Legislature(2003 - 2004)
03/19/2003 03:16 PM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 19, 2003
3:16 p.m.
MEMBERS PRESENT
Representative Tom Anderson, Chair
Representative Bob Lynn, Vice Chair
Representative Nancy Dahlstrom
Representative Norman Rokeberg
Representative David Guttenberg
MEMBERS ABSENT
Representative Carl Gatto
Representative Harry Crawford
COMMITTEE CALENDAR
HOUSE BILL NO. 111
"An Act extending the termination date of the Regulatory
Commission of Alaska; and providing for an effective date."
- HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE
HOUSE BILL NO. 119
"An Act permitting grants to certain regulated public utilities
for water quality enhancement projects and water supply and
wastewater systems."
- MOVED CSHB 119(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 120
"An Act excluding service contracts from regulation as
insurance; and providing for an effective date."
- MOVED CSHB 120(L&C) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 111
SHORT TITLE:EXTEND REGULATORY COMMISSION OF ALASKA
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
02/19/03 0250 (H) READ THE FIRST TIME -
REFERRALS
02/19/03 0250 (H) L&C, FIN
02/19/03 0250 (H) FN1: (CED)
02/19/03 0250 (H) GOVERNOR'S TRANSMITTAL LETTER
02/19/03 0250 (H) REFERRED TO LABOR & COMMERCE
03/10/03 (H) L&C AT 3:15 PM CAPITOL 17
03/10/03 (H) Heard & Held
MINUTE(L&C)
03/17/03 (H) L&C AT 3:15 PM CAPITOL 17
03/17/03 (H) <Bill Hearing Postponed to
3/19>
03/19/03 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 119
SHORT TITLE:WATER/SEWER/WASTE GRANTS TO UTILITIES
SPONSOR(S): REPRESENTATIVE(S)COGHILL
Jrn-Date Jrn-Page Action
02/24/03 0286 (H) READ THE FIRST TIME -
REFERRALS
02/24/03 0286 (H) L&C, FIN
02/24/03 0286 (H) REFERRED TO LABOR & COMMERCE
03/19/03 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 120
SHORT TITLE:SERVICE CONTRACT SALES ARE NOT INSURANCE
SPONSOR(S): REPRESENTATIVE(S)COGHILL
Jrn-Date Jrn-Page Action
02/24/03 0286 (H) READ THE FIRST TIME -
REFERRALS
02/24/03 0286 (H) L&C
03/05/03 (H) L&C AT 3:15 PM CAPITOL 17
03/05/03 (H) Heard & Held
MINUTE(L&C)
03/12/03 (H) L&C AT 4:00 PM CAPITOL 17
03/12/03 (H) Heard & Held
MINUTE(L&C)
03/19/03 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
DAVE HARBOUR, Chair
Regulatory Commission of Alaska (RCA)
Anchorage, Alaska
POSITION STATEMENT: Spoke about his new position as chair of
the RCA during the HB 111 hearing and answered questions on HB
119.
REPRESENTATIVE JOHN COGHILL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As the sponsor, testified on HB 119 and HB
120.
DAVID LEONE, Special Assistant
Mayor's Office
Fairbanks North Star Borough
Fairbanks, Alaska
POSITION STATEMENT: Spoke in support of HB 119, explaining how
service areas in a second-class borough turn to private
utilities for help in operating wastewater services.
KARA MORIARITY, President and CEO
Greater Fairbanks Chamber of Commerce
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 119 and
encouraged broadening it beyond water and waste water utilities
to all privately-owned utilities.
ANDY WARWICK, Chairman of the Board
Fairbanks Sewer and Water
Fairbanks, Alaska
POSITION STATEMENT: Supported HB 119, explaining that the
utility's ratepayers benefit from the company's access to state
grants.
JIM STRANDBERG, Commissioner
Regulatory Commission of Alaska (RCA)
Anchorage, Alaska
POSITION STATEMENT: Lauded HB 119's concept of giving more
utilities access to grant money to build infrastructure but
cautioned against pressuring the RCA to regulate small
utilities.
