Legislature(1999 - 2000)

04/17/2000 03:33 PM House L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
           HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                          
                         April 17, 2000                                                                                         
                            3:33 p.m.                                                                                           
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Representative Norman Rokeberg, Chairman                                                                                        
Representative Andrew Halcro, Vice Chairman                                                                                     
Representative Lisa Murkowski                                                                                                   
Representative John Harris                                                                                                      
Representative Tom Brice                                                                                                        
Representative Sharon Cissna                                                                                                    
Representative Jerry Sanders                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
HOUSE BILL NO. 169                                                                                                              
"An Act relating to including the costs of expansion activities                                                                 
and political activities in rates of electric cooperatives."                                                                    
                                                                                                                                
     - MOVED CSHB 169(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
PREVIOUS ACTION                                                                                                                 
                                                                                                                                
BILL: HB 169                                                                                                                  
SHORT TITLE: ELEC.COOPS:EXPANSION & POLITICAL ACTIVITY                                                                          
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 3/31/99       625     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 3/31/99       625     (H)  URS, L&C                                                                                            
 4/28/99               (H)  URS AT  8:00 AM CAPITOL 120                                                                         
 4/28/99               (H)  SCHEDULED BUT NOT HEARD                                                                             
 5/05/99               (H)  URS AT  8:00 AM CAPITOL 120                                                                         
 5/05/99               (H)  SCHEDULED BUT NOT HEARD                                                                             
 3/15/00               (H)  URS AT  8:00 AM CAPITOL 120                                                                         
 3/15/00               (H)  -- Meeting Postponed to 3/22 --                                                                     
 3/22/00               (H)  URS AT  8:00 AM CAPITOL 120                                                                         
 3/22/00               (H)  Heard & Held                                                                                        
 3/22/00               (H)  MINUTE(URS)                                                                                         
 3/29/00               (H)  URS AT  8:00 AM CAPITOL 124                                                                         
 3/29/00               (H)  Heard & Held                                                                                        
 3/29/00               (H)  MINUTE(URS)                                                                                         
 3/31/00               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 3/31/00               (H)  <Pending Referral>                                                                                  
 4/05/00               (H)  URS AT  8:00 AM CAPITOL 120                                                                         
 4/05/00               (H)  <Bill Postponed To 4/12>                                                                            
 4/12/00               (H)  URS AT  9:00 AM CAPITOL 120                                                                         
 4/12/00               (H)  Moved CSHB 169(URS) Out of Committee                                                                
 4/12/00               (H)  MINUTE(URS)                                                                                         
 4/13/00      3111     (H)  URS RPT CS(URS)  4DP 1NR                                                                            
 4/13/00      3111     (H)  DP: HUDSON, ROKEBERG, GREEN, KOTT;                                                                  
 4/13/00      3111     (H)  NR: COWDERY                                                                                         
 4/13/00      3112     (H)  ZERO FISCAL NOTE (DCED)                                                                             
 4/14/00               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 4/14/00               (H)  Heard & Held                                                                                        
 4/14/00               (H)  MINUTE(L&C)                                                                                         
 4/17/00               (H)  L&C AT  3:30 PM CAPITOL 17                                                                          
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
JEFF LOGAN, Staff                                                                                                               
  to Representative Joe Green                                                                                                   
Alaska State Legislature                                                                                                        
Capitol Building, Room 214                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Provided information on behalf of sponsor of                                                               
HB 169.                                                                                                                         
                                                                                                                                
NORM STOREY, General Manager                                                                                                    
Homer Electric Association                                                                                                      
3977 Lake Street                                                                                                                
Homer, Alaska 99603                                                                                                             
POSITION STATEMENT:  Testified on HB 169.                                                                                       
                                                                                                                                
BERNIE SMITH, Commissioner                                                                                                      
Regulatory Commission of Alaska                                                                                                 
Department of Community and Economic Development                                                                                
1016 West Sixth Avenue                                                                                                          
Anchorage, Alaska 99501                                                                                                         
POSITION STATEMENT:  Testified on HB 169.                                                                                       
                                                                                                                                
ROBERT BEANS, Chairman                                                                                                          
Alaska Village Electric Cooperative Association, Inc.                                                                           
4831 Eagle Street                                                                                                               
Anchorage, Alaska 99503                                                                                                         
POSITION STATEMENT:  Testified on HB 169.                                                                                       
                                                                                                                                
TUCKERMAN BABCOCK, Manager of Government and Strategic Affairs                                                                  
Matanuska Electric Association                                                                                                  
163 East Industrial Way                                                                                                         
Palmer, Alaska 99645                                                                                                            
POSITION STATEMENT:  Testified on HB 169.                                                                                       
                                                                                                                                
