Legislature(1997 - 1998)

03/07/1997 03:24 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                          
                         March 7, 1997                                         
                           3:24 p.m.                                           
 MEMBERS PRESENT                                                               
 Representative Norman Rokeberg, Chairman                                      
 Representative John Cowdery                                                   
 Representative Jerry Sanders                                                  
 Representative Joe Ryan                                                       
 Representative Tom Brice                                                      
 Representative Gene Kubina                                                    
 MEMBERS ABSENT                                                                
 Representative Bill Hudson                                                    
 COMMITTEE CALENDAR                                                            
 * HOUSE BILL NO. 161                                                          
 "An Act relating to deregulation of public utilities furnishing               
 collection and disposal service of waste material."                           
      - HEARD AND HELD                                                         
 (* First public hearing)                                                      
 PREVIOUS ACTION                                                               
 BILL:  HB 161                                                               
 SPONSOR(S): REPRESENTATIVE(S) JAMES, Kohring                                  
 JRN-DATE      JRN-PG               ACTION                                     
 02/25/97       466    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/25/97       466    (H)   LABOR & COMMERCE                                  
 03/06/97       570    (H)   COSPONSOR(S): KOHRING                             
 03/07/97              (H)   L&C AT  3:15 PM CAPITOL 17                        
 WITNESS REGISTER                                                              
 REPRESENTATIVE JEANNETTE JAMES                                                
 Alaska State Legislature                                                      
 Capitol Building, Room 102                                                    
 Telephone:  (907) 465-6822                                                    
 POSITION STATEMENT:  Sponsor of HB 161.                                       
 SAM COTTEN, Chairman                                                          
 Alaska Public Utilities Commission                                            
 1016 West Sixth Avenue                                                        
 Anchorage, Alaska 99501-1963                                                  
 Telephone:  (907) 276-6222                                                    
 POSITION STATEMENT:  Answered questions on HB 161.                            
 ALYCE HANLEY, Commissioner                                                    
 Alaska Public Utilities Commission                                            
 1016 West Sixth Avenue                                                        
 Anchorage, Alaska 99501-1963                                                  
 Telephone:  (907) 276-6222                                                    
 POSITION STATEMENT:  Answered questions on HB 161.                            
 ROBERT LOHR, Executive Director                                               
 Alaska Public Utilities Commission                                            
 1016 West Sixth Avenue                                                        
 Anchorage, Alaska 99501-1963                                                  
 Telephone:  (907) 276-6222                                                    
 POSITION STATEMENT:  Answered questions on HB 161.                            
 LARRY KELLY                                                                   
 Kelly and Associates                                                          
 331 Gold Claim Avenue                                                         
 Fairbanks, Alaska 99712                                                       
 Telephone:  (907) 452-7542                                                    
 POSITION STATEMENT:  Testified on HB 161.                                     
 GLEN THOMPSON                                                                 
 Tongass Sanitation, Incorporated                                              
 P.O. Box 7701                                                                 
 Ketchikan, Alaska 99901                                                       
 Telephone:  (907) 225-5561                                                    
 POSITION STATEMENT:  Testified on HB 161.                                     
 BOB DOYLE, Assistant Superintendent                                           
   of Finance                                                                  
 Mat-Su School District                                                        
 1900 Porcupine Trail                                                          
 Wasilla, Alaska 99687                                                         
 Telephone:  (907) 376-3172                                                    
 POSITION STATEMENT:  Testified in support of HB 161.                          
 PETE KINNEEN, Co-Owner                                                        
 Commercial Recycling Center                                                   
 P.O. Box 870070                                                               
 Wasilla, Alaska 99687                                                         
 Telephone:  (907) 279-3323                                                    
 POSITION STATEMENT:  Testified on HB 161.                                     
 FRED MORINO, Hauler                                                           
 Arrow Refuse                                                                  
 3200 Hospital Drive                                                           
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 586-6255                                                    
 POSITION STATEMENT:  Testified against HB 161.                                
 JOEL GRUNWALDT, Director                                                      
 Department of Solid Waste Services                                            
 Municipality of Anchorage                                                     
 P.O. Box 196650                                                               
 Anchorage, Alaska 99519                                                       
 Telephone:  (907) 343-6262                                                    
 POSITION STATEMENT:  Testified on HB 161.                                     
 MIKE MEATH, President                                                         
 Star Sanitation                                                               
 2090 Van Horn Road                                                            
 Fairbanks, Alaska 99701                                                       
 Telephone:  (907) 452-2009                                                    
 POSITION STATEMENT:  Testified against HB 161.                                
 ACTION NARRATIVE                                                              
 TAPE 97-17, SIDE A                                                            
 Number 001                                                                    
 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce                  
 Standing Committee to order at 3:24 p.m.  Members present at the              
 call to order were Representatives Rokeberg, Cowdery, Sanders,                
 Brice and Ryan.  Representative Kubina arrived at 3:30 p.m.                   
 HB 161 - DEREGULATION OF GARBAGE UTILITIES                                  
 Number 025                                                                    
 CHAIRMAN ROKEBERG announced the committee would address HB 161,               
 "An Act relating to deregulation of public utilities furnishing               
 collection and disposal service of waste material."                           
 Number 057                                                                    
 REPRESENTATIVE JEANNETTE JAMES, sponsor of HB 161, read the                   
 following statement into the record:                                          
 "House Bill 161 deletes the authority of the Alaska Public                    
 Utilities Commission (APUC) to regulate the furnishing of                     
 collection and disposal service of garbage.                                   
 "Alaska appears to be one of the few states that has this type of             
 utility regulated on a partial statewide basis, some cities                   
 currently set their own rates, as Haines does.  Perhaps garbage               
 rates should be under local control if they are to be monopolies at           
 all.  Competition is healthy, and should be encouraged whenever               
 "I have been, as a state representative, involved in two attempts             
 at regulation of garbage monopolies by the APUC, wherein the APUC             
 were and are unable to deal with garbage utilities in a timely                
 manner due to problems such as APUC personnel and commissioner                
 turnover, federal mandates related to telecommunications issues,              
 and other excuses.  Perhaps the APUC simply does not have the time,           
 interest, or money to properly regulate this class of utility.                
 "I offer HB 161 as a point of beginning, an opportunity to                    
 encourage open discussion on this issue, to hopefully provide                 
 solutions to resolve what appears to be an ongoing concern.  The              
 question is, `Should the state or any other governmental agency               
 regulate the furnishing of collection and disposal service of                 
 REPRESENTATIVE JAMES noted she currently isn't asking for any                 
 action on the bill, but would like to wait a couple of weeks after            
 it is determined what the proper way is to go.  She said she                  
 believes it is a very important issue.  She stated she has heard              
 from a lot of the garbage companies and some are in favor of the              
 legislation and some are opposed.  She gave committee members a               
 copy of a position paper from Anchorage Refuse, Incorporated (ARI).           
 Number 261                                                                    
 CHAIRMAN ROKEBERG said the position paper would be included in the            
 committee file.                                                               
 REPRESENTATIVE JAMES noted Walt Wilcox of her staff is present and            
 he is the staff person for the Administrative Regulation Review               
 Committee from which the legislation originated.                              
 REPRESENTATIVE JOHN COWDERY said the municipality of Anchorage is             
 in the garbage business and there isn't much comfort in the fact              
 that since they are in the business themselves, they may not                  
 protect another company's interest.                                           
 Number 380                                                                    
 REPRESENTATIVE JAMES responded that scenario is probably is true.             
 She stated she doesn't believe that it is proper for the                      
 municipality to be in the garbage business.  It should be fully               
 competitive and the municipality shouldn't be calling the shots.              
 REPRESENTATIVE COWDERY said the fact is that they are in the                  
 business.  He said he worked for about five or six years trying to            
 get them out of the business, but didn't have success.                        
