver to a job site a fully integrated generator system with a
gas fired turbine that will be capable of providing the power to
small business operations like McDonald's free standing
restaurants, et cetera, which basically allows the business to not
hook up to the local utility. Additionally, in the Glennallen
area, there are electrical generations with even waste heat
elements from diesel powered type stations providing electrical and
(indisc.) heat to individual businesses.
Number 1396
REPRESENTATIVE RYAN pointed out that Representative Barnes' brother
works for a company in Tennessee who receives eight or ten bids in
the mail for a certain amount per kilowatt from various
entrepreneurs, some of whom wouldn't recognize a generator if they
saw one, but they buy power from wholesale lots and resell it.
It's a pretty small marketplace, but it's high volume so there's
quite a bit of money made on it. In his opinion, it's important to
take a look at the infrastructure costs.
Number 1455
CHAIRMAN ROKEBERG noted there were a number of individuals wishing
to testify. He asked Eric Yould to come before the committee to
present his comments at this time.
Number 1465
ERIC YOULD, Executive Director, Alaska Rural Electric Cooperative
Association Inc. (ARECA), said ARECA is the trade association that
represents the electric utility industry in the state of Alaska.
He noted that Chairman Rokeberg had addressed where the industry is
today, and he would add a few remarks on where Alaska stands in
terms of other states and what's being done.
Number 1530
MR. YOULD said, "Everybody knows that we've seen deregulation at
the gas line industry, airlines, telecommunications and we've seen
some quantum leaps in the technology associated with
telecommunications. I'll leave it up to some of the other utility
managers that are on teleconference today to discuss the viability
of some of the electrical generation options that we're going to
see in the future. There will be some break throughs, but I think
we'll find that they're going to be much slower in coming than what
we've seen in the telecommunications industry, where we've seen
fiber optics and cellular technology brought to the fore. We're
still basically a hard wire technology with feed stock and heavy
(indisc.). So, we'll see some efficiencies, but we're not going to
see the quantum leaps that we've seen transform the
telecommunications industry. Nevertheless, Congress is very
interested in seeing deregulation in some form come to the United
States, and as a matter of fact, they have been working on it
themselves for a number of years. It had been hypothesized that at
least two years ago, some form of electric utility deregulation
would have passed Congress mandating some form of deregulation for
all states, but that still hasn't happened and it's probably not
going to happen this year either. Be that as it may, with the
prospect of deregulation coming along, the various states have
attempted to address the issue over the years so that they will be
ready when the federal legislation ultimately comes."
MR. YOULD pointed out that ten states - generally with high cost
power - have passed some form of deregulation law. Nine states
have basically required their respective public utilities
commission implement some form of deregulation with statutory
guidelines passed by the legislature. Twenty-three states have
embarked on - many of them for a number of years - the process that
HCR 34 is attempting in the state of Alaska; that is, figure out
how deregulation in their state is unique, how it would work and in
what fashion it should be brought to their state. It is his
understanding there are nine states doing nothing on deregulation
at the present time. So the state of Alaska, despite the fact that
many of the other states have been working on this for a number of
years, is really just now getting into it and in some respects,
there's some valid reasons for that.
MR. YOULD further stated in the Lower 48, 75 percent of the
electric utility generation comes from investor-owned utilities.
Those utilities are in the business of competing. They have a very
integrated electric transmission grid system throughout the Lower
48 with multiple providers of electricity and major power marketing
entities that can move power around the United States. The state
of Alaska on the other hand, has a very weak inter-connected
railbelt system and there's virtually no inter-connection in rural
Alaska. Within the railbelt area, there are three major providers
- Golden Valley Electric, Chugach Electric and Anchorage Municipal
Light and Power. Also, unlike the Lower 48 where 75 percent of the
power comes from investor-owned utilities, despite the fact that
Alaska has some extremely good investor-owned utilities in the
state of Alaska, only 9 percent of our generation comes from
investor-owned utilities. The rest - or 91 percent - comes from
consumer-owned utilities; either municipal or cooperative. So in
many respects, we're already the owner of the resources that we're
using to generate power and would like to believe their main
incentive is to provide the lowest possible costs of power for
consumers.
MR. YOULD said be that as it may, because of the desire to see
competition in the Anchorage area, he would have to say the
prospect of deregulation has come to Alaska. Not only that, in
August, Senator Murkowski addressed the electric utility industry
and basically said it's coming on a national basis and he strongly
urged the electric utility industry to craft what deregulation
should look like for the state of Alaska and having done that, he
could work with that to make sure the federal legislation will
complement Alaska's prerogatives.
Number 1710
MR. YOULD explained that as a result, ARECA's board of directors
had a policy planning discussion the previous fall after several
attempts to come up with some sort of consensus on what everyone
wanted in the area of deregulation, and adopted a single
resolution, a result of 11 different options, that reads as
follows:
Introduce legislation which reaffirms exclusive service
areas for electric utilities for the immediate future,
that also contains legislation resolutions forming a blue
ribbon committee composed of legislative and electric
utility representatives which would be directed to
investigate whether, and if so, under what circumstances
wholesale and retail competition is in the best interest
of consumers in the state of Alaska and report back its
findings and to draft legislation for introduction to the
legislature by the year 2000.
MR. YOULD said the resolution was adopted on a vote of 18-1;
Chugach Electric was the dissenting vote because they would still
like to proceed into deregulation immediately.
MR. YOULD concluded that HCR 34 sets up a legislative subcommittee
- it's different from ARECA's resolution in that they would like to
have utility representation on the proposed joint committee. He
encouraged the establishment of a subcommittee in which the utility
industry would have more access to the committee. In addition,
HCR 34 establishes a 20-month period of time to address what is a
very complex issue - an issue to which other states have dedicated
two, three and four years. He said those are the two primary
differences in the resolutions; a third difference is the purpose
of the subcommittee recommended by ARECA would be to look at under
what circumstances, and if deregulation is even appropriate for the
state of Alaska. He remarked that it is a very complex issue and
individuals appointed to the proposed joint committee will have to
deal with new buzzwords like "market power," "reliability,"
"uniform standards and information," "predatory pricing," "cherry
picking," "universal service," "standard costs," "tax exempt status
of financing" and "unregulatory monopolies." He said the utility
industry is prepared to take a hard look at restructuring and wants
to ensure that all consumers benefit from restructuring; not just
those with economic clout.