DAN EASTON, Director
Facility Construction and Operation
Department of Environmental Conservation (DEC)
Juneau, Alaska
POSITION STATEMENT: During the hearing on HB 119, answered
questions about DEC's method of classifying small water systems.
RYNNIEVA MOSS, Staff
to Representative John Coghill
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions on HB 120.
ACTION NARRATIVE
TAPE 03-23, SIDE A
Number 0001
CHAIR TOM ANDERSON called the House Labor and Commerce Standing
Committee meeting to order at 3:16 p.m. Representatives
Anderson, Lynn, Dahlstrom, and Guttenberg were present at the
call to order. Representative Rokeberg arrived as the meeting
was in progress.
HB 111-EXTEND REGULATORY COMMISSION OF ALASKA
CHAIR ANDERSON announced that the first order of business would
be HOUSE BILL NO. 111, "An Act extending the termination date of
the Regulatory Commission of Alaska; and providing for an
effective date."
CHAIRMAN ANDERSON informed the committee that he was assigning
HB 111 to a subcommittee consisting of himself and
Representatives Dahlstrom and Guttenberg. He announced that the
subcommittee would meet next Thursday, March 27, 2003. He
requested that interested parties provide a one-page position
statement identifying their suggested changes.
Number 0152
DAVE HARBOUR, Chair, Regulatory Commission of Alaska (RCA),
thanked the committee for its role in the confirmation process.
He discussed the circumstances under which he took the position
as chair of the RCA. He commented on the RCA's dedicated staff
of specialists. Mr. Harbour related that he feels a special
sense of mission from the legislature and governor because one
appointed him and the other confirmed him. He pointed out that
after some 2,000 orders since the RCA was created in 1999, only
about 15 major appeals have occurred. Virtually all of those
appeals have been sustained by the court system, with the
exception of one which was turned back for a procedural reason.
Mr. Harbour emphasized the importance of RCA's communication
with the legislature, the administration, as well as the
regulated community. He encouraged dialogue about improving the
processes effecting the public interest and maximizing the RCA's
efficiencies.
CHAIR ANDERSON reiterated that HB 111 will be held and heard in
subcommittee next week.
HB 119-WATER/SEWER/WASTE GRANTS TO UTILITIES
Number 502
CHAIR ANDERSON announced that the next order of business would
be HOUSE BILL NO. 119, "An Act permitting grants to certain
regulated public utilities for water quality enhancement
projects and water supply and wastewater systems."
Number 0538
REPRESENTATIVE JACK COGHILL, Alaska State Legislature, sponsor
of HB 119, noted that Section 3 is the heart of the bill.
Number 0528
REPRESENTATIVE GUTTENBERG moved to adopt committee substitute
(CS) HB 119, Version 23-LS0617\D, Craver, 3/12/03, as the
working document. There being no objection, Version D was
before the committee.
REPRESENTATIVE COGHILL testified that this legislation will give
certain groups that provide water and sewer services the ability
to access matching grants, regardless of whether they are
publicly or privately owned. However, these groups do need to
fall under the jurisdiction of the Regulatory Commission of
Alaska (RCA). He said this provision is found on page 2, lines
15-18, in Section 3, which reads: "(i) A public water and sewer
utility is eligible for a grant for projects described in (b)(1)
- (3) of this section if its rates are regulated by the
Regulatory Commission of Alaska under AS 42.05."
REPRESENTATIVE COGHILL explained that HB 119 attempts to provide
equity. A privately owned utility in Fairbanks was originally
publicly owned; when the company made the transition, it no
longer qualified for state matching grants. He noted that
private utilities serve the same customers as public utilities
and have the same needs. A key question is whether [such
financial assistance] increases the profit for the private
utility or whether it helps the ratepayers. He said this bill
allows the utility to expand or do maintenance without passing
the cost onto the customers. For example, a municipal utility
can use grant money to expand, and the ratepayers receive the
benefit [of the expansion without a corresponding rate
increase]. He said under HB 119, the grant would not enlarge
the asset base of the for-profit utility. The RCA would not
calculate the grant in adjusting the company's rate. He added
that there may other smaller [privately-owned] companies that
provide similar services, for example, village safe water
contracts.
