03/25/2024 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB218 | |
| HB313 | |
| HB324 | |
| HB55 | |
| HB226 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 313 | TELECONFERENCED | |
| *+ | HB 324 | TELECONFERENCED | |
| += | HB 55 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 226 | TELECONFERENCED | |
| += | HB 218 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 25, 2024
3:17 p.m.
MEMBERS PRESENT
Representative Jesse Sumner, Chair
Representative Justin Ruffridge, Vice Chair
Representative Mike Prax
Representative Dan Saddler
Representative Stanley Wright
Representative Ashley Carrick
Representative Zack Fields
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 218
"An Act relating to coverage for disability from diseases for
certain firefighters; and providing for an effective date."
- MOVED CSHB 218(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 313
"An Act relating to the calculation of the regulatory cost
charge for public utilities and pipeline carriers; and providing
for an effective date."
- HEARD & HELD
HOUSE BILL NO. 324
"An Act relating to insurance data security; amending Rule 26,
Alaska Rules of Civil Procedure, and Rules 402 and 501, Alaska
Rules of Evidence; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 55
"An Act relating to allocations of funding for the Alaska
Workforce Investment Board; and providing for an effective
date."
- HEARD & HELD
HOUSE BILL NO. 226
"An Act relating to the Board of Pharmacy; relating to
insurance; relating to pharmacies; relating to pharmacists;
relating to pharmacy benefits managers; relating to patient
choice of pharmacy; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 218
SHORT TITLE: FIREFIGHTER WORKERS COMP REQUIREMENTS
SPONSOR(s): REPRESENTATIVE(s) SADDLER
01/16/24 (H) PREFILE RELEASED 1/8/24
01/16/24 (H) READ THE FIRST TIME - REFERRALS
01/16/24 (H) L&C
02/28/24 (H) L&C AT 3:15 PM BARNES 124
02/28/24 (H) -- MEETING CANCELED --
03/01/24 (H) L&C AT 3:15 PM BARNES 124
03/01/24 (H) Heard & Held
03/01/24 (H) MINUTE(L&C)
03/20/24 (H) L&C AT 3:15 PM BARNES 124
03/20/24 (H) Heard & Held
03/20/24 (H) MINUTE(L&C)
03/25/24 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 313
SHORT TITLE: PUBLIC UTILITY REGULATORY COST CHARGE
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/09/24 (H) READ THE FIRST TIME - REFERRALS
02/09/24 (H) L&C, FIN
03/25/24 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 324
SHORT TITLE: INS. DATA SECURITY; INFO. SECURITY PRGRMS
SPONSOR(s): STAPP
02/14/24 (H) READ THE FIRST TIME - REFERRALS
02/14/24 (H) L&C, JUD
03/25/24 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 55
SHORT TITLE: EXTEND WORKFORCE INVEST BOARD ALLOCATIONS
SPONSOR(s): CARRICK
02/01/23 (H) READ THE FIRST TIME - REFERRALS
02/01/23 (H) EDC, L&C, FIN
01/31/24 (H) EDC AT 8:00 AM DAVIS 106
01/31/24 (H) Heard & Held
01/31/24 (H) MINUTE(EDC)
02/12/24 (H) EDC AT 8:00 AM DAVIS 106
02/12/24 (H) Heard & Held
02/12/24 (H) MINUTE(EDC)
02/14/24 (H) EDC AT 8:00 AM DAVIS 106
02/14/24 (H) Scheduled but Not Heard
03/13/24 (H) EDC AT 8:00 AM DAVIS 106
03/13/24 (H) Heard & Held
03/13/24 (H) MINUTE(EDC)
03/15/24 (H) EDC AT 8:00 AM DAVIS 106
03/15/24 (H) Moved CSHB 55(EDC) Out of Committee
03/15/24 (H) MINUTE(EDC)
03/20/24 (H) EDC RPT CS(EDC) NEW TITLE 2DP 2NR 3AM
03/20/24 (H) DP: MCCORMICK, ALLARD
03/20/24 (H) NR: MCKAY, PRAX
03/20/24 (H) AM: HIMSCHOOT, STORY, RUFFRIDGE
03/20/24 (H) L&C AT 3:15 PM BARNES 124
03/20/24 (H) Scheduled but Not Heard
03/21/24 (H) L&C AT 10:30 AM BARNES 124
03/21/24 (H) -- MEETING CANCELED --
03/22/24 (H) L&C AT 3:15 PM BARNES 124
03/22/24 (H) Heard & Held
03/22/24 (H) MINUTE(L&C)
03/25/24 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 226
SHORT TITLE: PHARMACIES/PHARMACISTS/BENEFITS MANAGERS
SPONSOR(s): SUMNER
01/16/24 (H) PREFILE RELEASED 1/8/24
01/16/24 (H) READ THE FIRST TIME - REFERRALS
01/16/24 (H) HSS, L&C, FIN
02/27/24 (H) HSS AT 3:00 PM DAVIS 106
02/27/24 (H) Heard & Held
02/27/24 (H) MINUTE(HSS)