MR. YOULD advised committee members the general manager of the
Ketchikan Public Utilities was unable to attend this hearing and
had requested that Mr. Yould distribute his letter supporting
HCR 34.
REPRESENTATIVE COWDERY referred to Mr. Yould's statement that
Chugach Electric had been the one dissenting vote and asked if
everyone had equal voting; not based on the number of people
supplied.
MR. YOULD affirmed that. He said each utility has one vote,
probably to the chagrin of those utilities with substantially more
customers.
Number 1913
CHAIRMAN ROKEBERG explained the reason the legislature didn't
select the year 2000 is because this is an important issue and the
fact is, this committee, as well as the Senate Labor & Commerce
Committee has been working on this issue for a couple years
already.
Number 1965
CHAIRMAN ROKEBERG thanked Mr. Yould for his testimony and asked Don
Edwards from Anchorage to testify at this time.
Number 1980
DON EDWARDS, General Counsel, Chugach Electric Association,
testified via teleconference from Anchorage and said he'd like to
address two general areas. First is the respectfully suggested
changes to HCR 34 and secondly, to address some of the previous
comments. He noted that Mr. Reinwand was attending the hearing and
had a couple of suggested amendments for HCR 34. He stated Chugach
Electric's position is that no additional legislation is required
because it is their view the customers already have the right to
choose; that is to say the legislature has never taken away the
right of customers to choose their electric supplier. And so
whether or not legislation is required depends on whether an
individual agrees with that view or not. He said that question has
been posed to the commission. He explained that Chugach Electric
Association feels this is very important. Therefore, the substance
of the first amendment suggests the committee ask the commission to
move on those matters pending pertaining to competition. He was of
the opinion the joint committee would have a difficult time
accomplishing its goals until it is determined exactly how the
commission feels about its own authority; specifically, has the
legislature acted to prohibit competition already or not. If the
commission takes the position that the legislature has already
prohibited competition - unless until the APUC authorizes it - then
the legislature will have to consider whether or not it wants to
change legislation to make it clear that competition is not
prohibited. If, on the other hand, the commission's decision is
the legislature has never prohibited competition, the joint
committee will either need to stop competition before it gets going
or by explicit legislation. He pointed out this is the basis for
the suggested changes on HCR 34. Additionally, he referred to page
2, line 10, and recommended deleting "whether and how" and insert,
"any additional legislation needed". The wording of the final
resolve would then read: "Further resolved that the joint
committee shall provide to the legislature written recommendations
on any additional legislation needed to implement electric utility
restructuring in Alaska." This would leave it open for the joint
committee to respond to whatever view the commission has of its
authority under existing legislation.
CHAIRMAN ROKEBERG said he didn't necessarily agree with Mr.
Edward's last suggestion because he felt it was broad enough for
the committee to do whatever it deems necessary.
Number 2233
MR. EDWARDS further said, "If I might I'd like to shift to the
second portion of my testimony just briefly to address the cherry
picking issue because I think it's a critical issue - everyone I've
talked to - not everyone, but nearly everyone initially had their
concern about cherry picking and I think it's a legitimate concern.
But let me tell you why, at least why we at Chugach do not think
it's a problem. It's only a problem if you don't allow all
customers to have a choice. If you allow all customers to have a
choice, then it's not possible for the problem to develop that
Representative Ryan described. If there are -- let's just assume
that one utility is successful at cherry picking another utility's
large customers and then if that utility that has lost the large
customer attempts to raise prices to the remaining customers, those
customers will also leave. So it will not be possible to raise
those prices. Now, if there in fact are stranded investments that
need to be dealt with, the commission is fully empowered to deal
with that issue and we're prepared to make suggestions to the
commission on how they might deal with that. It's entirely
possible that Chugach might have stranded investments in that event
- we don't really know. Although we are very clear on the idea
that stranded investments must be truly stranded and they must be
stranded as a result of the competition and there should be no game
playing there to try to shift costs on the customers that don't
belong. If you want local utilities - that is utilities in Alaska
to survive, we feel very strongly that it's important that we all
be given a chance to compete. Now we recognize that most - in fact
all the other utilities that we've come across - disagree with us
on that. But we feel very strongly that if we're going to learn to
compete, then compete so that we can meet the competition that is
already occurring in Anchorage and is likely to intensify as
restructuring develops. We feel that we need to have the
opportunity to learn how to do that and the only way to do that is
to begin competing. I want to clarify that Chugach has never
presumed to tell anyone outside the railbelt (indisc.) how they
should do anything and we've always attempted and we've always been
willing to let the competition at least (indisc.) to Anchorage and
certainly have not made any presumptions to tell people in outlying
areas that are not inter-connected to the grid how the competition
should or shouldn't draw on their system."
MR. EDWARDS agreed that Alaska is different, but he said it's
different because it's much simpler here. He said, "We have a
couple customers in ML&P service territory that requested service.
It's a relatively simple matter to serve them - it's not
complicated by poles of electricity or a map of an inter-connected
grid across the entire western half of the United States or
anything like that. We have a thin, small system that is very
simple to understand and it's very simple to (indisc.)."
MR. EDWARDS said the committee is likely to get input and the
people who are unhappy about this or made uncomfortable about this
are the other utilities, which is understandable. Chugach Electric
Association certainly isn't comfortable with change, but they are
approaching and dealing with the changes coming into the industry
differently. He said the committee will hear almost exclusively
from other utilities, but Chugach Electric Association requests
committee members not to forget the recent poll results they
conducted. Arguments can be made about whether or not the
questions were correct, but by any measure - 92 percent of the
Anchorage population of the whole believed they deserve a choice
and Chugach Electric agrees with them.
Number 2167
CHAIRMAN ROKEBERG thanked Mr. Edwards for his comments.
REPRESENTATIVE COWDERY asked Mr. Edwards if some type of authority
should make the choice on the cherry picking decision.
MR. EDWARDS replied that Chugach Electric believes quite strongly
that to the greatest extent possible, circumstances should be set
up so that government entities or authorities are not determining
who gets to buy from whom. In their view, the better choice is to
develop a system that has good incentives and which allows
customers to choose and make economic choices which then businesses
respond to.
REPRESENTATIVE COWDERY asked if Mr. Edwards was implying there was
no need for the Alaska Public Utilities Commission to exist?