GEORGE KITCHENS, President                                                                                                      
Golden Valley Electric Association                                                                                              
758 Illinois Street                                                                                                             
Fairbanks, Alaska 99701                                                                                                         
POSITION STATEMENT:  Testified on HB 169.                                                                                       
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 00-51, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CHAIRMAN  NORMAN  ROKEBERG called  the  House Labor  and  Commerce                                                              
Standing Committee meeting to order  at 3:33 p.m.  Members present                                                              
at  the  call to  order  were  Representatives  Rokeberg,  Halcro,                                                              
Harris and Sanders.  Representatives   Murkowski, Brice and Cissna                                                              
arrived as the meeting was in progress.                                                                                         
                                                                                                                                
HB 169-ELEC.COOPS:EXPANSION & POLITICAL ACTIVITY                                                                              
                                                                                                                                
CHAIRMAN  ROKEBERG  announced that  the  first order  of  business                                                              
would be  HOUSE BILL NO.  169, "An Act  relating to  including the                                                              
costs of  expansion activities and  political activities  in rates                                                              
of electric cooperatives."                                                                                                      
                                                                                                                                
Number 0050                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO  moved  to  adopt  the  proposed  committee                                                              
substitute  (CS)  for  HB  169,  Version  I  [1-LS0766\I,  Cramer,                                                              
4/17/00], as  a work draft.  There  being no objection,  it was so                                                              
ordered.                                                                                                                        
                                                                                                                                
Number 0076                                                                                                                     
                                                                                                                                
JEFF  LOGAN,  Staff  to Representative  Joe  Green,  Alaska  State                                                              
Legislature  came  forward  on  behalf  of  Representative  Green,                                                              
sponsor  of HB  169  to explain  the  changes in  Version  I.   In                                                              
response to  committee members' comments  and public  testimony at                                                              
the last hearing,  a number of changes had been made  to the bill.                                                              
The first  change is on  page 1, line 4,  Section 1:   The statute                                                              
cited has  been changed to AS  10.25.010 from AS 42.05.381.   This                                                              
reflects the suggestion  of Nan Thompson, chair  of the Regulatory                                                              
Commission  of  Alaska,  that  the   language  more  appropriately                                                              
belongs in AS  10.25, which is the section of  the statute dealing                                                              
with  the relationship  between  cooperatives  and their  members.                                                              
The sponsor and  his staff concur, and have moved  the language to                                                              
a different  [statutory] title.   He  noted that subsections  (1),                                                              
(2) and (3) are essentially the same  as they were in the previous                                                              
version.                                                                                                                        
                                                                                                                                
Number 0222                                                                                                                     
                                                                                                                                
MR.  LOGAN called  attention to  subsection (4),  which now  says,                                                              
"received approval  of a  majority of  the cooperatives'  board of                                                              
directors for including the cost  of expansion activity in rates."                                                              
This changes the  focus of decision making from  a pre-approval of                                                              
members to  simply an  approval of  the majority  of the  board of                                                              
directors.  "That is where such decisions  are made anyway, but it                                                              
just  doesn't  say  that  anywhere in  the  statutes,"  Mr.  Logan                                                              
explained.   He added  that Representative  Green thought  that if                                                              
the co-op  members were advised in  advance that there would  be a                                                              
meeting  to discuss  the use  of rate  monies for  these types  of                                                              
[expansion]  purposes, that  would  give co-op  members plenty  of                                                              
opportunity to address their board.                                                                                             
                                                                                                                                
Number 0296                                                                                                                     
                                                                                                                                
MR. LOGAN pointed out that comparable  changes are made on page 2,                                                              
lines 2  through 12,  concerning political  activities.   However,                                                              
the definitions sections  needs some help from the  committee.  On                                                              
page 2, line  14, subsection (1), is the definition  of "expansion                                                              
activity."   The  title  of the  bill  reflects  the inclusion  of                                                              
telephone cooperatives,  and that  was inadvertently  omitted from                                                              
this definition.   The  drafter had  advised him  that if  someone                                                              
were to move  a conceptual amendment that telephones  be included,                                                              
it could be taken care of as a House  Labor and Commerce committee                                                              
substitute (CS).                                                                                                                
                                                                                                                                
Number 0391                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO made a motion  to adopt conceptual Amendment                                                              
1  to  Version  I:   on  page  2,  line  15,  eliminate  the  word                                                              
"electrical" before the word "service",  and insert "or telephone"                                                              
before the  word "cooperative";  and on line  16, delete  the word                                                              
"electric".  There being no objection, it was so ordered.                                                                       
                                                                                                                                
CHAIRMAN ROKEBERG reminded Mr. Logan  of a suggestion the chairman                                                              
had made in  the House Special Committee on  Utility Restructuring                                                              
about adding  expansion outside  a certified  service area  to the                                                              
expansion definition.  He asked if that would be redundant.                                                                     
                                                                                                                                