 Representative Cowdery explained he has a problem that the                    
 municipalities or the city governments would take over regulations            
 after a given time.                                                           
 Number 440                                                                    
 REPRESENTATIVE JAMES said that would be an option.  The other                 
 option would be for them not to take it over.  It could be totally            
 unregulated and fully competitive.  She said it would be up to the            
 people in the districts as to what they wish to do about that.  It            
 would be a public policy issue.  Representative James said she                
 understands Representative Cowdery's concern.  She believes there             
 are severe problems with the way garbage has been managed over the            
 years.  We have created monopolies and then allowed competition               
 within the monopolies.  Representative James pointed out the APUC             
 has allowed competition, but it is restricted competition.  She               
 said the market ought to drive the system.  Representative James              
 indicated she has received complaints that APUC doesn't respond to            
 questions that have been asked.  She said there is a systemic                 
 problem.  The place where the problem is felt the most is in the              
 garbage service.                                                              
 REPRESENTATIVE COWDERY said most of the complaints are from her               
 district, but there have been complaints from around the state.               
 Number 588                                                                    
 REPRESENTATIVE JOE RYAN questioned what is done in the rural areas            
 where there are small markets and there are monopolies that charge            
 whatever they can bear and then blame in on gypping from Seattle.             
 He asked how this will be addressed.                                          
 REPRESENTATIVE JAMES said it would depend on what caused the                  
 monopoly.  If the monopoly is caused because only one person in a             
 small area has a certificate of convenience from the APUC,                    
 therefore, they're ripping the public off, that's a supply and                
 demand problem.  If it gets too painful for the people, somebody              
 else will come along and compete.  The problem is when they make an           
 application to the APUC, if the APUC thinks it's an area that's not           
 big enough to have two people, then they're not going to accept the           
 threat to come in unless compelling interest has been shown.                  
 REPRESENTATIVE JAMES said the issue was raised by the city of Healy           
 where there are approximately 1,700 people in the entire borough.             
 The problem in Healy was a person had a certificate of convenience            
 for providing the picking up of garbage and he passed away.  At               
 about the same time all the rules and regulations that came down on           
 landfills, the landfill there was managed by the Healy Fire                   
 Department, pretty much on a volunteer basis.  The Healy Fire                 
 Department decided they couldn't manage the landfill anymore                  
 because of the overwhelming amount of responsibility and liability            
 they had by managing a landfill.  The person who had the license is           
 dead and his family isn't following up and following through.  The            
 residents now have to haul their garbage to Nenana, which is about            
 75 miles away.  She questioned who is going to haul the garbage.              
 Representative James explained several people said they would get             
 a truck and haul the garbage, so they all made application to be              
 able to haul garbage.  Those people never received a response from            
 the APUC.  The garbage was piling up and nobody was hauling the               
 garbage.  They finally started hauling it for free because they               
 couldn't charge as they didn't have a certificate of convenience.             
 She said that issue was finally resolved due to her interference.             
 Representative James said she has received complaints from Wasilla,           
 Anchorage, Ketchikan and Fairbanks.                                           
 Number 810                                                                    
 REPRESENTATIVE RYAN explained this same concern echoes a complaint            
 from last year when they tried to deregulate electric utilities.              
 He said Mike Kelly from Golden Valley Electric Association (GVEA)             
 said they didn't want deregulation because the big outfits would              
 come in, skim off the cream and leave the little more nonprofitable           
 utilities with hardly the ability to survive.  That would mean a              
 reduction in service to the rural communities.  They felt it should           
 stay the way it is so there would be adequate service.  They didn't           
 want someone to come in and skim off the cream.  Representative               
 Ryan said there is the same concern with garbage in that a large              
 company that is well funded would come in, take the choice routes             
 and leave the people in peripheral areas, where it's more expensive           
 to haul, on their own or somebody else would have to try and make             
 it a living doing it where it wouldn't be profitable.  He stated he           
 doesn't think government has business in the marketplace.                     
 Number 877                                                                    
 REPRESENTATIVE JAMES said that issue has been brought to her                  
 attention.  She said in the Fairbanks area there was a similar                
 situation that happened under APUC regulations.  It was where                 
 competition was allowed and the competition destroyed some of the             
 players.  She said it has been her experience that the APUC hasn't            
 made a lot of protection for that.  The APUC exists and all those             
 conflicts continue to exist with the APUC.  She said she doesn't              
 see where they're solving that problem.                                       
 Number 946                                                                    
 CHAIRMAN ROKEBERG questioned if the problem is with the APUC having           
 a problem in responding or is it a philosophical issue relating to            
 deregulation and open competition.                                            
 REPRESENTATIVE JAMES informed the committee that her personal                 
 position is that garbage ought to be competitive and that we ought            
 not to be regulating it.  The market forces should drive the                  
 system, but that is not the reason the bill is before the                     
 committee.  The bill is before the committee because of problems              
 with the APUC not responding to the needs around the state.                   
 Representative James explained she received a complaint from                  
 someone in Fairbanks where a decision was made on an application              
 last September and as of today, he hasn't received a response.                
 There was another case where a person hasn't received a response              
 and it has been over a year.  She noted this was something that               
 came through the Administrative Regulation Review Committee, which            
 she chairs, that prompted her to introduce legislation.                       
 Number 1066                                                                   
 CHAIRMAN ROKEBERG asked if that complaint was from Hite                       
 REPRESENTATIVE JAMES answered in the affirmative.                             
 CHAIRMAN ROKEBERG asked Representative James if her testimony is              
 that the APUC has not issued that certificate despite of the fact             
 that it appears that they agreed to issue it.                                 
 REPRESENTATIVE JAMES said the APUC told Mr. Hite that a decision              
 was made and that he had been approved.  There was nothing in                 
 writing.  It was just during a conversation.                                  
 Number 1095                                                                   
 REPRESENTATIVE GENE KUBINA asked if that is still the case.                   
 REPRESENTATIVE JAMES responded, "That is still as of today."                  
 CHAIRMAN ROKEBERG asked Mr. Cotten to give an overview of the                 
 APUC's position regarding waste regulation.                                   
 Number 1174                                                                   
 SAM COTTEN, Chairman, Alaska Public Utilities Commission, testified           
 via teleconference.  He explained that the APUC would be happy to             
 consider a position on the bill, but hasn't done so as of yet.                
 Traditionally, they wait until the legislature asks for a position.           
 They then hold a public meeting and if they can come to an                    
 agreement, they would then inform the legislature of their                    
 REPRESENTATIVE JAMES said she hasn't specifically not requested an            
 opinion from the APUC Board.  She said in speaking to Chairman                
 Cotten, he had indicated they would only do that if she made a                
 written request and she hasn't done that.                                     
 Number 1229                                                                   
 MR. COTTEN informed the committee that the APUC isn't at liberty to           
 discuss the merits of the cases being talked about.  He referred to           
 the Hite Construction application and said a couple of things have            
 happened since the panel considered the case.  Two of the                     
 commissioners that were on the panel are no longer on the                     
 commission.  If a decision had been reached on that, somebody is              
 misunderstanding what has happened.  He said, "It sounded as though           
 someone was told that the commission had agreed to approve the                
 application and told somebody that but we just haven't issued the             
 written order.  Was that somebody's understanding?"                           
 CHAIRMAN ROKEBERG answered in the affirmative.                                
 MR. COTTEN said the APUC staff recommended the approval of the                
 certificate, but the commission didn't take any action for or                 
 against it.  He noted Commissioner Hanley was on that panel.  Mr.             