MR. EDWARDS replied, "No, I think there's a role for the [Alaska]
Public Utility Commission and in fact, I think the legislature has
already set out by statute exactly what that role should be. What
the legislature has said is that if competition occurs - in other
words if it's already going - and if the commission finds that it's
not in the public interest, then the legislature has already
empowered the commission to step in and take measures to deal with
that. We do not believe that the legislature has issued a blanket
prohibition against competition and that's what the argument is
about that's in front of the commission right now. So, we do
believe that there's a role for the commission - in particular
there's clearly a role for the commission in setting rates. And
that's exactly what we've asked the commission to do with respect
to ML&P. The reason we aren't able to serve MLP customers right
now is because ML&P will not allow us to have access to their
customers and will not establish a rate for us to get to those
customers over their system. We're not proposing any kind of
duplication of physical plant; we're simply proposing that we pay
(indisc.) a fair price. Again, which is a relatively simple matter
to figure out."
TAPE 98-44, SIDE B
Number 0010
CHAIRMAN ROKEBERG .... interpretation of Alaska statute by
prohibiting competition any where within that particular boundary."
He asked if that was a fair description or had Chugach Electric
changed its approach since that conversation.
MR. EDWARDS said Chugach Electric is willing to go with a result
that results in competition just within the Anchorage area;
specifically, within Anchorage Municipal Light and Power and
Chugach Electric Association's existing distribution service
territories. Philosophically, Chugach Electric believes that
competition is the best way to go and believes that it's better for
the utilities if all are exposed to that competition sooner rather
than later.
CHAIRMAN ROKEBERG expressed his appreciation to Mr. Edwards and
said he looks forward to working with him on this issue in the
future. He asked Robert Grimm to present his remarks at this time.
Number 0053
ROBERT GRIMM, President, Alaska Power and Telephone Company (AP&T),
came before the committee and said AP&T is a small investor-owned
utility and a contributing member to ARECA, which means they
receive benefits from ARECA, but don't vote. Alaska Power and
Telephone serves 28 communities from Allakaket down to Hydaburg;
primarily along the eastern boundary of Alaska. These are small
communities that are electrically isolated from one another which
is something that should be looked at very carefully if there's
another utility company thinking of competing with AP&T. He said
this is going to be a difficult decision on how, where, when and if
competition is allowed in the electric utility. He supports
legislation to create the joint committee because it is his belief
that's what needs to be done to get enough knowledge on the table
to be able to make an informed decision.
Number 0105
CHAIRMAN ROKEBERG noted that AP&T is rare in terms of being an
investor-owned utility and inquired as to the number of customers
served by AP&T.
MR. GRIMM replied about 6,000.
CHAIRMAN ROKEBERG inquired if it was mostly diesel generated.
MR. GRIMM said it was mostly diesel, but they have two hydros - one
on Prince of Wales and two in Skagway.
CHAIRMAN ROKEBERG thanked Mr. Grimm for his testimony and said the
committee would now hear from Mr. Roberts.
Number 0133
JIM ROBERTS, General Manager, Cordova Electric Cooperative,
testified via teleconference from Cordova in support of HCR 34. He
echoed the comments of Eric Yould and Bob Grimm. He said Cordova
Electric Cooperative is an isolated system, predominately diesel
generation with one small hydro and working on getting another one
built. He said their industry is fishing based and they are
concerned about the possibility of another utility coming in under
this restructuring and being able to cherry pick their large loads.
In his opinion this is something the committee needs to address,
especially in rural areas. He noted this is definitely a concern
of the rural consumers and was a topic of discussion at the recent
annual meeting.
CHAIRMAN ROKEBERG thanked Mr. Roberts for his testimony and
expressed that he enjoyed visiting Cordova and speaking at the
ARECA convention on this issue last August. He called on Robert
Wilkinson to present his remarks at this time. Mr. Wilkinson was
unavailable and had requested Colleen Granger to read his statement
into the record.
Number 0205
COLLEEN GRANGER, Manager of Member Services, Copper Valley Electric
Association, testified via teleconference from Valdez. She read
the following statement on behalf of Robert Wilkinson:
Thank you, Chairman Rokeberg and members of the committee
for allowing me to testify today on this very important
issue. As I said, my name is Colleen Granger and I am
speaking for Robert Wilkinson who is the general manager
of Copper Valley Electric. Copper Valley is a rural
electric cooperative serving approximately 3,200
customers in a geographic area roughly the size of West
Virginia. We began preparing for competition in November
of 1996 when we adopted a new issue statement which is to
be the power supplier of choice within our service
territory. We know being the chosen provider means being
the low cost provider and since adopting our new mission,
we have filed a rate change with the Alaska Public
Utilities Commission to bring our annual revenue
requirement down by $800,000 which is a reduction of
approximately 7 percent. Basically, we have and will
continue to inject the profit motive into our nonprofit
electric cooperative so those profits can be in the form
of lower electric rates. We are very concerned, however,
as to what impact industry restructuring will have on our
efforts to maintain competitive rates. Restructuring is
sure to create opportunities for some and unless done
carefully and correctly will surely create hardships for
others. Alaska's electric cooperatives have faithfully
and capably served this state for over 50 years. As we
travel the road toward industry restructuring, we must be
cautious and deliberate in our actions so as not to upset
the carefully balanced system which has been built over
these years. Alaska is unique among the nation's utility
systems and Alaska's cooperatives are also unique.
Restructuring is an extremely complex issue which must be
carefully studied and thoroughly understood to ensure
financial and electrical impacts to customers are known
before they occur. I would like to commend the
legislature for the foresight in forming this committee
to study the issues before making a decision. I am
concerned that the time provided for in HCR 34 for the
committee to do their work may be inadequate to properly
address the many complex issues surrounding restructuring
in Alaska. At a minimum, any restructuring legislation
must address stranded investment, cost recovery,
reliability, safety standards, rate impacts to all
utilities and all customer (indisc.), necessary customer
education and an adequate transition period into the new
competitive environment. We urge the legislature to
proceed carefully and diligently to ensure that we
proceed in a thoughtful manner and that the best interest
of all Alaskan consumers are preserved. Thank you very
much, folks.
CHAIRMAN ROKEBERG thanked Ms. Granger for her comments and called
upon Norm Story to testify at this time.