MR. LOGAN said he remembered that suggestion.                                                                                   
                                                                                                                                
Number 0493                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO  said he has heard some  concern about money                                                              
for  expansion  activities  being  taken  from  the  cooperative's                                                              
operation  and maintenance  funds.    He asked  if  that had  been                                                              
discussed.                                                                                                                      
                                                                                                                                
Number 0550                                                                                                                     
                                                                                                                                
MR. LOGAN said it had been discussed  briefly in the House Special                                                              
Committee on Utility  Restructuring, where there had  been a brief                                                              
explanation of  the difference between  "rate monies"  and "margin                                                              
monies."   The rate monies are  those allowed to be  collected for                                                              
the services  the utility provides.   But, in fact,  the utilities                                                              
are allowed to  collect a small portion above and  beyond the cost                                                              
of operating the  utility.  That additional amount  goes into what                                                              
are known  as "margin  monies," the savings  account, as  it were.                                                              
"We acknowledged that there could  still be a use of margin monies                                                              
to perform  some of these activities,  but it was the  rate monies                                                              
that are reviewed  more stringently by the commission,"  Mr. Logan                                                              
recalled.                                                                                                                       
                                                                                                                                
Number 0493                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO  said he just  wanted to make sure  that the                                                              
question  had been addressed  in the  previous committee,  because                                                              
he  had  heard  some  concerns  that   "it's  not  only  that  you                                                              
[utilities] are  using rate payers'  money for political  activity                                                              
or  expansion, but  you [utilities]  are  diverting those  dollars                                                              
from operation  and maintenance,  [away]  from providing  a stable                                                              
source of electricity or telephone service."                                                                                    
                                                                                                                                
MR. LOGAN  commented that  he hoped if  there were a  street light                                                              
out at  the playground,  it would be  repaired before the  next ad                                                              
was placed in the paper.                                                                                                        
                                                                                                                                
CHAIRMAN  ROKEBERG  said there  had  been  testimony in  the  last                                                              
committee  about an  existing  statute that  prohibited  political                                                              
activity on  the part of the cooperative.   He wondered  if HB 169                                                              
would override that.                                                                                                            
                                                                                                                                
Number 0692                                                                                                                     
                                                                                                                                
MR. LOGAN explained that the current  prohibitions are found in AS                                                              
15.13.074, and they relate to candidates.                                                                                       
                                                                                                                                
[CHAIRMAN ROKEBERG asked an indiscernible question.]                                                                            
                                                                                                                                
MR. LOGAN said  he did not believe  so, and that it was  only that                                                              
they  could  not  advocate  for a  candidate,  which  was  in  the                                                              
original  version  of the  bill.   Identified  political  activity                                                              
means an activity  intended to advocate for a candidate  or make a                                                              
contribution to a  candidate or political party.   Those were both                                                              
already  covered under  AS 15.13.074  and 3  AAC.50.500, so  those                                                              
have been removed.                                                                                                              
                                                                                                                                
CHAIRMAN ROKEBERG asked, "You have removed those from the bill?"                                                                
                                                                                                                                
MR. LOGAN  responded, "We have  removed the duplication  from this                                                              
bill.  Those prohibitions are still  in the statute and regulation                                                              
I cited."                                                                                                                       
                                                                                                                                
CHAIRMAN ROKEBERG asked, "Shouldn't  we put that in here, that any                                                              
political activity  be subject to  those provisions?"  He  said he                                                              
thought it  would cause confusion  if there were one  section that                                                              
says political activity  is permitted and then  another section of                                                              
statute prohibits it.                                                                                                           
                                                                                                                                
CHAIRMAN ROKEBERG declared a brief  at-ease beginning at 3:46 p.m.                                                              
The  meeting was  called  back to  order at  3:47  p.m.   Chairman                                                              
Rokeberg noted  that Representatives Brice and Murkowski  were now                                                              
present.                                                                                                                        
                                                                                                                                
CHAIRMAN  ROKEBERG  noted  that  there  were  two  people  on  the                                                              
teleconference line,  and he asked if  both of them had  Version I                                                              
of the bill.                                                                                                                    
                                                                                                                                
Number 0824                                                                                                                     
                                                                                                                                
NORM  STOREY said  they  did not.    They had  heard  some of  the                                                              
discussion,  but despite staff  efforts earlier  in the  day, they                                                              
had not received copies.                                                                                                        
                                                                                                                                