02/29/24 (H) HSS AT 3:00 PM DAVIS 106
02/29/24 (H) Moved CSHB 226(HSS) Out of Committee
02/29/24 (H) MINUTE(HSS)
03/04/24 (H) HSS RPT CS(HSS) 6DP 1NR
03/04/24 (H) DP: SUMNER, RUFFRIDGE, MCCORMICK,
SADDLER, MINA, PRAX
03/04/24 (H) NR: FIELDS
03/06/24 (H) L&C AT 3:15 PM BARNES 124
03/06/24 (H) Scheduled but Not Heard
03/11/24 (H) L&C AT 3:15 PM BARNES 124
03/11/24 (H) Heard & Held
03/11/24 (H) MINUTE(L&C)
03/25/24 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
BECKI ALVEY, Advisory Section Manager
Regulatory Commission of Alaska
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: During the hearing on HB 313, co-provided a
PowerPoint presentation titled "House Bill 313: Public Utility
Regulatory Cost Charge."
NAOMI JOHNSTON, Administrative Operations Manager
Regulatory Commission of Alaska
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: During the hearing on HB 313, co-provided a
PowerPoint presentation titled "House Bill 313: Public Utility
Regulatory Cost Charge."
REPRESENTATIVE WILL STAPP
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 324 as prime sponsor.
CLIFTON COGHILL, Staff
Representative Will Stapp
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Representative Stapp, prime
sponsor of HB 324, presented the changes in Version B, the
proposed committee substitute (CS) for the bill.
LORI WING-HEIER, Director
Division of Insurance
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: During the hearing on HB 324, answered
questions.
TERI COTHREN, Associate Vice President
Workforce Development
University of Alaska
Anchorage, Alaska
POSITION STATEMENT: During the hearing on HB 55, provided a
PowerPoint presentation, titled "Technical Vocational Education
Program," dated 3/25/24.
BRIAN RIDLEY, Chief/Chairman
Tanana Chief's Conference
Eagle, Alaska
POSITION STATEMENT: Testified in support of HB 226.
TAMMY THIEL, Executive Director
Denali Oncology Group
Wasilla, Alaska
POSITION STATEMENT: Testified in support of HB 226.
JAMES LEE, Director
State Regulation and Policy
Community Oncology Alliance
Washington, DC
POSITION STATEMENT: Testified in support of HB 226.
TONIA NEAL, Senior Director
State Affairs
Pharmaceutical Care Management Association
Bellevue, WA
POSITION STATEMENT: Testified in opposition to HB 226.
BALLARD SAUL, PharmD, BCPS, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 226.
SHAWNA KING, PharmD, BCPS
Providence Alaska Medical Center
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 226.
LEIF HOLM, PharmD, Owner
Alaska Family Pharmacy
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 226.
SAMANTHA ERVIN, PharmD, BCACP
representing self
Tok, Alaska
POSITION STATEMENT: Testified in support of HB 226.
DARLENE HUNTINGTON, representing self
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 226.
GERALD "JERRY" BROWN, Pharmacist, representing self
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 226.
DIRK WHITE, RPh, representing self
Sitka, Alaska
POSITION STATEMENT: Testified in support of HB 226.
MEGAN PENNER, PharmD, BCPS
representing self
Eagle River, Alaska
POSITION STATEMENT: Testified in support of HB 226.
MARK BOHRER, RPh, Pharmacy Practice Coordinator
Fred Meyer
Chugiak, Alaska
POSITION STATEMENT: Testified in support of HB 226.
BRITTANY KARNS, PharmD, representing self
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 226.
KAREN MILLER, Pharmacist, representing self
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 226.
ACTION NARRATIVE
3:17:10 PM
CHAIR JESSE SUMNER called the House Labor and Commerce Standing
Committee meeting to order at 3:17 p.m. Representatives
Saddler, Prax, Wright, Carrick, Fields, Ruffridge, and Sumner
were present at the call to order.
HB 218-FIREFIGHTER WORKERS COMP REQUIREMENTS
3:18:11 PM
CHAIR SUMNER announced that the first order of business would be
HOUSE BILL NO. 218, "An Act relating to coverage for disability
from diseases for certain firefighters; and providing for an
effective date."