Number 0330
NORM STORY, Manager, Homer Electric Association, testified via
teleconference from Homer in support of HCR 34. He didn't feel it
was necessary to expand on the previous comments regarding the
uniqueness of Alaska and why it's important to be very careful
before employing competition within the state. He said Homer
Electric Association provides electrical service to approximately
17,000 members on the Kenai Peninsula. Homer Electric is very
concerned about opening electric competition within their service
territory without first closely studying its effect on the majority
of electric users which could result in increased rate. He said
Homer Electric Association believes that HCR 34 provides for such
a study, but would like to see more time allowed for the study.
CHAIRMAN ROKEBERG pointed out that by bringing a report back to the
first session of the Twenty-First Legislature, it's possible that
it could be finalized in the second session if there are any
statutory requirements to be changed. He asked Robert Hansen to
present his remarks at this time.
Number 0417
ROBERT HANSEN, Chief Financial Officer, Golden Valley Electric
Association (GVEA), testified via teleconference from Fairbanks in
support of HCR 34. He said Golden Valley Electric Association
serves about 36,000 consumers. The GVEA recognizes that
restructuring is a very complex issue and as it has been pointed
out, Alaska is not like the Lower 48 by having limited generation
resources and providers limited inter-connection, and Alaska has
primarily cooperatives and municipals. Most of their concerns have
already been addressed; primarily the stranded cost issues,
liability issues, access issues and certainly cherry picking. He
thanked the committee for the opportunity to speak in support of
HCR 34.
Number 0462
CHAIRMAN ROKEBERG called on Charles Walls to present his testimony
at this time.
Number 0486
CHARLES WALLS, President, Alaska Village Electric Cooperative,
testified via teleconference from Anchorage in favor of HCR 34. He
said it is imperative the legislature carefully consider all the
ramifications of restructuring the electric utility industry. He
said, "You've heard quite a bit of testimony about some of the
major concerns of some others that are a little bit unique to the
area I serve which is village Alaska is perhaps just an
amplification of what you've heard. When you have just one or two
large customers and a handful of houses in a typical village that's
totally isolated from anywhere else, it becomes very apparent that
the feasibility of that electric utility could be very easily
destroyed by another (indisc.) coming in and cherry picking,
particularly if that competitor is not willing to take on the
social responsibility that a public utility has to bear - that is,
where we are obligated to provide electric service by law, some of
our competitors don't want to carry that burden." He said if the
issues are looked at, he believes the legislature will find that it
doesn't make sense to open rural Alaska up to competition. He
noted the telephone industry discovered that same thing when going
to deregulation of telephone service. In fact, because of these
small, unprofitable service areas, that industry created what's
referred to as a universal service fund to ensure that everyone
would have access to affordable service. He said those are some of
the issues faced in rural Alaska, particularly village Alaska, and
those complex issues need some study before restructuring. He
reiterated his support for HCR 34 and encouraged committee members
to take some time to focus on this important issue.
CHAIRMAN ROKEBERG asked if there were any questions of Mr. Walls.
Hearing none, he called on Meera Kohler to present her testimony.
Number 0599
MEERA KOHLER, Representative, Anchorage Municipal Light & Power,
testified via teleconference from Anchorage. She said the
introduction of HCR 34 comes at a very momentous time, especially
in light of the very recent introduction of the President of the
United States' Comprehensive Electricity Competition Plan. She
offered to make copies of that plan available to committee members,
if necessary. She said item 1 of the President's plan encourages
states to implement retail competition on a sensible mandate. It
specifically urges states to carefully craft a plan to (indisc.-
coughing) retail competition would best be implemented in each
state. She said the uniqueness of Alaskan conditions must be taken
fully into consideration before any sweeping measures are taken to
rush the state into retail competition. It must be recognized that
any assets that might become stranded through deregulating the
industry belong already almost entirely to the people of the state
of Alaska; either cooperative members or municipal taxpayers. It
must also be noted that despite a single utility's (indisc.) call
to immediately open the Alaska urban electricity market to
competition, the (indisc.) of retail wheeling is not yet in place.
Our fledgling transmission system that ties the railbelt utilities
together is still undersized and controlled by a single utility.
Until that transmission grid is operated by an independent
operator, the utilities cannot possibly compete for retail
customers.
MS. KOHLER continued that as this committee convenes to address the
enormous task that lies ahead of it, the municipality of Anchorage
urges that provision be made to include industry representatives
into the deliberative process. The municipality also urges the
committee allowed the flexibility to take the necessary time to
fully address the many complexities of the issues involved. It
must be noted that the wholesale wheeling mandated by (indisc.) Act
of 1992 is not yet in place in Alaska six years later. California
which was the first state to implement retail wheeling and has only
just started, has taken over four years to reach this stage and
numerous glitches still remain to be worked out. It's imperative
though to recognize that Alaska was the forty-ninth state to join
the union for good reason. Our conditions - geographic,
demographic and climatic are unique. Our population is small and
widely dispersed. We have minimum transportation routes to use,
both land based and energy wise. When a 60-megawatt generator
coughs, the frequency from Fairbanks to Anchorage to Homer takes a
hit. Alaska's problems and solutions have always been unique to
our state. She urged the committee to give this extremely critical
issue their closest scrutiny and fastest solution that will serve
all Alaska's electric consumers well now and in the future.
Number 0721
CHAIRMAN ROKEBERG remarked the reason why the scope of membership
of the joint committee hasn't been broadened in the resolution is
that in order to do so, it would incur a fiscal or financial
obligation to the communication and transportation of those
members. He fully expected that everyone wishing to testify or
having input into the committee would be more than welcome to
participate. He asked if there was anyone else wishing to testify
on HCR 34. Hearing none, he closed public testimony and called an
at-ease at 4:23 p.m.
CHAIRMAN ROKEBERG reconvened the House State Affairs Committee at
4:35 p.m. He directed committee members attention to the proposed
committee substitute.
Number 0792
REPRESENTATIVE COWDERY made a motion to adopt proposed committee
substitute, Version 0-LS1639\B, Cook, 4/6/98, as the working draft,
CHAIRMAN ROKEBERG asked if there was any objection. Hearing none,
that version was before the committee. He explained the difference
between the two versions is the language on lines 10, 11 and 12 of
Version E has been deleted.