CHAIRMAN  ROKEBERG   asked  if  they   were  at   the  Legislative                                                              
Information  Office (LIO), and  Mr. Storey  confirmed that  he was                                                              
one of  two participants  at the LIO  office in Wasilla,  and they                                                              
did not  have a  copy.   [Arrangements were  made to transmit  one                                                              
immediately.]  Chairman  Rokeberg observed that the  bill had been                                                              
radically changed,  so they needed  to see the new  version before                                                              
they could make any comments.                                                                                                   
                                                                                                                                
BERNIE  SMITH,  Commissioner,  Regulatory   Commission  of  Alaska                                                              
(RCA),  confirmed   that  he  had   a  copy.    He   testified  by                                                              
teleconference from  Anchorage, explaining  that he was sitting in                                                              
for RCA  chairperson Nan  Thompson.  He  agreed that Version  I of                                                              
the bill is radically different.  He said:                                                                                      
                                                                                                                                
     It took quite  a bit of the recommendations  that we had                                                                   
     put together, and I think it  is appropriate.  I guess I                                                                   
     would probably  see if  we could add  a little bit  more                                                                   
     definition  to 'expansion  activities,'  but other  than                                                                   
     that,  I  think  it would  work  for  us.   We  have  no                                                                   
     problems with it.                                                                                                          
                                                                                                                                
MR.  SMITH answered  a  question  that Representative  Halcro  had                                                              
asked, saying the RCA would still  regulate the rates if they came                                                              
to the RCA  in a rate case.   But if they came under  the margins,                                                              
the RCA would not have jurisdiction over that.                                                                                  
                                                                                                                                
Number 0971                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG said  that was the point he was  getting at with                                                              
Mr. Logan - the rate structure area  exclusive of the margin area.                                                              
He wondered, "Is that what you are referring to?"                                                                               
                                                                                                                                
MR. SMITH said that is correct.                                                                                                 
                                                                                                                                
CHAIRMAN ROKEBERG  asked, "So it's currently prohibited  to charge                                                              
in your rate base for any political activities?"                                                                                
                                                                                                                                
MR. SMITH said that is correct, although  it would be a little bit                                                              
better definition  to refer to AS 42.05.381 and  include political                                                              
activities  and  lobbying  in amending  that  particular  section.                                                              
"That  gives us  a little bit  more 'oomph'  to do  away with  the                                                              
lobbying and the  political activity," he said.   "So it just adds                                                              
a little bit more power to us to define those two items."                                                                       
                                                                                                                                
CHAIRMAN ROKEBERG told  him that a couple of lobbyists  sitting in                                                              
the room had  "just about had a  heart attack" when he  said that,                                                              
and Mr. Smith humorously remarked that that was good for them.                                                                  
                                                                                                                                
CHAIRMAN  ROKEBERG  confirmed  that   the  section  cited  was  AS                                                              
42.05.381.   Then he  asked Mr.  Smith if  he had any  suggestions                                                              
regarding expansion activities.                                                                                                 
                                                                                                                                
MR. SMITH said he did not.                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG  declared a brief  at-ease at 3:52 p.m.  to give                                                              
those who had  just received a copy  of the new Version  I to read                                                              
it.                                                                                                                             
The meeting was called back to order at 3:56 p.m.                                                                               
                                                                                                                                
ROBERT BEANS, Chairman, Alaska Village  Electric Cooperative, Inc.                                                              
(AVEC), serving  some 51 villages throughout Western  Alaska, came                                                              
forward to  testify on HB 169.   He asked if it would  be possible                                                              
to have some  time to digest  this new language, and  perhaps AVEC                                                              
would  come back  in  favor.   He  said,  "We are  electric  board                                                              
members.   We have  in place  in AVEC  a system  which is  fair to                                                              
everybody,  a  system where  all  of  our  6,500 members  have  an                                                              
opportunity to voice  their concerns through a process."   He said                                                              
AVEC  is cognizant  of  all the  rules and  regulations  governing                                                              
cooperatives.  He asked for a chance  to "at least digest this new                                                              
language to see if we can come to an agreement."                                                                                
                                                                                                                                
Number 1202                                                                                                                     
                                                                                                                                
CHAIRMAN  ROKEBERG   restated  that  this  version   is  radically                                                              
different, saying he  thinks it is a much improved  version of the                                                              
bill.   He  said he  appreciated  Mr. Bean's  request, but  added,                                                              
"This thing has  a long way to go anyway, so you  should have more                                                              
than adequate  time  to digest it.   But  having indigestion  down                                                              
here at this time of year is not uncommon."                                                                                     
                                                                                                                                
Number 1235                                                                                                                     
                                                                                                                                
NORM STOREY, General Manager, Homer  Electric Association, offered                                                              
that Version I leaves him a bit in question.  He said:                                                                          
                                                                                                                                