 Cotten said, "If somebody got the impression that the commission              
 had approved it, but just hasn't written out the order, that was              
 Number 1306                                                                   
 ALYCE HANLEY, Commissioner, Alaska Public Utilities Commission,               
 said there has been no written order and that is unfortunate.  A              
 decision was made, but the written orders did not go out.  There              
 has been no public communication about what that decision was.  She           
 noted she is the only original member left on that panel.  There              
 are two new panel members and they hope to discuss the issue and              
 come to a decision soon.                                                      
 Number 1362                                                                   
 MR. COTTEN added that in addition to the application in Fairbanks,            
 there is also an application in Anchorage for at least two people             
 to compete with the existing service provider.  There is also one             
 on the Kenai Peninsula.  He noted they are not able to talk about             
 the merits of the case while the cases are pending, but they                  
 haven't been swept aside and they are doing the best they can under           
 the circumstances.                                                            
 CHAIRMAN ROKEBERG asked what the time lines are in issuing written            
 MR. COTTEN responded that there are no written requirements for               
 time lines.  There are different response times.  He noted they               
 currently have a backlog and they aren't happy about that.  They              
 are making efforts to improve that.  They have also arranged for              
 additional training for the commissioners and staff so more people            
 can be involved with the drafting and the final writing of the                
 orders which are very technical.  Mr. Cotten said they have asked             
 the legislature for two more paralegals to assist.  There has                 
 already been approval from the Governor's office.  The APUC is also           
 attempting to work with the utility organizations such as the                 
 Alaska Telephone Associations and the Alaska Rural Electric                   
 Association.  Mr. Cotten referred to the question of how long does            
 it take them to write an order and said he doesn't have an answer,            
 but they do it as quickly as they can.  Sometimes it is not that              
 easy to come to a decision.                                                   
 Number 1486                                                                   
 CHAIRMAN ROKEBERG asked if there is a percentage of revenues that             
 the refuse wage companies contribute to the maintenance of the                
 MR. COTTEN said it is between 3 percent and 4 percent of the APUC's           
 CHAIRMAN ROKEBERG questioned how much money that is.                          
 Number 1507                                                                   
 ROBERT LOHR, Executive Director, Alaska Public Utilities                      
 Commission, said the APUC receives approximately $130,000 a year.             
 CHAIRMAN ROKEBERG asked what other states regulate garbage                    
 collection similar to the way Alaska does.                                    
 MR. COTTEN said they had hearings last fall about the application             
 to compete in Anchorage.  The expert witnesses provided by both               
 sides used examples of other communities around the country.  Some            
 resemble Anchorage and some don't.  In Seattle, they cut the city             
 up into different districts and only allow one provider per                   
 district.  Other communities have gone to wide open competition               
 with various degrees of success.  Mr. Cotten noted before he was on           
 the commission, the commission did allow competition.  It seemed              
 like the pattern was that two companies would go head to head.  One           
 would fail and the other would consume the loser and there would be           
 one company again.                                                            
 Number 1589                                                                   
 CHAIRMAN ROKEBERG referred to having a deregulated regime and asked           
 if under existing statutes, would the municipalities have the                 
 ability or right to regulate within their boundaries.  He also                
 asked Mr. Cotten if he has an opinion to the impact of the cost of            
 service to the consumers.                                                     
 MR. COTTEN responded that he thinks that the municipalities will              
 have an interest in it.  He said in Anchorage, the municipality               
 does part of the garbage service and they require the people to               
 take the service.  The authority for that is the protection of the            
 health and safety of the community.  You can't just let the garbage           
 pile up, so the city has taken some responsibility to make sure               
 that doesn't happen.                                                          
 Number 1641                                                                   
 CHAIRMAN ROKEBERG asked what the APUC's statutory responsibilities            
 are regarding waste regulation.                                               
 Number 1667                                                                   
 MR. LOHR explained his understanding is the commission is basically           
 involved in two areas of regulation with respect to refuse.  The              
 commission is required to issue certificates of public convenience            
 and necessity to any regulated public utility that is found by the            
 commission to be fit, willing and able to provide refuse service.             
 That is a determination of basic fitness to operate.  About 43                
 certificated refuse facilities operate in Alaska at the current               
 time.  If the annual operations of those utilities exceed a certain           
 threshold, then those utilities are economically regulated by the             
 commission.  That means the commission is involved as it is for               
 elected telephone utilities in regulation of the rates, services              
 and practices of those utilities, including their tariff                      
 provisions.  Mr. Lohr said to that extent, currently there are 13             
 regulated public refuse utilities in the state.  Those tend to be             
 the larger utilities operating in the more urban areas.  For                  
 example, the commission looks at the rates, services and practices            
 for Anchorage Refuse, Incorporated.                                           
 MR. LOHR said in addition, when a certificate is applied for by a             
 utility, if there is an existing certificate already covering that            
 service area, then the commission is forced to make a decision of             
 whether or not competition among refuse utilities would be in the             
 public's interest.  Those cases tend to be more complex and                   
 controversial ones.  The appropriate market structure is one of the           
 key decisions in those cases and tend to take longer than the                 
 regular plain garden certificate or rate cases.                               
 Number 1773                                                                   
 REPRESENTATIVE COWDERY asked if he is correct in saying that the              
 Municipality of Anchorage regulates and requires the public to                
 utilize their services.                                                       
 MR. COTTEN said it is his understanding that the municipal                    
 ordinance requires the residents in that service district to take             
 the service.                                                                  
 REPRESENTATIVE COWDERY asked if that is the municipality's service            
 or could it be someone in the private sector that provides that               
 same service.                                                                 
 MR. COTTEN responded that the municipality is the only company that           
 provides service in that area and has a certificate.  He noted the            
 APUC doesn't economically regulate the city.  It is up to the                 
 municipality as to whether they want competition in that area.                
 REPRESENTATIVE COWDERY asked if the APUC regulates the rates for              
 the Municipality of Anchorage.                                                
 MR. COTTEN indicated they don't.                                              
 Number 1840                                                                   
 REPRESENTATIVE COWDERY questioned how the municipality's boundaries           
 were established.                                                             
 MS. HANLEY said she thinks the boundaries are a small section of              
 mid-town.  It is apparently the old boundaries of the city where              
 the garbage utility operates.                                                 
 Number 1878                                                                   
 CHAIRMAN ROKEBERG said the APUC doesn't regulate the municipality's           
 refuse service, but they do regulate the Anchorage Refuse Service.            
 MS. HANLEY said that is correct.  She explained municipal utilities           
 are exempt and the APUC doesn't regulate any municipal utilities.             
 CHAIRMAN ROKEBERG asked if the APUC could not certify a competitor            
 for the municipality's boundaries.                                            
 MR. COTTEN explained said they currently have a pending application           
 from somebody who wants to compete there.  He referred to Title 29            
 and said there is a section that talks about the municipality                 
 having the right to buy out any of the competitors the APUC lets in           
 there.  Mr. Cotten said the city allows competition with some of              
 their commercial services.  They contract some of it out and he               
 believes they have more than one person doing some of their work              
 for them.                                                                     
 Number 1941                                                                   
 REPRESENTATIVE RYAN said he serves on a subcommittee that reviewed            
 the APUC's budget a couple of weeks ago.  He said as he remembers,            
 the APUC has about 35 or 40 employees.                                        
 MR. COTTEN said there is a total of 40 employees including the five           
 REPRESENTATIVE RYAN said he has information before him from Mr.               
