Legislature(2007 - 2008)CAPITOL 17
04/04/2008 03:00 PM House LABOR & COMMERCE
| Audio | Topic |
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| Start | |
| Confirmation Hearing|| Regulatory Commission of Alaska (rca) | |
| Adjourn |
* 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
April 4, 2008
3:06 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Mark Neuman, Vice Chair
Representative Carl Gatto
Representative Gabrielle LeDoux
Representative Jay Ramras
Representative Robert L. "Bob" Buch
Representative Berta Gardner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CONFIRMATION HEARING
Regulatory Commission of Alaska (RCA)
Robert M. "Bob" Pickett - Wasilla
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ROBERT PICKETT, Appointee
Regulatory Commission of Alaska (RCA)
WASILLA, ALASKA
POSITION STATEMENT: As appointee to the Regulatory Commission
of Alaska (RCA), provided background and answered questions.
ACTION NARRATIVE
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:06:08 PM. Representatives Buch,
Gardner, Gatto, Neuman, and Olson were present at the call to
order. Representatives LeDoux and Ramras arrived as the meeting
was in progress.
^CONFIRMATION HEARING
^Regulatory Commission of Alaska (RCA)
3:06:24 PM
CHAIR OLSON announced that the only order of business would be
to hold an informational hearing. He advised that no action
will be taken at this hearing.
3:06:34 PM
ROBERT PICKETT, Appointee, stated that it has been a great honor
and very humbling experience to have been appointed to the
Regulatory Commission of Alaska (RCA) by Governor Palin. He
stated that he is a 33 year resident of Alaska. He offered that
he owes much to this great state. He explained that his
original motivation to visit Alaska in 1975 was to pay off
college student loans. He said he did not plan on staying in
Alaska, but soon after arriving in Alaska that he fell in love
with the state. He has held blue collar, technical, and
professional jobs in rural and urban settings of the state. He
noted that for the past 21 years he has held a variety of
positions for the Alaska Housing Finance Corporation (AHFC). He
appreciates the great challenges the state faces and the
opportunities that exist for Alaska. He said that the RCA, with
its broad authority to regulate nearly 200 utilities and 21
pipeline carriers, impacts the economic health of Alaska. The
RCA has a challenging mandate to keep rates as low as possible
yet to allow the regulated utilities and pipeline carriers the
opportunity to earn a fair rate of return. The RCA must conduct
its business in a manner that has the confidence and respect of
all stakeholders: consumers and customers, utility companies
and cooperatives, local governments, pipeline carriers,
legislative, executive, and judicial branches of government.
Balancing all of these varying interests must be accomplished
within statutory timelines and in an open and transparent manner
while respecting the due process rights of all of the involved
parties, he noted. These competing and sometimes conflicting
interests can be difficult to resolve, he opined. He said he
believes that his work experience, knowledge, and interpersonal
skills give him the temperament and ability to strike this
balance. He said he is excited to bring his skills and
experience to the RCA, to assist it in its important work, and
to contribute in a meaningful way.
3:10:01 PM
REPRESENTATIVE NEUMAN inquired as to whether Mr. Pickett has any
background in the oil and gas industry.
MR. PICKETT explained that he does not have direct experience in
the oil and gas industry, outside of some initial work in the
state for Dowl Engineers and geotechnical work on the Tesoro
refinery in 1979. However, he said that he has extensive
experience reviewing and analyzing balance sheets for large
entities and corporations, producing 30 year performance and
trend analyses, although not specifically with a petroleum
industry or pipeline element. While at AHFC, he said he
developed a new market study process that is currently being
used. He highlighted that some of the projects he has been
involved in range from $25 million. Many of the principles used
at the RCA will be the same, he opined. He admitted that he
does not have the specific background in the oil and gas
industry, but he noted that he does have the advantage of
working with a fellow commissioner, Jan Wilson, who has more
than 25 years of experience in the pipeline industry. He noted
that he is currently assigned to several RCA dockets with Ms.