     We are speaking of regulating  the electric cooperatives                                                                   
     of  this  state  to  include   in  some  ways  divulging                                                                   
     information  to the  public  that could  be critical  in                                                                   
     terms  of  strategies  to  provide  future  service  and                                                                   
     economic  service  to  our   consumers  by  (indisc.)  a                                                                   
     strategy to either expand or  to complement the services                                                                   
     we provide today.                                                                                                          
                                                                                                                                
     I  have  some concerns  with  that  in terms  of  giving                                                                   
     notice  to  rate  payers.    I  think  the  commissioner                                                                   
     commented on  things that today we know is  not included                                                                   
     like  political activities  into  our  rates, and  those                                                                   
     non-electric costs  are obviously not includable  in our                                                                   
     rates.   However, this  new bill seems  to speak  to the                                                                   
     fact that we  have to advise the members  that a portion                                                                   
     of the rates would be used for  expansion activities and                                                                   
     then later  on in the bill addresses  receiving approval                                                                   
     of a majority of the cooperative's board of directors.                                                                     
                                                                                                                                
     If  that   was  in  reverse,   it  would  certainly   be                                                                   
     friendlier to  our concerns, and that is  that our board                                                                   
     of  directors has  to by a  majority vote  move to  pass                                                                   
     rate changes and tariffs today.   No activity is allowed                                                                   
     until  that is  done and  rates are  not affected  until                                                                   
     such time as the RCA actually  takes action and approves                                                                   
     that  filing.   So  there is  process  there already  in                                                                   
     place.  If I read this correctly,  it could mean that we                                                                   
     would  have to  go out and  advise the  members that  we                                                                   
     were  going  to  use  portions of  future  rates  to  do                                                                   
     expansion  activities  and later  charge  them into  the                                                                   
     rates.  So that's a little confusing  to me and we don't                                                                   
     understand that.                                                                                                           
                                                                                                                                
     We  have   difficulty  with   the  legislature   getting                                                                   
     involving in   directing the electric utilities  only in                                                                   
     this  regard.   Each time I  sit with  a private  sector                                                                   
     utilities  I   understand  fully  their  need   to  keep                                                                   
     information  confidential to  go out  and market and  do                                                                   
     different  things  they  need  to  make  their  business                                                                   
     successful, which is to sell their service.                                                                                
                                                                                                                                
     It may  be that the  maker of this  bill or staff  could                                                                   
     explain  how (1)  and (4)  on page  1, lines  7 and  14,                                                                   
     relate to one  another and what we're really  looking at                                                                   
     here  in terms  of requirement  by law.   My concern  is                                                                   
     understanding  when does  the co-op  have to  go out  an                                                                   
     advertise   to  let   its  members   know  that  it   is                                                                   
     considering activities that  might cause rate increases,                                                                   
     and exactly what does it means in terms of priority.                                                                       
                                                                                                                                
Number 1445                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG said, "Mr. Storey, you mentioned something                                                                    
else.  You said you couldn't understand one for the other?"                                                                     
                                                                                                                                
Number 1463                                                                                                                     
                                                                                                                                
MR. STOREY answered:                                                                                                            
                                                                                                                                
     Normally,  if  we were  going  to conduct  business,  we                                                                   
     would go  to our board  of directors, we'd  get approval                                                                   
     for whatever  the activity is,  and we would go  out and                                                                   
     we  would  seek  to  complete   that  activity  or  that                                                                   
     strategy.   That sometimes  is done  well in advance  of                                                                   
     any  actual change.   At  some point,  there may  be   a                                                                   
     business  activity  that  results  in  a  success  or  a                                                                   
     conclusion and  money was spent, it would  be later that                                                                   
     it would be considered going into rates.                                                                                   
                                                                                                                                
     At that time, the board of directors  would have another                                                                   
     opportunity to  approve the rate filing that  would then                                                                   
     have to be sent to the RCA for  final approval before we                                                                   
     could  actually affect a  rate change.   So my  question                                                                   
     is,  if  this were  to  become  a  law,  would we  as  a                                                                   
     cooperative  be  required  to   advise  the  members  in                                                                   
     advance that  we may be  spending money that  would come                                                                   
     out of rates  before we start any activity,  or would it                                                                   
     be a subsequent  event that would occur after  or before                                                                   
     the board  makes the decision  to do a rate  filing that                                                                   
     would include those monies spent in the rate.                                                                              
                                                                                                                                
CHAIRMAN ROKEBERG  told Mr. Storey that  he was going to  offer an                                                              
amendment that says nothing in this  section is to be construed to                                                              
be  contrary to  the  AS  42.05.381 [sub]section  (a)  provisions.                                                              
That might help clean some of that up.                                                                                          
                                                                                                                                
CHAIRMAN  ROKEBERG also  asked Mr.  Storey and  Mr. Babcock  to be                                                              
aware that the committee amended  the subsection (e) definition of                                                              
expansion  activities  to  include both  telephone  [and  electric                                                              
utilities].                                                                                                                     
                                                                                                                                