Number 0811
DAVID LEONE, Special Assistant, Mayor's Office, Fairbanks North
Star Borough, testified that this second-class borough has
limited powers to provide water and wastewater facilities.
These utilities can be provided through citizen-approved service
areas, of which there are two in the borough. Neither of those
service areas can afford the cost of providing quality utility
functions, nor can they afford major necessary improvements.
This has resulted in some health and safety issues that must be
addressed, he said. There is one service area in particular
that has already raised its property taxes to the maximum
allowable mill rate in order to improve the wastewater process.
The citizens turned to a privately held water and wastewater
corporation to provide some support. He admitted that
unfortunately, as the borough tries to privatize some of the
services, inequities in state statute [come to light], in this
case, privately owned utilities not being able to obtain state
grants. These grants allow public utilities to improve the
existing infrastructure without placing the burden on the
ratepayer. Under this bill, the grants would cover improvements
that are currently "transparent" to the consumer, that is, the
cost is now passed through to the consumer. Under HB 119, the
company's dollar value would not be increased by the
improvements, a factor prevented by the RCA. Mr. Leone
concluded that the borough supports the passage of HB 119.
Number 0968
KARA MORIARITY, President and CEO, Greater Fairbanks Chamber of
Commerce, stated that the chamber passed a resolution of support
for HB 119. She explained that the chamber supports this
legislation because publicly owned utilities have access to
state grant funds for infrastructure development while privately
owned utilities do not. In this regard, privately owned
utilities and their ratepayers are penalized because it costs
more to develop their infrastructure. If a privately held
utility was eligible for a grant, according to the RCA, the
investors in the private utility would not profit from the use
of those grants; the financial gain would have to be passed on
to the rate payers as a cost-saving measure.
Number 1058
MS. MORIARITY explained that almost all the utilities in the
Fairbanks area are privately owned or owned by a cooperative.
Fairbanks no longer has any municipally- or government-owned
utilities. The chamber board members indicated that they would
like to see HB 119 expanded to allow all privately-owned
utilities regulated by the RCA to apply for grants, not just
water and wastewater utilities. She mentioned that a small,
privately owned Natural Gas Company faces an enormous hurdle in
expanding its lines in to more areas in Fairbanks. She said it
has been a huge challenge and investment for that company to
build its infrastructure.
MS. MORIARITY noted that giving both privately- and publicly-
owned utilities the same access for grants for infrastructure
development would promote economic development, allowing
expansion to customers that are not currently connected to a
utility system. She said that there are lots in the borough
that are only 10 to 15 minutes from downtown that are not
connected to the water system. She concluded that the chamber
supports the bill and encourages broadening it to allow all
privately owned utilities regulated by the RCA to have access to
state grants.
Number 1182
ANDY WARWICK, Chairman of the Board, Fairbanks Sewer and Water,
explained that this company was formed in 1996 to acquire the
City of Fairbanks' water and wastewater utility. At that time,
the city was participating only minimally in grant funding
because there was not much funding available. Now grants for
water and sewer projects appear to be increasing in importance.
Because Fairbanks has privatized its utilities, it is the only
community in the state that is ineligible to participate. He
noted that HB 119 remedies this inequity by allowing privately
owned utilities that are regulated by the RCA to apply for
grants under AS 46.03.030(b) [Environmental Conservation]. This
puts Fairbanks ratepayers in the same position as ratepayers in
every other city in the state. He stressed that under RCA
regulation, all the economic benefits of these grants are passed
onto the ratepayers; the utilities get no rate of return on the
plant, or any depreciation expense, nor can the rates be
increased. Economic regulation [by the RCA] essentially makes
his company economically neutral under this bill, and the
benefits to the ratepayer are obvious. He said that HB 119 will
reduce the burden to ratepayers for improvements made to water
and wastewater systems. It will also increase the ability of
the utility to expand its water and wastewater systems to
include families and businesses that currently use well and
septic systems.
Number 1282
MR. WARWICK commented that the vast majority of Fairbanks
residents are not hooked up to public water, which results in
sanitary problems that could be resolved by connecting them to
the utility system.
