Legislature(1997 - 1998)

04/06/1998 03:18 PM L&C

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

Document Name Date/Time Subjects