Number 1574                                                                                                                     
                                                                                                                                
TUCKERMAN BABCOCK,  Manager of  Government and Strategic  Affairs,                                                              
Matanuska Electric  Association, testified by  teleconference from                                                              
the  Mat-Su  (Matanuska-Susitna)  Legislative  Information  Office                                                              
(LIO).  He asked  whether or not - either under  the definition of                                                              
expansion  activity or  political activity  - enterprises  such as                                                              
Chugach  Electric's going  into the Internet  business and  buying                                                              
Internet companies, or Chugach Alaska's  bid submitted to purchase                                                              
Enstar  Natural Gas  last year would  be covered  under having  to                                                              
advise members before committing  several hundred million dollars.                                                              
                                                                                                                                
Number 1620                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG  said he thinks  one could construe this  to say                                                              
that the activities of an electric  cooperative (indisc.), because                                                              
that is  what the  definition says,  but it  is not entirely,  100                                                              
percent  theirs   to  (indisc.).    In  other   words,  enterprise                                                              
activities   outside   the  realm   of  their   typical   electric                                                              
cooperative activity might be looked  upon as something that needs                                                              
to be cleared up to make sure there is no ambiguity.                                                                            
                                                                                                                                
Number 1665                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO  said he would interpret it on  page 2 under                                                              
the  definition  of  expansion  activity.     He  said,  "You  are                                                              
intending  to attract customers  to the  cooperative from  another                                                              
public utility."                                                                                                                
                                                                                                                                
CHAIRMAN ROKEBERG said that was his opinion, too.                                                                               
                                                                                                                                
Number 1696                                                                                                                     
                                                                                                                                
MR.  LOGAN apologized,  saying that  after the  hearing on  Friday                                                              
there  had  been  a  flurry  of  activity  between  Representative                                                              
Green's  office  and the  drafter's  in  trying  to come  up  with                                                              
something that would be acceptable to the committee.  He said:                                                                  
                                                                                                                                
     Somehow a simple phrase was  left out, and it might help                                                                   
     satisfy  Mr. Storey's  [concern].   That is  on page  1,                                                                   
     line 7,  after the words  "advised its members,"  we had                                                                   
     intended to  have the phrase  "in advance".   The intent                                                                   
     was if the  cooperative was not going to go  out and get                                                                   
     permission from  its members because it used  rate money                                                                   
     for these purposes,  that at least the board  would have                                                                   
     to vote on  it, and before that vote, the  members would                                                                   
     know  that there  would be an  issue on  this that  they                                                                   
     could come to the board and make their comments known.                                                                     
                                                                                                                                
     So, I think  if we say, "advised its members  in advance                                                                   
     that a portion of the rates  would be used for expansion                                                                   
     activities"  -- and  then, in  subsection  (4), it  says                                                                   
     that a  majority of the  cooperative board of  directors                                                                   
     has to  vote to do  so.  In  that manner, it  allows the                                                                   
     members of  the cooperative to be properly  noticed that                                                                   
     this  type of  discussion is  going to  take place,  and                                                                   
     they  can go down  to the  local meeting  hall and  make                                                                   
     their feelings on the subject known.                                                                                       
                                                                                                                                
Number 1759                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG  asked, "Wouldn't 'in advance' apply to all of                                                                
them?"                                                                                                                          
                                                                                                                                
MR. LOGAN said it could.  He stated:                                                                                            
                                                                                                                                
     We took  it that  if it advised  its members in  advance                                                                   
     that subsection  (2) would follow, that they  would also                                                                   
     know how much,  and we would expect  that sub[paragraph]                                                                   
     (3) would  be a policy adopted  by the board  that might                                                                   
     not be  included in every  notification, but  we thought                                                                   
     it would be adopted by the board  as an operating policy                                                                   
     of the cooperative,  that everyone would know  that.  If                                                                   
     the board  was considering  a use  of rate moneys,  that                                                                   
     might be controversial to some of the members.                                                                             
                                                                                                                                
CHAIRMAN ROKEBERG asked, "Wouldn't you do that in advance?"                                                                     
                                                                                                                                
MR. LOGAN said yes.                                                                                                             
                                                                                                                                
CHAIRMAN ROKEBERG  asked, "Wouldn't you  have to get  the approval                                                              
of the board in advance to do anything?"                                                                                        
                                                                                                                                
MR. LOGAN replied,  "I would think that, as a  priority, you would                                                              
have to."                                                                                                                       
                                                                                                                                
CHAIRMAN ROKEBERG said,  "So I think that both (c)  and (d), you'd                                                              
have to  have advance approval  on all - (1),  (2), (3) and  (4) -                                                              
would you not?"                                                                                                                 
                                                                                                                                