REPRESENTATIVE ROKEBERG noted that the current statute that
covers municipalities puts a cap of 50 percent on eligible costs
for a municipality and, if HB 119 passes, utility service for
populations over 5,000 people. He asked if the 50 percent cap
is a problem.
MR. WARWICK explained that he wants his utility and his
ratepayers to be treated the same as other communities. The
change wouldn't benefit or penalize the utility; it's held
neutral. There are benefits to a utility of having happy
ratepayers, for example, when the utility goes before the RCA
for a rate increase.
Number 1395
JIM STRANDBERG, Commissioner, Regulatory Commission of Alaska,
described how the RCA regulates small water and sewer systems in
the state. He said he agreed with Mr. Warwick that grant funds
in Alaska are particularly important to reduce the cost of
services to the ratepayers, especially in such capital-intensive
utilities as water and sewer systems. He acknowledged that in
Fairbanks, capital needs are particularly high for large network
systems, given the permafrost conditions and high operating
costs.
MR. STRANDBERG noted that in HB 119, any utility that is rate-
regulated by the RCA would be eligible to apply for a grant. As
a result, many of the small utilities which the RCA does not
currently regulate would come to RCA [in order to qualify for
these grants]. A legislative audit recommended over a year ago
that the RCA determine which classes of small water and sewer
systems it will regulate. He said the RCA has held citizen
advisory meetings and taken extensive public comment; it has
developed regulations for these systems and will soon accept
public comment on the regulations.
MR. STRANDBERG explained that the public sentiment is that the
RCA should not regulate the rates of many of the smaller
utilities but find another way to assure ratepayers that they
are being treated fairly. He said many people have recommended
that certain classes of utilities be exempted totally from RCA
regulation. Another type of reduced regulation would allow
utilities to register with the RCA and agree to comply with a
model tariff. In a third class, the RCA would rate-regulate the
larger utilities, although no break has been set between these
levels yet. He said it's likely that the actual universe of
rate-regulated water and sewer utilities may not be very large.
MR. STRANDBERG noted, however, if the RCA elected to rate
regulate all the utilities, the statistics are daunting. There
are 400 water systems and 250 sewer systems which qualify as
utilities under the statute. If the RCA chose to rate-regulate
all of those, the RCA would be faced with regulating an
additional 237 water utilities and 136 sewer utilities. He said
that the RCA prepared an indeterminate fiscal note on HB 119
because staff doesn't know how many utilities will be rate-
regulated [under the proposed regulations]. He summarized that
RCA lauds the bill with its goal of increasing access to grant
money to build infrastructure. However, he cautioned
legislators to anticipate the impact on the RCA as it attempts
to lighten its regulatory load among smaller utilities.
Number 1655
REPRESENTATIVE GUTTENBERG asked whether a large number of
private utilities might come forward seeking these water and
sewer grants.
MR. STRANDBERG replied that depends on the ease of application
for the grant funds; that will reveal how many utilities
approach the RCA to be regulated. If the money is easy to get,
he suggested that the RCA could be deluged.
REPRESENTATIVE GUTTENBERG asked for the definition of a public
utility.
Number 1735
MR. STRANDBERG replied that the RCA statute defines public
utility in AS 42.05.990 (4)(c) as including every corporation,
whether public, cooperative or otherwise, company, individual,
or association of individuals, that owns, operates, manages, or
controls any plant, pipeline or system furnishing, water, steam,
or sewer service to the public for compensation. The public is
a group of 10 or more customers. He said that public utility is
well defined, and the definition is fairly inclusive.
REPRESENTATIVE GUTTENBERG noted the language on page 2, lines 9-
14, in which a utility serving more than 5,000 people under
certain circumstances receives a grant of 60 percent of the
eligible costs. He asked whether this 60 percent figure is high
enough.
MR. STRANDBERG replied that the dynamic of grant funding in
Fairbanks is different than in rural communities. With the
matching fund requirement, it will be highly variable whether
the utilities can raise the necessary match. He commented that
it's more likely that larger communities will seek this funding.
Number 1846
REPRESENTATIVE ROKEBERG asked about the total number of
certificated water systems under the RCA.