 William Brunelle of Commercial Refuse, Incorporated.  Mr. Brunelle            
 stated he spent a lot of time and $100,000 just to get a hearing              
 and hasn't received any communication for two years.  There is also           
 a person by the name of Berry Hite from Fairbanks has been waiting            
 for 18 months for a response.  He read from a letter from Mr. Hite            
 that says he is forbidden to talk to the commissioners.  The only             
 contact Mr. Hite can have is with Patricia Clark, the hearing                 
 officer.  It says he has called every week and she can't help him             
 because she isn't allowed to tell him anything.  Representative               
 Ryan said with 40 people, he has difficulty understanding why these           
 things can't be resolved in a more timely manner.  Perhaps there              
 are too many in-house rules that they have to conform with.  He               
 said he can't understand why people should have to wait two years             
 and spend $100,000 to get a hearing.                                          
 MR. COTTEN said he can't argue with Representative Ryan.  He                  
 referred to the Anchorage case and said hearings have been held and           
 the commission has met on the subject.  They are attempting to                
 complete their work.  Mr. Cotten noted he can't discuss the reasons           
 why they are having difficulty, but he is hopeful that it will be             
 resolved soon.  He said they don't think it is acceptable to wait             
 that long and they are taking steps to improve their ability to act           
 more timely.                                                                  
 Number 2127                                                                   
 REPRESENTATIVE KUBINA said, "Wouldn't it seem a lot simpler just in           
 any kind of a place where there is a municipality with a local                
 government, that a local government deals with this totally, and we           
 as a state overall agency stay out of it?  And if there are places            
 that are not to have local government I can understand that -- I              
 guess I'm asking why do we need you involved in the municipality of           
 Anchorage or the municipality of Fairbanks or any of them?"                   
 MR. COTTEN said his personal opinion is he agrees with                        
 Representative Kubina.                                                        
 Number 2108                                                                   
 CHAIRMAN ROKEBERG said he thinks the state has a constitutional               
 mandate to be aware of what happens in terms of sanitation because            
 of our requirement under the constitution regarding the health of             
 Number 2138                                                                   
 LARRY KELLY, Kelly and Associates, testified via teleconference               
 from Fairbanks.  He noted he does management consulting for various           
 companies.  Mr. Kelly explained his concern about deregulation of             
 refuse hauling, etc., stems strictly from a personal perspective in           
 that he doesn't want to see a reduction in the quality of life that           
 would result in a decrease of the regulation and the quality                  
 requirements that are handed down by the APUC.  Mr. Kelly said he             
 would like to see the APUC, whose mission statement is to make                
 decisions and promote competitiveness amongst the players, be done            
 in a more timely manner so that the representatives of the industry           
 would be able to make some decisions as to what to do with                    
 equipment, etc.                                                               
 MR. KELLY said he has never heard of the APUC trying to deregulate            
 telephones and pipelines.  He said he would assure the committee              
 that if you don't get good phone service, it's an inconvenience,              
 but if you don't get your trash hauled, it is the beginning of a              
 major health problem.  Mr. Kelly noted he has lived in Fairbanks              
 most of his life and in 1950 was the last time he saw a rat there.            
 He said there are some things occurring, specifically the complex             
 that Mr. Bartlett has out by the dump.  He said by the decrease in            
 regulation, it creates a tremendous opportunity for rat infestation           
 and other vermin infestation.  Mr. Kelly said he is somewhat                  
 associated with some of the knowledge of players and he believes              
 they require regulation so that there is established criteria.  He            
 noted concern regarding the APUC being able to take things up in a            
 timely manner.                                                                
 Number 2260                                                                   
 REPRESENTATIVE COWDERY referred to the opportunity for rat                    
 infestation and asked if that is a problem of the landfill or a               
 problem with the people who pick the garbage up.                              
 MR. KELLY clarified it is not a problem with the North Star Borough           
 landfill or with the haulers at this time.  He said Mr. Bartlett,             
 who is just across the street from the landfill on private land, is           
 an unregulated entity.  He has been stacking paper, etc, claiming             
 some day that he would recycle it.  On Mr. Bartlett's property                
 there are large quantities of paper, newspaper, etc., stacked up in           
 an uncontrolled manner and it would be perfect for the generation             
 of a rat infestation population.                                              
 Number 2313                                                                   
 GLEN THOMPSON, Tongass Sanitation, Incorporated, testified via                
 teleconference from Ketchikan.  He said there are two points for              
 deregulating and several points against deregulating.  One of the             
 points for deregulating is increased competition may create                   
 efficiency and lower rates in the long term.  The second point is             
 a reduced workload for the APUC may create a potential budget                 
 savings for the state.                                                        
 MR. THOMPSON read from his statement explaining the following                 
 points against deregulating:                                                  
 "Public health may be endangered.  Regulation creates some                    
 guarantee that garbage is collected and disposed of properly.  If             
 public health does become an issue, who will be the new policing              
 agency?  Local police, state troopers or will a new agency be                 
 created to police the scofflaws?                                              
 "Service may suffer, especially residential.  Competitors will                
 target high dollar volume, commercial customers, `the cream,' at              
 the expense of smaller customers.                                             
 "Residential service will not be mandated as a condition of                   
 certification and unprofitable routes may be jeopardized.                     
 "Commercial rates will likely drop due to increased competition               
 while residential rates will increase due to the labor intensive              
 nature of this type of service.  Rates are currently developed                
 based on combining the commercial and residential operations.                 
 "Monopolies are a given to get situation with regards to the refuse           
 industry:  Limited profits, full cost disclosure, regulated                   
 operations, reporting requirements, etc., in return for potentially           
 sole source certificate granted by APUC.  There is clearly a                  
 difference between having an exclusive operating area under income            
 restrictions and a true monopoly with little or no regulation.                
 This is especially true considering that unlike electricity,                  
 telephone, sewer, etc., garbage customers have the choice to                  
 utilize the service or not.                                                   
 "Certificates granted by the APUC may have a marketable value much            
 like IFQs in fishing.  Elimination of this license to operate may             
 constitute an eminent domain taking by the state and create a                 
 financial liability for the state."                                           
 Number 2427                                                                   
 REPRESENTATIVE JAMES said she doesn't think Mr. Thompson has seen             
 the letter from Anchorage Refuse where they suggest a couple of               
 changes to the bill.  She said one change would phase it out so we            
 could deal with whatever the amortization is on the cost of their             
 license so there wouldn't be a taking.  The other issue was to                
 eliminate the repeal of AS 29.35.050 which would ensure that                  
 constitutionally protected property interest of ARI and other                 
 currently certified refuge haulers would be protected from unlawful           
 TAPE 97-17, SIDE B                                                            
 Number 003                                                                    
 BOB DOYLE, Assistant Superintendent of Finance, Mat-Su School                 
 District, testified in support of HB 161 from Wasilla.  He said               
 deregulation of utilities is good in general and free enterprise              
 should be encouraged by any legislature.  Mr. Doyle said he thinks            
 utilities should be allowed to work in a marketplace.  He explained           
 when the Mat-Su Borough was allowed to competitively bid the same             
 people that had a monopoly on the school district have actually               
 dropped their rates by $50,000.  He explained $50,000 for the                 
 school district is a teacher in the classroom.  With adequate                 
 competition in the state, businesses could recoup their investments           
 in a competitive bidding environment and monopolies should be                 
 avoided whenever possible.  Mr. Doyle referred to enforcement of              
 regulations and making sure they (indisc.) standard of life in                
 Alaska is appropriate and said he isn't sure what kind of                     
 enforcement there currently is by APUC.  He said if there are 35              
 employees and they can't get certification back in two years, he              
 isn't sure how many more people there would have to be to enforce             
 the regulations.  He said he would think deregulation would save              
 the state and school districts money.  Mr. Doyle said he hopes the            
 legislature would allow deregulation to continue.                             