Number 0824
REPRESENTATIVE TOM BRICE made a motion to amend the language on
page 2, line 5, to read following committee, ", and ARECA shall
appoint an equal number of participants from their membership and
they will be required to cover their own costs." He said the idea
is to have ample representation from a wide range of people
involved with the issue to provide the legislature with grounding
in some of the realities of the industry.
CHAIRMAN ROKEBERG asked if there was objection.
REPRESENTATIVE COWDERY objected for discussion purposes. He asked
Representative Brice what he envisioned the total membership to be.
REPRESENTATIVE BRICE said it would be completely dependent upon the
presiding officers' determination. For example, if there's five
members from each body [House and Senate], then there would be ten
appointments from ARECA's membership. He reiterated his concern
that there be equal representation on this joint committee to
include people from the industry who deal with the day-to-day
issues.
Number 0928
REPRESENTATIVE COWDERY expressed concern about getting a quorum.
He believed that by forming a joint committee, members of the
industry would show up and participate at their own expense.
CHAIRMAN ROKEBERG agreed with Representative Cowdery's comments
with regards to the interest of the industry and participation in
the testimony to provide the necessary information for the
committee to make any recommendations to future legislatures. He
said, "Point in fact is, for the record, the reason we have an
indeterminate number here is that because it is an election year
and this is a very important issue, I'm not sure how many people
would be available to serve and therefore don't want to tie the
presiding officers to a specific numeric plateau in which they may
or may not be able to achieve of people interested in serving on
this committee...."
REPRESENTATIVE COWDERY remarked that perhaps the committee should
include members of the minority.
REPRESENTATIVE BRICE said the make up of standing committees is
based on the Uniform Rules and it may be possible to figure
something out, using the Uniform Rules as a guideline.
REPRESENTATIVE COWDERY remarked he did not have any problem with
that, but was of the opinion the committee should be kept to a
small number of members while still allowing industry members to
participate in the process.
CHAIRMAN ROKEBERG asked if the objection was maintained to the
proposed amendment? He objected to the amendment, also.
Number 1096
REPRESENTATIVE BRICE withdrew Amendment 1.
Number 1098
REPRESENTATIVE BRICE made a motion to adopt Amendment 2 on page 2,
line 8, to delete "First" and insert "Second" to provide additional
time for the committee to do its work.
CHAIRMAN ROKEBERG objected.
Number 1139
REPRESENTATIVE BRICE said this amendment speaks directly to one of
the recommendations made. He maintained that much of the attention
and focus of legislators is going to be drawn elsewhere during this
upcoming interim and the joint committee is going to be hard
pressed to devote the attention this issue needs.
CHAIRMAN ROKEBERG said his comments in opposing the amendment are
very practical in nature. He agreed the amendment was consistent
with one of the recommendations by ARECA, but the reason for his
disagreement with the amendment is because there will be an
election which means a new legislative body when the Twenty-First
Legislature reconvenes and some members of the committee may not
even be members of the legislature. And therefore, the presiding
officer will have to reconstitute the committee which may be
somewhat problematic at best.
Number 1234
REPRESENTATIVE BRICE remarked the flip side of that is perhaps the
leadership of the legislative body may change and there will be no
"buy-in" by the next leadership on this process and therefore no
compelling desire or interest to take action on the joint
committee's recommendations. He said everyone recognizes that it's
too late to get any legislation or recommendations in this session,
so any recommendations will have to go through a completely
reorganized house. He felt it important the reorganized
legislature should have buy-in to the process. He said it's going
to be difficult either way.
CHAIRMAN ROKEBERG asked for a roll call vote. Representatives
Sanders and Brice voted in favor of the amendment. Representatives
Rokeberg and Cowdery voted against the amendment. The motion
failed by a vote of 2-2.
Number 1360
REPRESENTATIVE BRICE made a motion to amend the language on page 2,
line 10, following restructuring, insert "and under what, if any,
circumstances it is appropriate". The last resolve would then
read: "Further Resolved that the joint committee shall provide to
the legislature written recommendations on whether and how to
implement electric utility restructuring and under what, if any,
circumstances it is appropriate in Alaska."
CHAIRMAN ROKEBERG objected for discussion purposes. He asked
Representative Brice to explain the overall goal of the amendment.
REPRESENTATIVE BRICE said there has been public testimony
indicating that it may not be appropriate to do a wholesale
restructuring in Alaska. It may be appropriate to have
restructuring in the Anchorage Bowl for example, but not
necessarily in the rest of the state. The goal is to clarify that
given the diversity in the electrical utilities within the state,
some places it may be appropriate in some places while it may not
be in others.
REPRESENTATIVE COWDERY noted that Representative Brice had
indicated it might be in Anchorage, so should the two utilities in
Anchorage make the determination or should all the utilities be
involved in the determination.
REPRESENTATIVE BRICE suggested that would be the function of the
joint committee.
CHAIRMAN ROKEBERG said he understood what Representative Brice was
attempting to do, but he felt the charge to the legislature is
clear and the amendment would make the legislation more vague. He
felt the "what, if any" was covered in the "whether or how" is ....
REPRESENTATIVE BRICE said, "...I was saying I wasn't quite sure -
I just saw the CS [committee substitute] when we were coming in, so
I was wondering how I could encompass that as to -- there's another
factor here, not only on just whether and how, but I think that
those relate to -- I mean, is it possible? Yes, it is possible.
Is it appropriate? We don't know. If it's practical and it's
appropriate - even beyond practicality -- so that third factor ....
CHAIRMAN ROKEBERG said he would maintain his objection and asked
for a roll call vote. Representative Brice voted in favor of
Amendment 3. Representatives Rokeberg, Sanders and Cowdery voted
against Amendment 3. Amendment 3 failed by a vote of 1-3.
Number 1684
CHAIRMAN ROKEBERG called an at-ease at 4:53 p.m.
TAPE 98-45, SIDE A
Number 0010
CHAIRMAN ROKEBERG called the meeting back to order at 4:54 p.m.
REPRESENTATIVE BRICE moved Amendment 4 on page 2, line 3, following
joint committee, insert "in accordance with the Uniform Rules,".
Page 2, line 3, would then read, "Representatives and of the Senate
to serve on the joint committee in accordance with the Uniform
Rules, and that the Speaker of the".
CHAIRMAN ROKEBERG asked if there was objection to Amendment 4.
Hearing none, Amendment 4 was adopted.