MR. STRANDBERG replied that there are 400 water systems and 250
sewer systems that quality as a utility.
REPRESENTATIVE ROKEBERG noted that the Department of
Environmental Conservation [DEC] categorizes the water systems
by size. He asked if the RCA uses similar categories.
MR. STRANDBERG replied that the two agencies' categories share
some similarities. The RCA statute refers to 10 or more
customers being a utility, whereas DEC regulations refer to 15
or more customers. The vast majority of DEC water systems are
Class A.
REPRESENTATIVE ROKEBERG said he's seeking a solution to Mr.
Strandberg's concerns about a "gold rush on his shop." He
explained that he is trying to clarify whether the RCA regulates
all three levels of DEC utilities.
MR. STRANDBERG replied that the RCA and DEC categories are very
different systems, but he said that he couldn't remember the
exact DEC classes.
Number 1983
REPRESENTATIVE ROKEBERG confirmed that the RCA statutory
authority is over utilities serving 10 or more people. He asked
if RCA has any other criteria for which utilities it regulates.
MR. STRANDBERG responded that DEC tends to focus on the [health]
risk of the water quality and the number of customers. He noted
that RCA qualifications tend to deal with ratepayers' financial
concerns, such as whether they are represented by a local
government unit so they don't need rate regulation. Also, the
RCA classifications recognize that regulating very small
utilities doesn't help the ratepayer because of its expense.
REPRESENTATIVE ROKEBERG asked which classes RCA regulates.
MR. STRANDBERG replied that the RCA is in the process of putting
those classes together, drafting the regulations now in response
to extensive public comment.
Number 2068
REPRESENTATIVE ROKEBERG asked whether the RCA currently rate-
regulates the 400 water systems.
MR. STRANDBERG replied that currently, the RCA regulates all
water utilities that are not municipal systems. He confirmed
that all 400 water systems are currently rate-regulated by the
RCA.
REPRESENTATIVE COGHILL asked whether there are unregulated
municipal utilities.
MR. STRANDBERG replied that there are approximately 100
municipally owned water and 70 municipally owned sewer utilities
that are not regulated by the RCA.
REPRESENTATIVE COGHILL stated that he may have inadvertently
excluded municipal utilities from having access to these
matching grants. The bill states on page 2, lines 16-17, that
public utilities must be regulated by the RCA in order to be
eligible for these matching grants.
Number 2145
MR. STRANDBERG referred to the language on page 1, lines [13-
14], subsection (e), "A grant under this section to a
municipality or public utility eligible under (i) of this
section..." He said he interprets this as [including municipal
utilities not regulated by the RCA].
REPRESENTATIVE COGHILL thanked him for that clarification.
REPRESENTATIVE ROKEBERG said he appreciates the RCA following
the legislative audit recommendation to remove small water
utilities from RCA regulation. He asked if the committee
limited the eligible rate-regulated water and sewer utilities in
HB 119 to those currently regulated by the RCA, would that help
[protect the RCA from being overwhelmed by requests to be
regulated]?
MR. STRANDBERG responded that it would depend on the
availability of funds and on whether other funds could be used
to meet the matching requirement.
REPRESENTATIVE ROKEBERG asked whether there are additional water
and sewer utilities, beyond the 400 water and 250 sewer
utilities, that would ask to be regulated [in order to qualify
for these grants].
CHAIR ANDERSON asked if the committee needs to change something
in the bill to cover this other group.
MR. STRANDBERG responded that HB 119 currently makes any utility
that is rate-regulated by the RCA eligible [to apply for a
grant]. He said there are currently 21 economically regulated
water utilities in the state now. Those would be eligible [for
grants under HB 119] if the RCA implemented its [draft]
regulations.
Number 2299
REPRESENTATIVE ROKEBERG said he assumes that because RCA has the
authority to rate-regulate all 400 water utilities, the
utilities would qualify for grants under this bill. He
reiterated that RCA has the authority to regulate those small
water utilities serving 10 or more people.
MR. STRANDBERG agreed and said that if the utilities are
economically regulated, they need to file a tariff with the RCA.
REPRESENTATIVE ROKEBERG asked if there are systems that are not
economically regulated now.