 MR. DOYLE explained that Mat-Su has the city of Palmer providing              
 garbage service.  Wasilla Refuse has a monopoly certification in a            
 lot of the areas.  There are also areas of the borough that don't             
 have that monopoly.  He noted there are some places in residential            
 areas where there is some competition.  For the consumers,                    
 competition can save even single family homeowners 40 percent to 50           
 percent of their garbage collection fees.  This isn't just a                  
 district issue, it can save a lot of people money.  Mr. Doyle said,           
 "In the borough, there is some kind of an exemption where the                 
 borough is able to move transfer sites and have folks haul it to              
 the main landfill.  We tried to piggyback on that and we had the              
 borough try and handle our bids so that we could try and operate              
 under that and we were stopped with the lawyers.  I appreciate                
 their diligence, but in this case, they're doing it for billable              
 hours and it's costing everybody, including the taxpayers, and I              
 think deregulation would stop that."                                          
 CHAIRMAN ROKEBERG said the school district is part of the borough             
 and asked why they couldn't piggyback.                                        
 MR. DOYLE said there was a threat of a lawsuit and rather then                
 going out to bid, and having the potential of losing a lawsuit,               
 they backed off and are going back to the APUC to try and get some            
 clarification on the issue.  He said it sounds like it will be                
 several years down the road before they hear back from the APUC.              
 Number 269                                                                    
 REPRESENTATIVE COWDERY asked what the pickup fees are for a four              
 cubic yard container.                                                         
 MR. DOYLE said the district doesn't have that many four yard                  
 dumpsters.  Most of them are 33 yard roll on, roll off.  He said              
 they have actually built their own dumpsters so they don't have to            
 lease them from anyone.  Mr. Doyle noted they have trimmed their              
 administrative overhead down to about 3.45 percent and are self               
 insured in many areas.                                                        
 CHAIRMAN ROKEBERG asked Mr. Doyle when he gets his rate chart if he           
 would send it to Representative Cowdery and the Labor and Commerce            
 Number 339                                                                    
 PETE KINNEEN, Co-Owner, Commercial Recycling Center, testified via            
 teleconference from Wasilla.  He informed the committee that he               
 went to the APUC and they gave him did a computer read out of their           
 stance over the years from 1970 until the present time as to                  
 whether they wished to be regulated or not.  The essence of it is             
 that consistently, they have been since the beginning in favor of             
 being out of this regulatory phase.  The Division of Legislative              
 Audit has done several audits in this regard and they seem to be in           
 favor of deregulation.  He referred to an audit and said the APUC             
 did a survey of 49 states.  He explained 29 out of the 32 states              
 that responded stated to the APUC that they do not regulate this on           
 a statewide basis at all.  Mr. Kinneen said another point that was            
 made is that this in no way affects local government's ability to             
 handle the health, safety and welfare (indisc.) of the citizens.              
 He continued to discuss the audit in further detail and said he               
 would make the documents available to the committee.                          
 MR. KINNEEN explained their commercial recycling center has been in           
 existence for six years and they have done some experiments and are           
 ready to move forward on significant serious recycling.  He said              
 they find themselves stymieing to participate because the providers           
 in Anchorage have been consistently on the record that they have              
 elected not to provide curb side or consumer recycling because                
 (indisc.) particular demand for it from the consumers.  Mr. Kinneen           
 said, "We are therefore restricted by circumstance to commercial              
 which means somebody - the way I detect it they're all (indisc.)              
 and bring it to us.  So you're limited, by definition, to                     
 commercial businesses.  We found that through our own studies that            
 25 to 35 percent of the people in the Anchorage area would in fact            
 subscribe to a limited curb side recycling if it was available at             
 a price not exceeding what they're paying at the moment."  Mr.                
 Kinneen said by deregulating or through some other methodology of             
 allowing providers to come in and offer recycling services, that              
 would be accomplished and there would be more recycling going on.             
 Number 608                                                                    
 REPRESENTATIVE COWDERY asked Mr. Kinneen if his recycling business            
 is profitable.                                                                
 MR. KINNEEN indicated it is very profitable.                                  
 Number 685                                                                    
 FRED MORINO, Hauler, Arrow Refuse, came before the committee to               
 give his testimony.  He explained his business is a hauling                   
 business where they haul refuse for the public and commercial                 
 sector to the local landfill.  He indicated he has distributed                
 information to the committee of some of his thoughts regarding HB
 161.  Mr. Morino said a consideration is the economy of scale in              
 regards to the competitive nature of the service they provide.  The           
 minimum expenditure in his area would be in the neighborhood of               
 $750,000 plus dollars just for the consideration of vehicles.  For            
 a community the size of Juneau, it would be very difficult to say             
 that you could allow anyone to come in and have free competition.             
 He informed the committee that all states have laws on the books              
 regarding the handling of municipal solid waste.  Mr. Morino said,            
 "In many states, it is allowed to be regulated by the municipality            
 or by the city or local government in the way they feel they should           
 under the direction of the state in the laws that they've provided            
 for the handling of municipal solid wastes."  So all of the states            
 are regulated and they do have laws regarding the handling of                 
 municipal solid wastes.                                                       
 MR. MORINO said one of his concerns is the fact that the bill                 
 provides no regulation regarding the handling of municipal solid              
 waste.  The competitive factor is another interesting aspect.  In             
 Juneau, for a capacity of 92 gallons per week they charge $22.38.             
 The city of Seattle charges $33.00 plus dollars for the same                  
 service.  The city of Portland charges in excess of $22.00 for a 60           
 gallon capacity.  All of those communities have competition.  The             
 city of Portland started out in 1989 or 1990, with 120 providers.             
 Today, they are down to less than 50 providers.  Mr. Morino said,             
 "What's happening in America is there are a few large companies who           
 have gone out and acquired and have become very large as a                    
 government agency or a large bureaucratic private company and are             
 not as efficient.  And some of this now is turning again so that              
 the larger companies are showing less profitability although they             
 are still acquiring more of the market share which has been                   
 exemplified by some of the larger banks, some of the business, as             
 well as in the refuse industry."  Mr. Morino said it might be easy            
 in some of the areas in Alaska to say, "We have a large enough                
 population that we can handle this adequately."  He said he isn't             
 sure that many of the smaller communities like Juneau would have              
 the expertise or the financial ability to say, "Handle it as well             
 as the APUC may be handling it for us today."                                 
 MR. MORINO said a consideration needs to be given to those areas              
 where there aren't regulations in place regarding the handling of             
 municipal solid waste.  He said he thinks that is one of the                  
 services that APUC does provide.  Mr. Morino stated he hasn't run             
 into any obstacles in dealing with the APUC.  He said he doesn't              
 have anything to say against them.  It seems that the system works            
 well in most communities.  If there is a perception that a                    
 regulator, for example the APUC, has a problem or it is perceived             
 that they have a problem, then maybe that should be addressed.  Mr.           
 Morino said he doesn't think that the industry is doing a poor job            
 in the state of Alaska.                                                       
 Number 911                                                                    
 CHAIRMAN ROKEBERG asked Mr. Morino if he has a monopoly in Juneau.            
 MR. MORINO said he doesn't believe he has a monopoly.  He noted he            
 is the only certificated hauler.  The citizens of Juneau have an              
 opportunity to go directly to the landfill, which he has no                   
 financial interest in.  People in Juneau have a choice regarding              
 hauling refuse where they don't have a choice with water, sewer,              
 telephones or electricity.                                                    
 CHAIRMAN ROKEBERG referred to utility services and pointed out that           
 a person could have his own septic tank, water well, satellite dish           
 for communications, generate electric power with a generator and              
 then take his trash to the landfill.  Unless a person threw his               
 trash over the bank, they would need some type of regulated                   
 MR. MORINO said he would need a regulated landfill.  He pointed out           
 the landfills will be the basis for the our municipal solid waste             
 at least for the next 100 years until the technological advances              
 change and make other options available.  He said someone could               
 reproduce some of the utility functions that are available to them            
 now.  Mr. Morino said he believes that self hauling would be more             
 expensive than the service his company provides.                              