Wilson. He characterized his own approach as a thoughtful
approach in gathering evidence. He opined that as a voracious
reader, he has developed skills which will be helpful in terms
of number of dockets and evidence to review. He noted that he
also has experience with depreciation schedules and has a strong
mathematical background.
REPRESENTATIVE NEUMAN inquired as to whether he could elaborate
on the joint action agencies (JAAs).
MR. PICKETT answered that the JAAs are permitted but are not
mandated by statute. He related his understanding that specific
projects have not been assigned or contracted. He noted that
the Alaska Energy Authority, with an appropriation from the
legislature, is performing its Unified System Operator Study.
He surmised that report is due to be finalized in May or June
2008.
3:13:00 PM
REPRESENTATIVE NEUMAN inquired as to Mr. Pickett's ideas of the
concept of electrical generation joined together in a
cooperative effort to form a grid.
MR. PICKETT explained that he can't speak to any specifics since
it would not be appropriate for him to do so, but in terms of
resource planning, the age of the infrastructure, and the
capital decisions that need to be made in the next few years,
that it makes sense to cooperate, coordinate, and eliminate
inefficiencies whenever possible.
REPRESENTATIVE NEUMAN asked for clarification of RCA's role in
regulatory review of utilities since some utilities generate
their own electricity and others purchase the electricity.
MR. PICKETT answered that the RCA will respond to specific cases
and dockets. He reiterated that the JAA is permitted but not
mandated.
CHAIR OLSON reminded members that Mr. Pickett cannot answer any
questions on any open docket currently before the RCA.
3:14:50 PM
CHAIR OLSON noted that the RCA does not have designated seats
and expressed concern that the RCA is losing 25 years of
experience with Dave Harbour's service at the RCA ending in
February 2008. He inquired as to whether Mr. Pickett has had an
opportunity to review the Alaska Gas Inducement Act (AGIA).
MR. PICKETT answered that he has not reviewed AGIA in any great
detail.
3:15:49 PM
REPRESENTATIVE GATTO related his understanding of the recent
plans to shelve the Matanuska Electric Association's plans to
build a coal-fired power plant south of Palmer, which was
stymied by a Matanuska-Susitna Borough ordinance. He inquired
as to whether Mr. Pickett has been involved with any utility
request that simply wasn't feasible.
3:17:20 PM
MR. PICKETT answered that due to his recent appointment to the
RCA that he has not been involved with those issues. He
reminded members that he cannot speak to the specifics of any
docket since it would prejudice the RCA's decision making
process. However, he said that in a general sense that
significant decisions need to be made by cooperatives and the
state in terms of supply of energy, in light of aging equipment,
infrastructure, and capital decisions.
MR. PICKETT, in response to Representative Gatto, explained that
the RCA becomes involved in a project, such as the Energy Task
Force consideration of a 600-megawatt Susitna Hydroelectric
project, at the point that a docket is opened and the RCA is
asked to adjudicate.
3:18:48 PM
REPRESENTATIVE RAMRAS inquired as to whether Mr. Pickett has any
experience with rate deregulated utilities.
MR. PICKETT pointed out that he has limited experience at the
RCA and has limited knowledge of the RCA's precedent. He
answered that he knows a little bit about deregulated utilities.
In terms of economic regulation, he noted that several
exemptions exist such that cooperative memberships can elect for
an exemption or for some smaller water utilities due to size
limitations.
3:19:51 PM
REPRESENTATIVE RAMRAS related that the gas utility in Fairbanks
is a rate deregulated utility that currently trucks LNG from
Point MacKenzie to Fairbanks and re-gasifies it for distribution
to more than 1,000 customers. He expressed concern that the
Fairbanks Natural Gas refuses to disclose its variable pricing,
but purchases LNG at $8.70 [per 1000 cubic feet (Mcf)]and sells
it to customers in his district for $22.91 [per Mcf]. He
inquired as to whether a rate deregulated utility has an implied
obligation to disclose the rate process to its ratepayers since
the utility enjoys the benefits of rate deregulation.