Number 2334
MR. STRANDBERG said that a significant number of the water and
sewer utilities are not regulated because they have never
approached the RCA.
REPRESENTATIVE ROKEBERG asked how many water utilities are
currently regulated by RCA.
MR. STRANDBERG replied that the RCA currently regulates 21 water
utilities.
REPRESENTATIVE ROKEBERG confirmed that only those utilities that
have approached the RCA and asked for economic regulation are
currently certified as economically regulated now.
TAPE 03-23, SIDE B
Number 2357
REPRESENTATIVE ROKEBERG asked whether these other [400 water and
250 sewer] utilities have filed no tariffs with the RCA.
MR. STRANDBERG stated that is correct. He said the reason for
the legislative audit [recommendation] is that many small
organizations in small communities have never approached the
RCA. He added that it has been a significant question of how
the RCA should regulate [these utilities] to protect the public
safety.
Number 2336
CHAIR ANDERSON asked the sponsor if he would like to look at
these technical questions and bring the bill back to committee
for consideration at the next meeting.
REPRESENTATIVE COGHILL replied that the technical question is
[how many utilities RCA regulates now and how many will it
regulate in the future]. He said there is no technical question
about how the bill works. The bill has a referral to the House
Finance Standing Committee, and that committee could [review the
number of utilities that would be eligible]. He said he would
like to see the bill move [today] if this committee supports the
policy [of grants to privately-held utilities].
REPRESENTATIVE ROKEBERG said he remains concerned about who is
really going to be eligible [to apply for these grants]. He
said he thought he could amend the bill to limit it to those who
are currently regulated [by the RCA] but he's not sure what that
would mean. The RCA trying to meet the recommendation of the
Legislative Budget and Audit Committee by limiting the number of
small utilities that it regulates seems to work at cross
purposes to HB 119, he said.
Number 2263
REPRESENTATIVE COGHILL said this bill would allow [utilities to
apply for grants] based on how they are certified under the
RCA's tier system.
REPRESENTATIVE ROKEBERG commented that if the bill included only
those 21 water systems currently regulated [by the RCA], many
small water systems wouldn't qualify under HB 119.
Number 2248
DAVE HARBOUR, Chair, Regulatory Commission of Alaska), described
the problem of timing. A legislative audit recommended that the
RCA limit the regulation of small utilities so that regulation
costs could be minimized and public safety maintained. Yet, he
pointed out, HB 119 presents an opportunity for improvements to
many small utilities without cost to their ratepayers. He said
Representative Rokeberg is on point. If the sponsor and the
committee passes HB 119 on to the finance committee, the RCA
would supply information [to answer these questions], even
though the RCA is still developing its regulations. RCA staff
anticipated having those regulations completed by summer.
COMMISSIONER HARBOUR noted that the [challenge] is to write the
definition [of rate-regulated utilities] so that those who want
to take advantage of grants may do so and so that there's the
appropriate reporting [to the RCA] of the grant money. He also
noted the committee's goal to include those utilities that wish
minimal regulation. That's the language the RCA and the sponsor
will have to work on, he said
Number 2172
REPRESENTATIVE ROKEBERG explained that the real problem here is
defining which utilities qualify. He noted that HB 119 uses the
DEC statute to define utilities because it has an existing
system in place. That might narrow the scope a bit, he said,
but the question becomes a policy issue--to what degree does the
legislature want to limit utilities [from applying for grant
funds]. For example, in urban Anchorage, there are 3,000 people
on well water; [their water systems will be impacted] by the
2006 target date in the federal Clean Water Act, which changes
the standards for arsenic. He said he hopes these small private
water systems would qualify for these grants. But there is a
problem with the unintended impact of the RCA's new direction
[of reducing the number of utilities it regulates].
Number 2084
REPRESENTATIVE COGHILL agreed.
REPRESENTATIVE ROKEBERG noted that HB 119 is placed under the
DEC title, so perhaps the bill should focus on DEC's definition
of small utilities.
COMMISSIONER HARBOUR agreed with this idea.
REPRESENTATIVE COGHILL said he is willing to have the bill held
in committee while that idea is explored.