MR. LOGAN said yes.                                                                                                             
                                                                                                                                
Number 1835                                                                                                                     
                                                                                                                                
MR. BABCOCK said  he appreciates some of the changes  with respect                                                              
to  trying  manage  a  business   enterprise  and  to  figure  out                                                              
reimbursements on the (indisc.) scale.  He stated:                                                                              
                                                                                                                                
     It is  a more  workable method  of advising members  and                                                                   
     giving  them an opportunity  to comment  on any sort  of                                                                   
     expansion activity.  I do appreciate  that.  My question                                                                   
     relates  to  (indisc.).    Last  year  Chugach  Electric                                                                   
     Board,  in executive session,  met to  discuss a bid  of                                                                   
     hundreds of millions dollars in stock.                                                                                     
                                                                                                                                
     I don't see  that this bill would have done  anything to                                                                   
     protect  cooperative members  in that  case from  having                                                                   
     hundreds  of  millions  of their  own  in  their  equity                                                                   
     committed  to expansion in  a non-electric,  cooperative                                                                   
     environment.  I'm not sure whether  or not the intention                                                                   
     of the sponsor was only to allow  the members to comment                                                                   
     when you're  (indisc.) electric  service or whether  you                                                                   
     would also want members to be  able to comment if you're                                                                   
     going  to commit the  resources of  their co-op  towards                                                                   
     some other business purchase.                                                                                              
                                                                                                                                
CHAIRMAN  ROKEBERG wondered  what  the MEA  [Matanuska  Electrical                                                              
Association] would like to see.                                                                                                 
                                                                                                                                
MR.  BABCOCK  replied  that  MEA   would  like  to  see  the  bill                                                              
considered  over the interim.   The  other question that  concerns                                                              
MEA is the definition of "political activity".  He said:                                                                        
                                                                                                                                
     We  understand and  appreciate the  political side,  but                                                                   
     the policy position  is a little troubling to  us on two                                                                   
     counts.       One,    despite    Commissioner    Smith's                                                                   
     recommendation  that  the utilities  not  be allowed  to                                                                   
     make  any  comments on  policy  positions,  ... my  main                                                                   
     observation is  this:  We donate a lot of  money to Boys                                                                   
     and  Girls Clubs and  school sporting  events and  those                                                                   
     sorts of  activities in our  community, in Eagle  River,                                                                   
     in Palmer, Wasilla, and Talkeetna,  and we would like to                                                                   
     be able  to continue  to do  that.   And we're just  not                                                                   
     certain whether  or not those  are prohibited  under the                                                                   
     definition of "political activity".   It does not appear                                                                   
     to be  that they're ... prohibited,  and I just  want to                                                                   
     confirm that interpretation meets with the sponsor.                                                                        
                                                                                                                                
MR. LOGAN specified  that the sponsor's position is  that if it is                                                              
an expenditure approved  by the duly-elected members  of the board                                                              
of directors of  MEA, then it is something they should  be able to                                                              
do.  It  is not the intent  of this legislation to stop  that kind                                                              
of activity.                                                                                                                    
                                                                                                                                
CHAIRMAN  ROKEBERG  commented  that   it  is  a  public  relations                                                              
activity and has nothing to do with political activity.                                                                         
                                                                                                                                
REPRESENTATIVE BRICE  said, "Unless, of course,  it's supporting a                                                              
tee-ball team whose team's name is the anti-IBEW/MEA team."                                                                     
                                                                                                                                
Number 1991                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO referred to  a letter from Mr. Babcock dated                                                              
April  13,  2000  (included  in the  bill  packet),  in  which  he                                                              
defended  the   decision  to  spend  money  to   purchase  Chugach                                                              
Electric.  The letter states that  59 percent of the MEA supported                                                              
the  decision.   Representative  Halcro wondered  if  that was  59                                                              
percent  of  those  who  responded  or 59  percent  of  the  total                                                              
membership base.                                                                                                                
                                                                                                                                
MR.  BABCOCK answered  that it  was 59  percent of  all those  who                                                              
voted in  the election,  not 59  percent of  the total  membership                                                              
base.                                                                                                                           
                                                                                                                                
Number 2037                                                                                                                     
                                                                                                                                
GEORGE KITCHENS,  President, Golden  Valley Electric  Association,                                                              
testified via  teleconference from Fairbanks.   He had  received a                                                              
copy of Version  I of HB 169 just recently and was  not sure if he                                                              
has anything  meaningful to add that  afternoon.  He  indicated he                                                              
was  still  somewhat  concerned  that  the  bill,  even  with  the                                                              
modifications, still targets electric  and telephone cooperatives.                                                              
It does not  impact others who might  try to compete and  does not                                                              
preclude them from  doing expenditures of the  type anticipated in                                                              
the bill to capture market shares in their areas.  He said:                                                                     
                                                                                                                                