 CHAIRMAN ROKEBERG said Seattle has a $33 rate, but don't they have            
 a recycling factor.                                                           
 MR. MORINO said there is a fee for recycling in Seattle.  He said             
 he is talking about providing a similar service.  So a 92 gallon              
 service in the city of Seattle, irrespective of recycling, would              
 cost 33 plus dollars a month, where in Juneau it is $22.38.                   
 Number 1053                                                                   
 REPRESENTATIVE COWDERY asked Mr. Morino if they handle the large              
 dumpsters of four or five cubic yards.                                        
 MR. MORINO explained the largest they provide is a three yard                 
 container.  He noted they do have up to 40 yard containers as well            
 as compactors.                                                                
 REPRESENTATIVE COWDERY asked Mr. Morino if his business services              
 all of Juneau.                                                                
 MR. MORINO indicated they do.  He said they go 30 miles out the               
 road.  He noted he has five packer and two roll off trucks.                   
 REPRESENTATIVE COWDERY asked what the average cost of a packer                
 truck is.                                                                     
 MR. MORINO responded that the minimum expense for a packer is                 
 150,000 plus dollars.                                                         
 Number 1114                                                                   
 CHAIRMAN ROKEBERG asked if there isn't a provision in statute or              
 regulation that provides for "gypo operators" to give limited                 
 MR. MORINO said, "Again, legally I don't know what the aspects of             
 that are.  I think probably APUC could identify that much clearer.            
 There may be somebody here.  I believe it's four commercial                   
 customers under it's either nine or ten that someone can provide              
 that service today."                                                          
 CHAIRMAN ROKEBERG said an uncertified, unregulated trash hauler               
 could service a limited number of sites.                                      
 MR. MORINO said he believes that is true.                                     
 Number 1168                                                                   
 JOEL GRUNWALDT, Director, Department of Solid Waste Services,                 
 Municipality of Anchorage, testified via teleconference from                  
 Anchorage.  He informed the committee that within the Municipality            
 of Anchorage there are four certificated refuse haulers.  Each of             
 them have specific areas.  Peninsula Sanitation services Potter to            
 Portage.  Anchorage Refuse, Incorporated, services the Anchorage              
 bowl, excluding what is referred to as the city service area.  He             
 noted the city service area was the city of Anchorage at the time             
 of unification in 1975.  Eagle River Refuse is also a certificated            
 carrier serving the area north of the military bases up to Eklutna.           
 Mr. Grunwaldt said the Department of Solid Waste Services provides            
 mandatory refuse collection and (indisc.) within the city services            
 area.  They are a APUC certificated carrier, however, they aren't             
 economically regulated.  The remaining private haulers are                    
 economically regulated by the APUC.  Mr. Grunwaldt informed the               
 committee that Fort Richardson and Elmendorf Air Force Base                   
 provides their own service.  Elmendorf Air Force Base provides                
 their service by contract and Fort Richardson is by civil service             
 employees.  He said he doesn't have direct testimony with respect             
 to either endorsing or opposing HB 161.  He noted they just                   
 recently became aware of the legislation.                                     
 Number 1288                                                                   
 REPRESENTATIVE RYAN questioned how the municipality would be                  
 affected if the law were to change so that they could no longer               
 provide garbage services.                                                     
 MR. GRUNWALDT said he doesn't see HB 161 affecting the                        
 municipality's ability to provide service.  The municipality                  
 provides a service via AS 29.35.050, where the municipality may               
 regulate it within its area.  He said he has a legal question which           
 has to do with the municipal charter.  The charter limits the                 
 expansion of authority for powers that didn't exist upon                      
 unification unless there is a vote of the people.  He said Title 29           
 gives the municipality the power to do it, but is there a                     
 constraint for the municipality to regulate refuse carriers outside           
 the city service area should HB 161 pass.                                     
 Number 1377                                                                   
 REPRESENTATIVE COWDERY asked Mr. Grunwaldt if the municipality has            
 to have the approval of the APUC to change the rates for garbage              
 MR. GRUNWALDT said they do not need approval.  He explained that              
 prior to 1981, municipal refuse carriers were not regulated by the            
 APUC.  Only the private haulers were regulated.  That exemption               
 changed in 1981, and at the point in time, the municipality                   
 submitted an application for a certificate as was required under              
 the new statute.  At the same time, they requested an exemption               
 from economic regulation because Title 42 did provide for that                
 exemption.  The municipality of Anchorage was granted the                     
 exemption.  He said his assumption is that it is based primarily on           
 the municipality's ability to regulate it by ordinance and the                
 historical regulation was in place prior to the state saying, "You            
 have to have a certificate."                                                  
 REPRESENTATIVE COWDERY asked how they established their rates.                
 Number 1454                                                                   
 MR. GRUNWALDT explained their rates are established on a revenue              
 requirements analysis that is done annually.  Their last rates were           
 approved in 1990.  They are done by the adoption of an ordinance,             
 which is subject to a public hearing by the Anchorage Assembly.  He           
 explained that from an economic standpoint, they would continue to            
 do a rate setting basis based on revenue requirements.  He said               
 there would not be a impact on other utilities relating to                    
 municipal refuse collection utility rates.  Refuse collection is a            
 "stand alone utility," and they service private businesses provide            
 that are operating within the municipality wouldn't impact the                
 municipality's rate.                                                          
 REPRESENTATIVE COWDERY asked if the municipality's rates are                  
 comparable with the entities.                                                 
 MR. GRUNWALDT said to best of his knowledge, they are the lowest in           
 the state.                                                                    
 Number 1557                                                                   
 REPRESENTATIVE JAMES said with deregulation of the garbage                    
 business, that would mean that there wouldn't be the requirement of           
 having a certificate from the APUC.  She asked what the result                
 would be if there wasn't the requirement of obtaining a certificate           
 from the APUC.                                                                
 MR. GRUNWALDT indicated there wouldn't be an impact.  He noted the            
 certificate they currently hold would be of no value.                         
 REPRESENTATIVE JAMES asked if there is currently a value to the               
 MR. GRUNWALDT said considering that it is owned by the government,            
 probably not.                                                                 
 Number 1607                                                                   
 CHAIRMAN ROKEBERG said if another company wanted to come in and buy           
 the municipality's certificate and service area, wouldn't it then             
 have value.                                                                   
 MR. GRUNWALDT said from that standpoint it would.  He noted that              
 the municipal code would have to change.                                      
 CHAIRMAN ROKEBERG asked if a vote of 6 percent of the voters in               
 Anchorage would all the utility to be sold.                                   
 MR. GRUNWALDT said it would allow the utility to be sold and it has           
 a value in that sense.                                                        
 Number 1649                                                                   
 CHAIRMAN ROKEBERG asked Representative James if the bill were to              
 pass as written, would the municipality still be able to regulate             
 its own refuse within its own boundaries.                                     
 REPRESENTATIVE JAMES responded that existing language says, "The              
 assembly acting may regulate, fix, establish and change the rates             
 and charges imposed."  She said that doesn't change.                          
 MR. GRUNWALDT said, "As long you don't change 29.35.050, paragraph            
 (A) you aren't removing authorities that the municipalities in the            
 state can -- you aren't taking anything away from the                         
 REPRESENTATIVE JAMES indicated the bill isn't intended to do that;            
 however, there is an elimination of the 29.35.050 (B).  It was                
 suggested by a witness that that repeal be eliminated.                        
 Number 1755                                                                   
 CHAIRMAN ROKEBERG asked if the municipality would be willing to               
 open their boundaries to competition if it was mandated under state           
 MR. GRUNWALDT said it would be a policy decision that would have to           
 be established by the Administration and the Assembly.  He said his           
 opinion is that as you open competition, in some cases you will see           
 the reduction of rates.  In some cases, it may be a short-term                
 reduction of rates.  Over time, it can possibly go up.  He noted              
 they would have to consider where the competition would be allowed.           