Number 2063
CHAIR ANDERSON said the bill can be brought back before the
committee as soon as the sponsor is ready.
REPRESENTATIVE GUTTENBERG suggested that any changes in the
bill's language should avoid conflicts [with the RCA's statute].
Number 2033
DAN EASTON, Director, Facility Construction and Operation,
Department of Environmental Conservation, in response to
Representative Rokeberg, explained how DEC categorizes the
smaller water systems. He said the different classes of
drinking water systems are subject to different regulatory
requirements. These classes don't have anything to do with
DEC's grant program. The Class A water system serves 25
residents or more per day; the Class B serves 25 nonresidents,
for example, in a restaurant; a Class C system serves less than
25 people. There is no alignment between RCA and DEC
classifications because of the different purposes of these
schemes.
REPRESENTATIVE ROKEBERG asked how many systems fall in each
category.
MR. EASTON replied that there are approximately 650 water
systems in the Class A. In commenting on the difference in
numbers between the two agencies, he said RCA is interested in
water systems that charge a rate for the water, whereas DEC is
interested in all drinking water systems.
Number 1973
REPRESENTATIVE COGHILL confirmed that a hotel complex's water
system was an example of a system that didn't charge for its
water.
REPRESENTATIVE ROKEBERG said the information on the DEC
classifications does not help [the committee resolve the
problem]. He said there's only so much grant money available.
He pondered whether the sponsor could design some kind of
criteria rather than using economic regulation [by RCA]. The
criteria of a regulated rate is not sufficient because it is too
broad.
REPRESENTATIVE COGHILL said he wanted to make the criteria broad
so there would be some competition at the grant level. He said
that grant awards will be based on both the ability to match
[grant moneys] and the ability to perform. He said he realized
that there would be different classes of regulated groups
[competing]. He said he does not believe he is going crosswise
with the RCA but is willing to hold the bill over for that
discussion.
Number 1864
REPRESENTATIVE ROKEBERG said the fix is to amend this bill to
qualify those who are rate-regulated or who qualify for rate
regulation as a "date certain;" that would not affect the
outcome of the pending RCA regulations. That way, RCA wouldn't
get a rush of people into their office; those utilities already
qualify under the current definitions. By using a "date
certain," the legislature avoids the problem of unintended
consequences of this bill.
REPRESENTATIVE COGHILL responded that then there would be a
tiered qualification that was broad until RCA regulations were
finalized, and he said he did not like that option. He said
he'd rather leave [the field of potential applicants] broad; he
does not anticipate a rush [for grants], given the economic
condition of Alaska.
Number 1802
REPRESENTATIVE ROKEBERG confirmed that the number of interested
applicants [among utilities] would be self-limiting, [determined
by whether] the utility wanted to be regulated by the RCA. He
said this would force small utilities into rate-regulation [by
the RCA].
REPRESENTATIVE COGHILL said that would be part of the market-
driven approach for any community that would apply for a grant.
He said he was willing to discuss this further with the RCA,
which could be done in the next committee of referral.
REPRESENTATIVE GUTTENBERG asked Mr. Easton about the 60 percent
match for systems that incorporate resource recovery [per the
language on page 2, lines 13-14]. He asked if there would be
any benefit to having this 60 percent rate higher.
Number 1724
MR. EASTON noted that this language is an old provision that
applies to solid waste projects and allows for the state to pay
60 percent instead of 50 percent of a project's cost as a way to
entice solid waste systems to do recycling. Privately owned
solid waste processing systems would not qualify for grants
under this bill. In Section 3, page 2, lines 15-18, the
reference to projects described under (b)(1)-(3) does not
include solid waste processing.
REPRESENTATIVE ROKEBERG asked if the sponsor's goal is to make
[the field] as broad as possible and let the competitive grant
process winnow out [a large number of applicants]. But he
encouraged Representative Coghill to consider RCA's offer to see
how to avoid a "run on the bank."
Number 1645
REPRESENTATIVE ROKEBERG moved to report CSHB 119, Version 23-
LS0617\D, Craver, 3/12/03, from committee with individual
recommendations and the accompanying indeterminate fiscal notes.