3:18:38 PM
REPRESENTATIVE FIELDS moved to adopt Amendment 1 to HB 218,
labeled 33-LS0709\B.2, Marx, 3/25/24, which read:
Page 2, line 9:
Delete "three"
Insert "six [THREE]"
Page 2, line 10:
Delete "60"
Insert "84 [60]"
REPRESENTATIVE PRAX objected.
REPRESENTATIVE FIELDS explained that Amendment 1 would lengthen
the period of time post-employment that firefighters can be
covered by workers compensation from five years to seven years.
The current system of covering a firefighter for a period post-
employment would be maintained, he further explained, but the
amendment would push the timeline out from three months to six
months per year of employment. He said Amendment 1 is based on
feedback received from the Alaska State Firefighters Association
(ASFA) during a previous legislative session.
3:19:47 PM
REPRESENTATIVE PRAX expressed his concern that the committee
hasn't heard whether workers' compensation insurance providers
can handle the increased risk at the premiums to be charged. He
advised that if the local statewide company which provides
workers' compensation coverage is unable to determine the
actuarial risk or decides it is so high that it must discontinue
offering policies to fire companies, then the companies would
get kicked into the assigned risk pool and the premiums would go
way up. He urged that before deciding on the amendment, the
committee learn how it would affect premiums.
CHAIR SUMNER, in response to Representative Fields, informed the
committee that there is no one online to address HB 218.
REPRESENTATIVE SADDLER requested that he be able to present the
answers to the questions asked during the bill's previous
hearing before engaging on the language of Amendment 1.
3:21:37 PM
REPRESENTATIVE FIELDS withdrew Amendment 1 so the answers could
be heard.
REPRESENTATIVE SADDLER addressed the question about the bill's
intention in distinguishing between hiring and certification.
He answered that a person can be hired and work as a firefighter
pulling hoses, driving trucks, directing traffic, opening fire
hydrants, and so forth, but before someone can wear a pack and
enter a burning building they are required to have Firefighter 1
certification from the Alaska Fire Standards Council. It can
take months or possibly years between hiring and certification,
he explained, so the goal was to have exams at both areas.
Regarding the question about the time between hiring and being
certified, he answered that it is not uncommon for a firefighter
to be hired at a department and become certified months or
perhaps years later. Regarding the question about the effect on
the risk pool of this coverage, Representative Saddler answered
that this question was raised in 2022 when then-Senator Holland
added breast cancer to the list of presumed diseases for which
service as a firefighter was a presumed cause. He related that,
at that time, the Division of Insurance and the Division of
Workers' Compensation testified, and the Department of Labor &
Workforce Development concurred, that there was no indication
the bill would increase the risk or the cost. He further
related that the National Council of Compensation Insurers
(NCCI) has advised him that any change to the cost or risk would
be incalculable due to how little this provision would be used.
So, he continued, the answer is that he doesn't think the
departments would be exposed to huge risk.
3:24:09 PM
REPRESENTATIVE FIELDS again moved to adopt Amendment 1.
REPRESENTATIVE SADDLER objected, but qualified it isn't really
an objection. He stated he doesn't have a problem with page 1,
lines 1-5, of Amendment 1, which would extend the presumption
past a firefighter's retirement from the current statute of 60
months/five years to 84 months/seven years. He shared that the
director of the Division of Workers' Compensation has indicated
his support of this extension as well. Representative Saddler
then argued that lines 1-[4] of Amendment 1 would be
accomplished in the first section of Amendment 2. He said he
intends to look favorably upon the first section of Amendment 2
and offered Conceptual Amendment 1 to Amendment 1, which would
delete lines 1-4 of the Amendment 1.
3:25:27 PM
REPRESENTATIVE RUFFRIDGE objected to Conceptual Amendment 1. He
said the first part of Amendment 1 would affect page 2, line 9
of the bill, while the first part of Amendment 2, would affect
page 2, line 14 of the bill, and they are different.
REPRESENTATIVE SADDLER concurred. He said the first part of
Amendment 1 offered by Representative Fields would increase the
factor by 100 percent, so instead of three months for each year
of service, it would be six months for every year of service.
He surmised that this would be a doubling of the length of time
beyond which a retired firefighter could enjoy this presumption.
3:26:38 PM
The committee took an at-ease from 3:26 p.m. to 3:28 p.m.
3:28:26 PM
REPRESENTATIVE FIELDS, regarding going from three months to six
months per year of service, stated that firefighters would
continue to accrue additional benefits, until with the prospect
of adoption of Amendment 2, which would set it at 84 months,
would be 14 years of service versus the status quo of 20.