3:22:54 PM
MR. PICKETT, speaking as a private person, answered that he
thinks a fairness issue exists. He noted he is well aware of
the strains on Fairbanks residents for fuel costs, particularly
for senior citizens on fixed incomes.
REPRESENTATIVE RAMRAS again expressed concern that Fairbanks
Natural Gas will not disclose the reason for the difference in
the rate of $8.70 per Mcf and cost to customers at $22.91 per
Mcf, yet it enjoys the benefits of rate deregulation.
MR. PICKETT agreed that from his personal philosophical
standpoint that rate deregulated companies should have a higher
degree of financial disclosure.
3:27:56 PM
REPRESENTATIVE NEUMAN asked if there are some instances in which
certain proprietary information should be made public.
MR. PICKETT answered that he cannot speak to the specifics of
dockets, but offered that in instances of acquisition that
requests are made to keep certain elements confidential and that
the RCA has a process in place to make determinations, in
conjunction with its legal counsel, as to what information is
held confidential.
3:29:19 PM
REPRESENTATIVE BUCH offered that when a person who has specific
expertise in an area is not available that the selection process
includes examining candidates for their potential to learn. He
opined that it is unfair to hold deregulated companies to the
same requirements as those companies subject to regulation.
CHAIR OLSON offered that the former Alaska Public Utilities
Commission had specific assigned seats for its commissioners.
However, the RCA does not have specific assigned seats or job
descriptions for the RCA commissioners.
3:34:16 PM
MR. PICKETT, in response to Representative Ramras, answered that
if the state makes a political decision to invest in the bullet
line to bring North Slope natural gas to the Railbelt or some
other variation, that the state will make a determination in its
appropriation process on its expected rate of return on that
investment. If the state does not require as high a rate of
return the tariffs could be set lower to encourage more input
into the line from independent exploration, but if the state's
approach is to maximize its return, it would raise the tariffs,
he opined.
REPRESENTATIVE RAMRAS related that one of the problems with the
in-state gas line is concern over economically feasible. He
inquired as to the type of assistance or role that RCA would
play in assisting or expediting financial feasibility analysis
of in-state natural gas that made sense and had sound economic
underpinnings.
3:36:58 PM
MR. PICKETT answered that the RCA would probably take an
educational role in terms of the rate setting and tariff
mechanism so the legislature would understand how RCA would
evaluate and determine the tariff calculations.
3:37:24 PM
REPRESENTATIVE RAMRAS opined that if Interior Alaska does not
obtain relief from its utility rates, that the community will be
drastically reduced.
3:39:29 PM
REPRESENTATIVE NEUMAN inquired as to what role RCA might play in
value-added or industrial or commercial uses of natural gas to
liquids (GLTs) or natural gas liquids (NGLs) processing plants
to help lower the tariff costs.
3:41:09 PM
MR. PICKETT, in response to Representative Neuman, answered that
assuming the cost feasibility allows the natural gas pipeline to
be built, that the RCA would be likely be involved in the rate
design issues for residential, industrial, and commercial users
as one of its major roles. He offered that the general
principle for rate design issues is that "the cost causer should
be the cost payer."
REPRESENTATIVE NEUMAN asked for clarification on unfair trade
practices and tariffs. He posed a scenario in which natural gas
would be transported via a proposed in-state bullet line to an
industrial user who reprocesses GTL for resale compared to those
businesses whose natural gas source is Cook Inlet. He inquired
how the RCA would sort through those types of issues and balance
out businesses that may have an unfair advantage.
MR. PICKETT stated that he doesn't have an answer on in-state
gas issues. He stated that the first question will be whether
the RCA would have jurisdiction over the matter. If the RCA
does have jurisdiction, the question would be whether the RCA
would need to open a docket and investigate any inconsistencies.
[The RCA confirmation was held over.]
3:43:48 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
3:43 p.m.
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