     We're  still   getting  back  to  the  form   where  the                                                                   
     cooperatives, in general, represent  the democracies and                                                                   
     that  our  members,  just  like   in  state  government,                                                                   
     represent board members to represent  their interests in                                                                   
     the management of the cooperatives.                                                                                        
                                                                                                                                
Number 2128                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG  made a motion to adopt conceptual  Amendment 2:                                                              
to add ",  in advance" after "members"  on page 1, line  7, and to                                                              
add ",  in advance"  after "cooperative"  on page 2,  line 3.   He                                                              
said the intent is to advise the  members in advance before any of                                                              
these activities can occur.  There  being no objection, conceptual                                                              
Amendment 2 was adopted.                                                                                                        
                                                                                                                                
CHAIRMAN ROKEBERG  made a motion  to adopt conceptual  Amendment 3                                                              
on page 2, lines 19 and 20, as follows:                                                                                         
                                                                                                                                
     (f)   nothing  in  this section  shall  be construed  to                                                                   
     negate AS 15.13.074 or AS 42.050.381(a).                                                                                   
                                                                                                                                
He clarified that AS 42.050.381(a)  is the rate-making power which                                                              
says  that the  rate may  not include  an allowance  for costs  of                                                              
political contributions or public relations.  He added:                                                                         
                                                                                                                                
     My  point here, with  this conceptual  amendment, is  to                                                                   
     say, "Whatever  you do  here with political  activities,                                                                   
     you  can't  overcome  the  rate-making  power  found  in                                                                   
     Chapter 42, which is existing  law, or Chapter 15, which                                                                   
     is for  campaign election law."   Just so we say  we can                                                                   
     do  it here  in this  context.   My  intention with  the                                                                   
     conceptual  amendment   is  to  not  override   existing                                                                   
     statutes in other areas of the law.                                                                                        
                                                                                                                                
REPRESENTATIVE  MURKOWSKI asked  what the  first statute  was that                                                              
was referenced.                                                                                                                 
                                                                                                                                
CHAIRMAN ROKEBERG  explained that the first statute  was AS 15.13.                                                              
He  reiterated that  he  did not  want  to override  the  existing                                                              
statutes.   He asked  if there  was objection  to the adoption  of                                                              
conceptual  Amendment 3.   There  being  no objection,  conceptual                                                              
Amendment 3 was adopted.                                                                                                        
                                                                                                                                
CHAIRMAN ROKEBERG moved conceptual Amendment 4:                                                                                 
                                                                                                                                
     *Sec. 3.  Providing for an immediate effective date.                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked why  an immediate effective date is                                                              
needed.                                                                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG  indicated he had  heard some rumors.   He asked                                                              
Mr. Logan whether he knew the reason.                                                                                           
                                                                                                                                
MR. LOGAN  answered that  in the flurry  of drafts going  back and                                                              
forth, the sponsor had intended to  include an immediate effective                                                              
date in the  bill.  In further  response to Chairman  Rokeberg, he                                                              
said he was not aware of any other reason.                                                                                      
                                                                                                                                
REPRESENTATIVE BRICE wondered what those rumors were.                                                                           
                                                                                                                                
CHAIRMAN ROKEBERG said,  "I don't really know.  I  just heard some                                                              
scuttlebutt."                                                                                                                   
                                                                                                                                
MR. LOGAN indicated  there were no rumors in the  sponsor's office                                                              
that were  being responded to.   The sponsor simply wanted  to get                                                              
consumers protected as soon as possible,  which is the reason that                                                              
he wanted the immediate effective date.                                                                                         
                                                                                                                                
Number 2350                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO  wondered if an effective date  needed to be                                                              
provided for in the title.                                                                                                      
                                                                                                                                
CHAIRMAN  ROKEBERG   answered,  "That's  why  it's   a  conceptual                                                              
amendment."   He asked  if there was  any objection to  conceptual                                                              
Amendment 4.   There  being no objection,  conceptual Amendment  4                                                              
was adopted.                                                                                                                    
                                                                                                                                
MR.  LOGAN   stated  that  all   the  conceptual   amendments  are                                                              
consistent with the sponsor's intent in offering the bill.                                                                      
                                                                                                                                
Number 2393                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO made a motion  to move HB 169, Version I, as                                                              
amended, out of committee with individual  recommendations and the                                                              
attached fiscal  note.   There being  no objection, CSHB  169(L&C)                                                              
moved out of the House Labor and Commerce Standing Committee.                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was recessed to the                                                               
call of the chair at 4:25 p.m.                                                                                                  
                                                                                                                                

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