 There would be very little, if any, in a residential collection               
 area.  There would be more competition in the commercial collection           
 area because that is the more profitable aspect of the business.              
 Number 1849                                                                   
 CHAIRMAN ROKEBERG asked Mr. Grunwaldt if the municipality presently           
 allows a company like Anchorage Refuse to come into their service             
 area with extremely large containers.                                         
 MR. GRUNWALDT indicated they allow the collectors to collect the              
 roll-off units in the city service area.  It is because the years             
 ago the utility didn't have the equipment and made the decision not           
 to enter that phase of the business.  He noted that is by code.               
 Number 1884                                                                   
 REPRESENTATIVE COWDERY questioned what the municipality's rates               
 MR. GRUNWALDT responded that their rates are currently $15 per                
 month, per household, for curbside service once a week.  He                   
 referred to the commercial rate and said it depends on the                    
 frequency and the container size.  He referred to a three yard                
 container, serviced once a week, and said the monthly rate is                 
 $50.50.  There is an additional charge if the customer rents the              
 container from the municipality before he owns it.  If he owns his            
 own container, then there is no additional charge.  He noted a                
 container rents for $9.50 per month.                                          
 Number 1968                                                                   
 REPRESENTATIVE RYAN asked how the tipping fees are established and            
 how they relate to the rates.                                                 
 MR. GRUNWALDT explained in Anchorage, there are two separate                  
 utilities.  The rates are established by a revenue requirement                
 analysis.  He noted the last one they did was in 1986, projecting             
 the opening of the new Anchorage regional landfill and central                
 transfer station.  At that time, the rates were set both for                  
 implementation over a three year period.  One rate was in 1987,               
 another in 1988 and one in 1989.  He noted they have not moved off            
 the 1989 rate of $45.00 per ton.                                              
 Number 2031                                                                   
 REPRESENTATIVE JAMES asked if anything has happened in Anchorage              
 where a small operator came in took the amount of pick up sites               
 that they could do under existing law without having to go through            
 MR. GRUNWALDT informed the committee members they have exempted               
 approximately 70 of the large commercial, retail and wholesale type           
 businesses that require use of the roll off units.  They are                  
 serviced by three different haulers.                                          
 REPRESENTATIVE JAMES asked if Carrs is one customer or many                   
 MR. GRUNWALDT informed Representative James that Carrs is many                
 customers.  He noted the APUC defines customers as the location of            
 a pick up service.                                                            
 Number 2106                                                                   
 REPRESENTATIVE RYAN asked if there is an average weight per yard of           
 MR. GRUNWALDT said you could arrive at a number, but there will be            
 a significant variation from one type of customer to another type             
 of customer.  It all depends on the type of business.  For example,           
 wet food waste out of a restaurant can be significantly heavier per           
 cubic yard than mixed office paper coming out of a typical office.            
 Mr. Grunwaldt referred to an average three yard dumpster that is              
 serviced once a week and said the monthly weight is about 1,000 per           
 month.  Therefore, the weekly waste in a three yard container would           
 be roughly 250 pounds.  He noted that curb side waste collected per           
 week, per home, is about 230 pounds.                                          
 Number 2218                                                                   
 REPRESENTATIVE KUBINA said he isn't in favor of opening everything            
 to complete deregulation.  He asked if the Municipality of                    
 Anchorage could, themselves, handle all of the APUC's decisions               
 within their borough boundaries without having the APUC make those            
 decisions.  He asked if the municipality, borough and the city of             
 Anchorage couldn't make all those decisions themselves instead of             
 having a state body do it.                                                    
 MR. GRUNWALDT said there is a cost to regulating refuse collectors.           
 The question is, "How much does that cost and how would the                   
 municipality recover those costs if it in fact decided to provide             
 oversight or regulatory authority over (indisc.)?"  He said that is           
 Number 2307                                                                   
 CHAIRMAN ROKEBERG asked if the municipality of Anchorage pays any             
 percentage to the APUC for regulation.                                        
 MR. GRUNWALDT explained they presently do not pay because they are            
 economically exempt.                                                          
 Number 2352                                                                   
 MIKE MEATH, President of Star Sanitation in Fairbanks, came before            
 the committee to give his testimony.  He said he believes a lot of            
 the points he was going to discuss have already been addressed,               
 particularly in Mr. Morino's testimony.  Mr. Meath discussed the              
 history of the competition that has happened in Fairbanks.  He said           
 it has been tried twice over the last decade.  The first time there           
 was no economic regulation it resulted in both companies                      
 experiencing losses to the point where one finally bought the other           
 out returning the area to a monopoly status.  The second time his             
 company was involved.  He said the competition became so intense              
 that the competitors were forced to provide services below cost               
 which resulted in huge losses for both companies.  Mr. Meath noted            
 he has given committee members an APUC staff report that speaks to            
 that competition and what the financial situation of the two                  
 companies involved were.  Both companies were both placed in                  
 jeopardy of failing to the point where there wouldn't be a refuse             
 provider for Fairbanks which would lead to health and safety                  
 TAPE 97-18, SIDE A                                                            
 Number 001                                                                    
 MR. MEATH continued, "...want multiple trucks with different                  
 companies going down the same roads, unsafe, that haven't been                
 maintenanced, haven't been serviced, it becomes a serious safety              
 issue."  Mr. Meath explained their competitor, Far North, who was             
 Star Sanitation's competitor, sold out to them.  Star North is                
 currently the sole provider in a part of the Fairbanks area.  He              
 noted there is competition in another part of the Fairbanks area              
 which filed for bankruptcy within the last year.                              
 MR. MEATH explained reliable refuse collection is absolutely                  
 critical to public health, safety and the environment.  A gap of a            
 few days in which refuse isn't picked up could become a very                  
 serious problem.  Mr. Meath said those are some of the things that            
 could happen if there are multiple competitors.  There will be                
 people out there with pick up trucks collecting trash.  He said he            
 isn't convinced that a local government will do a better job than             
 the APUC.  Mr. Meath said the issues of his company have been                 
 resolved before APUC in a fairly timely manner.  He said he thinks            
 we are jumping way too fast if the APUC were to be completely                 
 MR. MEATH referred to there being unfairness to existing                      
 certificate holders and said his company has proven their viability           
 and experience to APUC's satisfaction.  He said they have an                  
 obligation to service each and every customer in their certificated           
 areas and cannot deny service; therefore, they have had to buy the            
 equipment necessary to service all those customers thinking they              
 had some protection from the APUC.  Mr. Meath informed the                    
 committee his company has bought about seven trucks at a cost of              
 $140,000 to $150,000.  He said, "Now we're going to deregulate it             
 and let someone come in, buy one truck, ten containers and go out             
 and cream skin the market, and here we are with this mass amount of           
 equipment."  He noted there isn't much of a market for used garbage           
 equipment.  He questioned how the equipment will be paid for.  Mr.            
 Meath urged the committee to table HB 161 and look at other                   
 Number 331                                                                    
 REPRESENTATIVE COWDERY asked Mr. Meath how many employees are                 
 employed by his business.  He also asked what their hauling                   
 boundaries are.                                                               
 MR. MEATH said there are about 15 employees including himself.                
 They service the whole Fairbanks North Star area except North Pole.           
 He noted he goes as far as Chena Hot Springs, up past Fort Knox               
 gold mine out to Skinny Dick's on the Parks highway and as far                
 south as the Tanana River.                                                    
 REPRESENTATIVE COWDERY asked what their residential and commercial            
 rates are.                                                                    
 MR. MEATH said their commercial rate for three cubic yards is                 
 $43.00 or $47.00 per ton.  The tipping fee is $1.85 per yard.  That           
 is multiplied by the size of the container times an average of 4.35           
 picks per month.  He said that is a straight pass through.  They              
 are not allowed to make money on the tipping fees.  He noted the              
 weight is approximately 89 pounds to 92 pounds per yard.                      