Number 0047
REPRESENTATIVE COWDERY made a motion to move CSHCR 34, Version 0-
LS1639\B, Cook, 4/6/98, as amended from committee with individual
recommendations and attached zero fiscal note.
REPRESENTATIVE SANDERS objected. It is his position that HCR 34
should be held in committee for further discussion at the next
meeting.
CHAIRMAN ROKEBERG asked for a roll call vote.
Number 0192
REPRESENTATIVE BRICE referred to the objection, and said he did not
intend to move this bill out of committee at this time because he
believed issues had been raised that needed to be addressed; e.g.,
the time line, industry representation, et cetera.
Number 0251
CHAIRMAN ROKEBERG requested a roll call. Representatives Rokeberg
and Cowdery voted in favor of moving the bill out of committee.
Representatives Sanders and Brice voted against the motion.
Therefore, the motion failed by a vote of 2-2.
HB 479 - RECOGNITION FOR EMPLOYERS OF ALASKANS
Number 0302
CHAIRMAN ROKEBERG announced the next item on the agenda was HB 479,
"An Act relating to recognition of employers who hire Alaskans." He
asked Ryan Kegley, his Legislative Secretary, to read the sponsor
statement for the record.
Number 0397
RYAN KEGLEY, Legislative Secretary to Representative Norman
Rokeberg,
Alaska State Legislature, read the following statement:
Alaska Department of Labor statistics show that about
one-third of job openings went to out-of-state workers in
1996 and companies in Alaska paid total wages topping
$900 million to nonresidents.
Between 20,000 and 30,000 Alaskans were unemployed in any
given month in 1996 while 52,000 nonresidents gained
employment in the state.
House Bill 479 is intended to induce companies to hire
within the state by awarding those who meet Alaska
Department of Labor criteria with an "Alaska Hire" seal,
modeled after the highly noticeable "Made in Alaska"
logo.
House Bill 479 will help state initiatives to curb out-
of-state hires, such as the State Training and Employment Program
which trains workers with an emphasis on occupations with high
nonresident hire, by giving companies an incentive to hire Alaskan
workers.
Nonresidents often spend portions of their wages in their
home state, decreasing the multiplier effect and
depriving Alaska of the full economic benefits of the
employment created in Alaska's economy.
An Alaska Department of Labor analysis shows that
nonresidents who spend even one-quarter of their earnings
outside Alaska take away $100 million to $200 million
from the state economy over and above the direct income
loss to Alaska.
Display of the "Alaska Hire" seal by Alaskan businesses
will confirm their commitment to the employment of the
citizens of this state and the economic health of Alaska.
Number 0522
CHAIRMAN ROKEBERG asked Mr. Kegley to explain HB 479 in his own
words, as well as the changes in the proposed committee substitute.
MR. KEGLEY said basically HB 479 attempts to allow for the public
display in businesses as well as on publications and letterheads,
a seal that shows that businesses hire a certain percentage of
Alaska employees. The criteria for determining an Alaska employee
is set on a two-year residency based on the permanent fund dividend
(PFD) formula used by the Department of Labor in the analysis of
resident versus nonresident hire in companies. House Bill 479 not
only allows for an incentive to hire an Alaskan employee to obtain
the "Alaska Hire" decal, but it also allows Alaskans, as residents,
to choose the business at which to shop.
Number 0605
MR. KEGLEY explained the proposed committee substitute 0-LS
17919\B, Cramer, 4/3/98, sets out the criteria for determining an
Alaska employee in subsection (g). Also, on page 1, lines 11-12,
it deletes language in the previous draft relating to the use of
the seal on items made by Alaska employees. He said that is the
"Made in Alaska" logo, so the language was deleted in an effort to
avoid confusion between the "Alaska Hire" program and the "Made in
Alaska" program.
CHAIRMAN ROKEBERG reiterated the idea is to have a seal or decal to
display on various items, and in no way is it meant to be in
competition or to denigrate the "Made in Alaska" logo.
CHAIRMAN ROKEBERG called on Ed Flanagan from the Department of
Labor to testify at this time.
Number 0718
ED FLANAGAN, Deputy Commissioner, Department of Labor, said the
department supports the concept of HB 479 and in fact, is something
the department has considered; however, the department has some
concerns. He said, "As you all well know, any time we talk about
resident hire, we get into a pretty prolonged debate on what's a
resident, how are you going to enforce -- to the extent that any
program like this would just piggyback on efforts that we're
already doing, like our annual report to the legislature and you
provided those outside to the public - and an offshoot of that, by
statute, we report to the legislature every year on nonresidents
working in Alaska - we do what we call the employer report card.
And all employers with 20 or more employees - and the reason we
seized on 20 - I believe, that was by regulation - was to give some
anonymity to it. It was felt that if you have an employer with 18
and reported that 16 of them were nonresidents, it might violate
confidentiality. Anyway, this is just under 4,000 employers and
it's a cross match of the UI [unemployment insurance] - the wage
files the employers report quarterly for the employees that worked
for them and we match that - in this case for 1996, which is the
report we just put out in January - we matched that with their
files with anyone who had applied -- received in '96 or applied for
a PFD in '97. By using the applicant file from the previous year,
we bring it forward -- it's not really a two-year requirement. In
an extreme case, if someone arrived in the state after January 1,
1996, and was not eligible to apply in '97, they would show up as
a nonresident. But at any rate, we do this reporting and we could
probably extrapolate some percentage. We would rather frankly in
this case - and I see one amendment that the Chairman I believe has
proposed specifies a minimum of 80 percent - one of our concerns --
we'd just as soon have the parameters laid out in the legislation
rather than go through a regulation process. And some number -
probably we could do something like 90 percent or better and then
maybe allow for improvement."
MR. FLANAGAN continued, "Just a run through real quickly - I
understand time is late - but some of the concerns -- and a couple
of them have been addressed in your CS -- just want to bring to
your attention, we could have a problem in -- I'm the one who gets
these phone calls just as Mr. Kegley probably would for the
Committee Chair after this law is in effect -- and the kind of
things we'll be hearing about. For example, a company that has
five divisions and the holding company over all of them is their
corporate headquarters in Anchorage. They might have 38 employees
and 35 of them are Alaskan, so they're over 90 percent - maybe we'd
give them an award. But then they have subsidiaries - they're
operations or they're construction companies -- I'm thinking of
specific companies -- and they could be as low as 60 percent. But
are they going to be able to put on the corporate letterhead the
seal of approval and then solicit work for the divisions that only
run 60 - 70 percent Alaskan. That's the kind of problems we will
have. We don't want to get into a situation where we have a lot of
employers saying 'I should get this - I should be able to get this
- you're using the PFD -- we hear this a lot from the oil industry
that the PFD is too stringent because of the time lag involved and
that it takes a year. But actually if you'll look at our report of
nonresidents working in Alaska, we track from year to year how many
nonresidents one year become residents the next year and over all
industries, it's about one in seven that actually become
residents."