There being no objection, CSHB 119(L&C) was reported from the
House Labor and Commerce Standing Committee.
HB 120-SERVICE CONTRACT SALES ARE NOT INSURANCE
Number 1613
CHAIR ANDERSON announced that the final order of business would
be HOUSE BILL NO. 120, "An Act excluding service contracts from
regulation as insurance; and providing for an effective date."
Number 1598
REPRESENTATIVE ROKEBERG moved that the committee adopt the
proposed committee substitute (CS) to HB 120, Version 23-
LS0537\I, Ford, 3/19/03, as the working document. There being
no objection, Version I was before the committee.
REPRESENTATIVE ROKEBERG related that [Version I addresses] all
the committee's questions. Furthermore, the legislation has a
zero fiscal note that was prepared by the committee.
REPRESENTATIVE LYNN related his understanding that this
legislation protects any licensed realtor providing a home
warranty in the state.
REPRESENTATIVE JOHN COGHILL, Alaska State Legislature, as the
sponsor of HB 120, deferred to officials from the
administration.
REPRESENTATIVE ROKEBERG pointed out that [Version I] clearly
does what Representative Lynn understood, which is why [the
language on page 2, lines 23-25] is included. Furthermore,
underwriters would still pay the premium tax under Section 1
language.
Number 1484
RYNNIEVA MOSS, Staff to Representative John Coghill, Alaska
State Legislature, said she concurred with Representative Lynn's
understanding that a realtor could sell a home warranty and not
have to have a license to sell insurance.
REPRESENTATIVE COGHILL pointed out that Section 2, [paragraph
(h)(2), page 2, lines 23-25] attempts to clarify that.
REPRESENTATIVE ROKEBERG said, "My understanding is on home
warranty underwriting, that [subparagraph (e)(1)(C) in Section
1, page 2, lines 5-8] is controlling, ... notwithstanding
[subparagraph (e)(2)(E)] below, 'where a home warranty, except
as described in (1)(C) of this subsection,' is excluded as found
in (1)(C) above."
REPRESENTATIVE COGHILL deferred to the representative of the
administration. He noted the need on page 2, line 13 to delete
"or" because it isn't necessary.
REPRESENTATIVE ROKEBERG pointed out that home warranties are not
excluded [from oversight by the Division of Insurance] per the
language on page 2, line 17. Therefore, [companies that
underwrite] home warranties still pay the premium tax, except if
the [home warranty] is a component part of a home under
[subparagraph (e)(1)(C) in Section 1]. Representative Rokeberg
clarified that the home warranty is not excluded from payment of
premium tax because it is an underwritten item. But [paragraph
(h)(2)] of Section 2 excludes the [seller of the warranty] from
being licensed in order to sell [the home warranty]. He said
for the record that he wanted to show that some service
contracts could cover component parts without intending to be
home warranties. So, a [company underwriting] a home warranty
would still pay a premium tax, but a [company offering a service
contract] on a washer and dryer component part would not [pay a
premium tax].
CHAIR ANDERSON noted that the sponsor seems to concur with
Representative Rokeberg's comments.
Number 1316
REPRESENTATIVE GUTTENBERG inquired as to why Chair Anderson had
written the fiscal note.
REPRESENTATIVE ROKEBERG explained that statute specifies that if
the department doesn't provide a fiscal note, then a committee
of referral can do so.
Number 1291
REPRESENTATIVE ROKEBERG moved to report CSHB 120 out of
committee with individual recommendations and the accompanying
fiscal notes.
REPRESENTATIVE ROKEBERG withdrew the aforementioned motion and
moved that the committee adopt Conceptual Amendment 1 as
follows: page 2, line 13, after "serviced;" delete "or". There
being no objection, Conceptual Amendment 1 was adopted.
Number 1247
REPRESENTATIVE ROKEBERG moved to report the CS for HB 120,
Version 23-LS0537\I, Ford, 3/19/03, as amended, out of committee
with individual recommendations and the accompanying zero fiscal
note. There being no objection, CSHB 120(L&C) was reported from
the House Labor and Commerce Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:30 p.m.
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