 Number 493                                                                    
 REPRESENTATIVE COWDERY asked if the summer and winter rates are the           
 MR. MEATH indicated they are the same.                                        
 REPRESENTATIVE COWDERY asked what the residential rates are.                  
 MR. MEATH responded residential rates are $12.12 for a three can              
 pick up once a week.  He said if there is pack out service where              
 they walk into a driveway and pack out the cans, there could be an            
 additional $10.00 charge.  Mr. Meath noted customers have an option           
 of renting a container from them.                                             
 REPRESENTATIVE COWDERY asked Mr. Meath how many trucks he has.                
 MR. MEATH responded they have five to six trucks that leave the               
 plant every day.  There are back up trucks in case one breaks down.           
 In the summer, there are eight to ten trucks that leave the plant             
 every day.  There is that much fluctuation from summer to winter.             
 Number 589                                                                    
 REPRESENTATIVE COWDERY asked if they service their own trucks.                
 MR. MEATH explained they have an approximately 30,000 square foot             
 shop where they manufacture containers and do truck repair and                
 REPRESENTATIVE COWDERY asked if their overhead is higher than what            
 it is in Juneau.                                                              
 MR. MEATH responded that it is significantly higher.                          
 Number 680                                                                    
 REPRESENTATIVE RYAN asked if the city of Fairbanks is indulging in            
 hauling trash.                                                                
 MR. MEATH informed the committee the city of Fairbanks, Public                
 Works Department, does the residential service for households                 
 within the city limits of Fairbanks.                                          
 REPRESENTATIVE RYAN said if the section that allowed municipalities           
 to engage in this trade were repealed and the city of Fairbanks had           
 to allow others come in, would that detriment his business.  He               
 said he believes they charge about $12 to $14 per month.                      
 MR. MEATH said they have what he would call a fairly cheap rate.              
 He noted the residents are allowed unlimited bags.  During spring             
 clean up, a resident may have 35 bags.  They have to pick it up.              
 He said he thinks the residents of Fairbanks are receiving a good             
 deal.  He said if his company was able to do that work within the             
 city limits, they would analyze it.  At this point, he couldn't say           
 they would.                                                                   
 Number 864                                                                    
 REPRESENTATIVE KUBINA asked if there is a section in the bill that            
 would require the city to get out of the business.                            
 REPRESENTATIVE JAMES said that is not part of the bill.                       
 REPRESENTATIVE KUBINA explained in Valdez, the garbage rate is paid           
 through the mill rate of their homes, which is also tax deductible.           
 Number 919                                                                    
 CHAIRMAN ROKEBERG referred to the case U94-19 and questioned what             
 case that was.                                                                
 MR. MEATH said that is the staff report that talked about                     
 competition when his business was competing with Far North                    
 Sanitation.  He noted the APUC didn't take action on that because             
 his company purchased Far North Sanitation a short time after the             
 staff report was issued.                                                      
 CHAIRMAN ROKEBERG asked what the time frame was for the APUC to               
 issue the staff report from the time they held the hearing.                   
 MR. MEATH explained he believes the report was a result of their              
 annual reports being filed.  The APUC looked at the financial                 
 conditions of the companies and they got nervous that the financial           
 status of both companies were in jeopardy.                                    
 Number 998                                                                    
 CHAIRMAN ROKEBERG said he would allow members of the APUC a chance            
 to make comments about the testimony that has been given.                     
 Number 1018                                                                   
 MS. HANLEY said Representative James talked about the problem in              
 Healy with landfills.  She said it is important to realize that the           
 APUC doesn't regulate landfills.  The APUC addressed the problem in           
 Healy with the only certificated hauler there.  The commission, a             
 couple of years ago, traveled to Healy and had a public input                 
 hearing.  While they were there, they made a ruling granting                  
 temporary certificates to the two companies who were trying to                
 address the needs of the people in that area.  Ms. Hanley said they           
 were charging nine customers and then were hauling for the rest of            
 the people for free because the certificated hauler was having some           
 problems and wasn't picking up the trash.                                     
 MS. HANLEY indicated the APUC hasn't received a filing from the               
 Mat-Su School District.  She noted the APUC isn't familiar with the           
 filing or the situation Mr. Doyle described.                                  
 Number 1098                                                                   
 MS. HANLEY referred to the Fairbanks area and said the APUC                   
 recently had a certificate transfer from Drake Sanitation to Mr.              
 Hite.  Mr. Hite now has the North Pole refuse hauling business.               
 Ms. Hanley explained that the decisions involving certificates that           
 may change the amount of competition or the market structure are              
 more complicated than controversial.  They do take longer than the            
 regular rate setting cases or a simple transfer of a certificate.             
 REPRESENTATIVE JAMES said she was curious how many little                     
 complaints that the APUC gets.  She asked if things are routinely             
 handled or if they handled in a timely fashion.                               
 MS. HANLEY said as Chairman Cotten indicated, they haven't                    
 addressed a few things in a timely fashion.  She explained                    
 sometimes other utilities take priority because public safety has             
 been involved in issuing new certificates.  She said the commission           
 hasn't responded in a timely fashion they would like to and are               
 working to change that.  Ms. Hanley said they occassionally receive           
 requests for clarification, particularly from Mat-Su.  With the               
 competitive environment there, there is a very complex situation              
 about who can serve duplexes, triplexes, businesses, etc.                     
 Number 1261                                                                   
 REPRESENTATIVE JAMES said as she understands the procedure, an                
 application for a certificate of convenience needs to accompanied             
 by information that would indicate the area that a company wants to           
 serve and their financial and physical abilities to serve the area.           
 A certificate of convenience does not, at that point in time,                 
 regulate the charges.  She asked if that is a second process after            
 a company receives a certificate of convenience or is it all done             
 MS. HANLEY responded that not everyone who has a certificate is               
 required to be economically regulated.  The statute says that they            
 do not economically regulate any garbage utility whose annual                 
 revenues are under $300,000.  Those companies do have a                       
 certificate, but aren't economically regulated by the commission.             
 Number 1331                                                                   
 REPRESENTATIVE JAMES referred to companies that do have                       
 certificates and asked what would be the process if they were not             
 maintaining health and safety issues in a proper way.  She asked if           
 it would take a complaint from the public to the APUC against the             
 company's certificate.                                                        
 MS. HANLEY said if there was a public complaint that a trash hauler           
 who has a certificate wasn't meeting their obligations, the APUC              
 would become involved.                                                        
 REPRESENTATIVE JAMES pointed out that there was a long delay in the           
 Healy process.                                                                
 MS. HANLEY said she believes the delay Representative James was               
 referring to was the issuing of the permanent certificates.  She              
 said once they issued temporary certificates so the companies could           
 operate and the public needs were being met, the issuing of the               
 permanent certificates went to the bottom of the APUC's orders that           
 needed to go out.                                                             
 REPRESENTATIVE JAMES said she remembers there being a long time               
 frame before the hearing was held for the temporary certificates.             
 Number 1470                                                                   
 CHAIRMAN ROKEBERG thanked everybody for their testimony.  He asked            
 Mr. Cotten if he would forward results of surveys done by the APUC            
 on this issue to the committee.                                               
 CHAIRMAN ROKEBERG thanked Representative James for bringing the               
 issue forward.  He said he would appoint a subcommittee on HB 161.            
 Representative Sanders was appointed as the chairman of the                   
 subcommittee and Representatives Brice and Hudson were appointed as           
 Number 1621                                                                   
 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Committee            
 meeting at 5:20 p.m.                                                          

Document Name Date/Time Subjects