Number 0979
MR. FLANAGAN further stated, "Another concern we have is we'll get
people calling up, "So and so has the logo - the decal in their
window, and I know for a fact they don't have people and you should
go take out their logo -- you know, in those cases, we'll just send
Dwight over with a baseball bat to remove the offending window
[laughter]. But you know, we've got to have due process and all
that stuff -- I don't mean to be throwing cold water on it, it's
just these are the things that will come up. The establishment of
different levels for different industries - that is doable - you
could do somebody who exceeds the industry average or something
like that, but the more we add to it, the more labor-intensive it
gets. And as far as tracking if someone's making a good faith
effort to hire Alaskans - we'd really like to stay out of that.
That's kind of subjective and we don't care to get into measuring
-- how do we measure for that. So I guess what we'd like to see --
the cost -- I believe our research and analysis branch has been
very conservative on the fiscal note and that assumes that we would
be able to do things pretty much the way we do them with regard to
determining the availability of workers who are able and willing to
engage. We do that for our resident hire in construction law - we
don't survey a bunch of workers and say if you could work on this,
would you? We look at how many people are registered with Job
Service in different classifications and what the availability is
of people that may be qualified. So, I guess if we could work with
the committee, I think on a quick turnaround, if we could get this
to be more of a - I guess passive program that takes things we
already do, takes the data and then, I guess the committee -
whatever your pleasure - if you gave a gold award for 95 percent or
better, assuming you could agree that PFD -- and not just
qualifying for it - that was one of the changes you made in the CS
- and we appreciate that, you know - that they qualify, they
satisfy their resident eligibility standards for eligibility in the
PFD. We don't want to do a case by case, you know if you have a
conscientious objector, like certain legislators who pride
themselves on not collecting a permanent fund, and we don't want to
have to certify that that person would have gotten a PFD if they
applied. We just want to go off the tape that we get from PFD
every year that shows who applied."
Number 1086
MR. FLANAGAN stated, "Mr. Kegley mentioned in a private
conversation that might look at some kind of program receipts
authority for this. We would certainly prefer that because any
general funds added to our budget, it's going to be up for grabs
the next time around. I mean if we have to make a choice between
enforcing the law protecting working conditions and workers and
doing this worthwhile program, we're probably going to go with
that. And we just have to be up front and tell you that. If it
was program receipts, we would hope that it would be the new
fangled designated program receipts, you know, that only -- you
don't do them -- you don't collect them unless you do the activity,
so that they're kind of off budget. And I guess I just make myself
available for questions. A couple of the suggestions we spelled
out was maybe you could have something for over 95 percent,
something for 85 - 95 percent; and then maybe -- and this would not
be too labor intensive -- if you had an employer -- and in some
cases, I mean there are some industries -- in seafood if somebody's
doing 50 percent - because there's such a huge influx of seasonal
workers, short demand -- if somebody's doing 50 percent in that
industry, they're way over the industry average. Maybe you could
have like an award for percent improvement year to year. If
someone's under 50 percent, they'd have to improve 20 percent to
get an award. Between 50 [percent] and 70 [percent], they'd have
to improve 15 percent. Between 70 [percent] and 85 percent, they'd
have to improve 10 percent. Just throwing those out for
suggestions - we only saw this -- I guess we saw it Thursday and we
have given it some thought and would be glad to work with committee
staff or a subcommittee on a quick turnaround and come up with
something that we would feel comfortable telling you it would not
just be another thing on the books like the Alaska products
preference - the dairy products, the timber products - that are on
the books and well-intentioned and maybe when they first started,
had a little enforcement money, but are virtually vestigial
(indisc.) as far as laws go that just sit there with no
enforcement."
Number 1198
REPRESENTATIVE SANDERS asked Mr. Flanagan to explain why industries
with outside markets like canneries, timber, mining and oil would
have an interest in this legislation.
MR. FLANAGAN believed there would be a lot of interest as is seen
with any discussion on resident hire - the corporate citizen
aspect. For example, there's been a lot of discussion with the oil
industry on resident hire. There's been a lot of emphasis on the
resident hire performance of the offshore and onshore sectors with
regard to the pollock allocation. Many industries coming before
the legislature for various reasons would conceivably have an
interest in having a seal of approval from the Department of Labor.
Number 1388
REPRESENTATIVE COWDERY inquired about the constitutionality of
Alaskan hire.
MR. FLANAGAN replied, "That's a very deep subject. I'll give you
the two-minute answer. The Alaska Supreme Court, let alone the
federal, have always looked real hard and not too favorably on
Alaska hire resident legislation. We've had two mandates in terms
of percentages - two laws go down and our last vestige is being
challenged as we speak in superior court. That regards public
construction projects in the state. However, the Department of Law
did look at this one - not saying that somebody couldn't figure out
they were aggrieved, but they basically think it's defensible you
know, because the withholding of it or the granting is a pretty
intangible potential bonus or detriment to somebody. It doesn't
mean somebody won't jump up and challenge it. But yeah, the equal
protection clause of our own state constitution has for the most
part preempted local hire laws before they even get to the U.S.
Supremes. It doesn't mean we all can't keep trying though.
Number 1455
CHAIRMAN ROKEBERG noted that Representative Sanders needed to leave
for another committee meeting, so he would like to adopt the
proposed committee substitute, Version 0-LS1719\B, Cramer, 4/3/98,
as the work draft while there was a quorum. Hearing no objection,
that version was before the committee.
Number 1489
REPRESENTATIVE COWDERY asked how the Department of Law defines an
Alaskan employer.
MR. FLANAGAN said he didn't believe the department had a definition
of an Alaskan employer in statute; however, it's defined in other
statutes pertaining to the Alaska bidder's preference and the
legislature came up with a fairly extensive definition in the North
Star legislation.
REPRESENTATIVE COWDERY inquired about joint ventures. He's aware
of a situation where an out-of-state or out-of-country company
attempted to find a small contractor in order to qualify for a
particular preference.
MR. FLANAGAN said he thought that had been dealt with in amendments
made to the North Star legislation. He added, "I don't if it was
a -- I know it said at least one of the partners had to meet the
full definition and then I've seen other places like when it's an
issue of minority contractoring or (indisc.), 51 percent has to be,
so I guess you could say 51 percent of the joint venture had to be
the Alaskan -- the one that met the Alaskan definition to get away
from the kind of front situation you're talking about,
Representative Cowdery."
Number 1584
REPRESENTATIVE ERIC CROFT stated, "Just on Representative Cowdery's
point about the constitutionality - this bill came up as part of a
discussion between me and your staff, Mr. Kegley, and later with
you, Representative Rokeberg, and Amanda Bohman on my staff, about
how we could get around a lot of the things that Ed [Flanagan] was
talking about. How we keep putting out or did for awhile, put out
local hire laws that kept getting struck down and exactly what
could we do that would be on the good side of the law. And this,
using by analogy the 'Made in Alaska' buttons and stickers seemed
to be one that would pass constitutional muster and that's the
preliminary opinion we got from the Department of Law. You can't
tell people who they have to hire or for that matter, what products
they have to buy. You can reward - you can recognize really -
people who do a good job in areas you like and by that way,
encourage. You can't mandate. You can't require. It seems to me
and it seems I think preliminary to the Department of Law you can
encourage through this process so this may be the one avenue we do
have to do this kind of resident hire stuff. And the more I look
through the data here and before, it does seem like as I've said,
that certain industries just have a difficult time or difficult
reputation in hiring locally - fisheries, food service, visitors.
It seems like the ones that operate in a short time span in the
summer have a lot of nonresident hires and whether having them
always excluded from the criteria, it seemed to me -- the
Department of Labor always does a sort of 'worst' list. It says in
each of the industries, here are the ones that don't do as well.
You could just as easily, it'd seem to me, do a 'here's the one in
each industries that do the best' so you could even have ones in
the fisheries that were only hitting 60, but that was so much
better than the average of 30 that we did want to recognize them.
So, I guess on those two issues -- what's an Alaskan employer, I'd
much rather recognize the hires here than some criteria about doing
business or licensed in the state - those you can have the kind of
sham offices or sham operations. When it really gets down to who
are your employees, it seems to me more verifiable and harder to
fake."
Number 1700
CHAIRMAN ROKEBERG acknowledged Steven Rouse standing by on
teleconference to testify.
Number 1714
STEVEN ROUSE, Executive Director, Trade Association, Make it
Alaskan, Inc.; and Permit Agent and Program Manager for the Made in
Alaska Program, testified from Anchorage via teleconference. He
said "Make it Alaskan" is a statewide, nonprofit organization whose
mission statement is to promote the purchase and use of Alaskan
made products and utilization of Alaskan services. The
organization has been an active leader in raising the awareness and
the importance of the issue of Alaska hire and believes that in a
resource rich state, the resident work force is a very valuable
resource and one that should be developed to its full potential.
He said his second role is speaking as the permit agent and program
manager for the state of Alaska's Made in Alaska program, which has
been so liberally referred to in the discussions of this bill. He
has some serious concerns and questions about HB 479. He had
expressed his concerns to Chairman Rokeberg's staff and while he
doesn't have a copy of the proposed committee substitute, he
understands that a couple of items of concern have been addressed
in the committee substitute.
MR. ROUSE said it was his understanding there was no fiscal note
for this bill.
CHAIRMAN ROKEBERG interjected that was incorrect; there was a
fiscal note attached.
MR. ROUSE said this type of program needs to be funded. There is
current and historical evidence that demonstrates that the
aftermath of well-intentioned programs enacted without enough
funds, let alone just funds, are widespread. He cited several
examples of programs that are no longer in existence or close to
nonexistent due to lack of funds: the product preference program;
the forest products preference program; the recycled products
preference; the Alaska grown program, et cetera. He concluded, "We
believe that while the bill is certainly well-intentioned, that we
believe in it in concept as does the Alaska Department of Labor,
for all of the reasons that Mr. Flanagan referred to and then some,
we strongly urge this committee to reconsider this bill before
passing it out (indisc.-coughing) willing to work with the
committee to determine a way in which you could identify and
support those people who meet any specific set of criteria. But
one who administers and has administered this program that you guys
are saying you want emulate, I'm telling you there's a lot to it
that you're not recognizing - there's a lot of cost to it that
you're not admitting and you're opening up what my experience has
been to be a pandora's box of public outcry and consternation over
who gets it, why they get, when they get it, who polices this logo
by the wayside, is it a copyrighted logo? Given the recent court
decision on the use of the state seal under the guise of artistic
expression, does this mean that this seal can be used and reused or
bastardized, for lack of a better term, by anybody and everybody
for commercial means." He stated that if this legislature is
looking to advance the concept of results based government and
allocate funds and create laws under that principle, he
respectfully suggested this legislation is not consistent with that
principle.
Number 1980
CHAIRMAN ROKEBERG inquired if the committee had any questions of
Mr. Rouse.
REPRESENTATIVE COWDERY inquired as to the size of the program
administered by Mr. Rouse.
MR. ROUSE replied the nonprofit organization, Make it Alaska which
administers the Made in Alaska program, has an employee and a half
and a volunteer staff that extends across the state - volunteer
site inspectors, volunteer information and various other
activities. More specifically, there are two paid staff and dozens
of volunteer staff statewide.
REPRESENTATIVE COWDERY inquired as to the number of members.
MR. ROUSE replied the Made in Alaska program currently has 1,162
active product lines certified in the program held by 1,018
different permit holders.
Number 2051
CHAIRMAN ROKEBERG said that concluded public testimony on HB 479.
He requested the Department of Labor work with the bill sponsors on
this particular piece of legislation. He remarked that he's not
real excited about rewarding businesses that reach 50 percent
achievement, even though it is a vast improvement, because the idea
is to take pride in the display of a decal or logo. Chairman
Rokeberg noted that HB 479 would be held in committee for further
consideration.
ADJOURNMENT
Number 2145
CHAIRMAN ROKEBERG adjourned the meeting of the House Labor and
Commerce Standing Committee at 5:33 p.m.
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