3:28:57 PM
REPRESENTATIVE RUFFRIDGE noted that Conceptual Amendment 1 would
delete the language in Amendment 1 that proposes to alter three
months of accrued possible disability to six months of accrued
possible disability for every year of requisite service. He
further noted that Amendment 1 would also increase the total
number of calendar months following the last day of employment
[from 60] to 84. Under current statute, he said, an individual
must work for 20 years to be capped out at 60 calendar months.
He interpreted Amendment 1 as saying that an individual must
work for 14 years to cap out at the 84 months. If [Conceptual
Amendment 1 to Amendment 1 is adopted], he continued, but the 84
months is kept, an individual will have to work for well over 30
years to cap out. He said he is not in support of the
conceptual amendment because it would extend that time for way
too long.
CHAIR SUMNER estimated it would be slightly under 30 years.
REPRESENTATIVE FIELDS said it would be 28 [years].
REPRESENTATIVE RUFFRIDGE thanked Chair Sumner and Representative
Fields.
3:30:50 PM
REPRESENTATIVE SADDLER stated he misread the provisions and
agreed that extending the period to [nearly] 30 years is too
much. He further stated that is okay with the second section of
Amendment 1 that would change 60 to 84. He withdrew Conceptual
Amendment 1 to Amendment 1. He said his preference is to not
accept Amendment 1 and instead make modification to [Amendment
2] to accomplish the provision of changing 60 to 84.
3:31:40 PM
A roll call vote was taken. Representatives Ruffridge, Carrick,
and Fields voted in favor of Amendment 1. Representatives Prax,
Saddler, Wright, and Sumner voted against it. Therefore,
Amendment 1 failed by a vote of 3-4.
3:32:14 PM
REPRESENTATIVE RUFFRIDGE moved to adopt Amendment 2 to HB 218,
labeled 33-LS0709\B.1, Marx, 3/6/24, which read:
Page 2, line 14:
Delete "three"
Insert "six"
Page 2, lines 15 - 25:
Delete all material and insert:
"(A) underwent [WAS GIVEN] a qualifying
medical examination
(i) upon the first employment as [BECOMING]
a firefighter that did not show evidence of the
disease;
(ii) at least once every two years [(B) WAS
GIVEN AN ANNUAL MEDICAL EXAM] during [EACH OF] the
first six [SEVEN] years of employment as a firefighter
that did not show evidence of the disease; and"
Page 2, line 30, following "cancer":
Insert ";
(4) the requirements of (3)(A) of this subsection
apply only if the firefighter's employer makes the
applicable qualifying medical examination available to
the firefighter"
REPRESENTATIVE SADDLER objected.
REPRESENTATIVE RUFFRIDGE reviewed the three parts within
Amendment 2. He noted that page 2, lines 12-14 of HB 218,
propose to change [the current statute of] seven years to three
years. The first part of Amendment 2, he said, proposes to
change three years to six. The rationale for the amendment's
change, he explained, is that some of these diseases can take a
significant amount of time to manifest themselves, so three
years seems to be a short window, seven years seems a little too
long, and six years seems more appropriate.
REPRESENTATIVE RUFFRIDGE stated that the second part of
Amendment 2 proposes to delete all material from page 2, lines
15-25 of HB 218, thereby getting rid of the language [that
distinguishes between a firefighter being hired and a
firefighter becoming certified]. He said this second provision
also proposes that a medical exam be given every two years for
the first six years of employment instead of annually during the
first seven years. This ensures, he explained, that a disease
doesn't creep up without notice and can be treated early, and
this language matches up with the language proposed to be
inserted on page 2, line. 14.
REPRESENTATIVE RUFFRIDGE explained that the third part of
Amendment 2 would add a new section on page 2, line 30 of HB
218. He allowed that adding this provision could be debatable
given that many of Alaska's institutions are volunteer.
However, he continued, these qualifying medical examinations are
very expensive and probably should be a part of the employment
process, so reducing it to every two years might fit easier into
a budget than every year.
3:35:41 PM
REPRESENTATIVE SADDLER stated that he can accept the first part
of Amendment 2 because it accomplishes the bill's general goal
to lower the onus of obtaining workers' compensation insurance
for firefighter cancers. He further stated that he can accept
the second part of Amendment 2 because it advances the overall
goal of the bill, even though it isn't the exact schedule he had
originally presumed and worked with the fire chiefs to say.
However, he continued, he is opposed to the third part of
Amendment 2 because it conditions the periodic medical exam
required on whether the employer pays for it, and if the
employer doesn't pay for the exam then the periodic exam
requirement goes away and does not apply. He pointed out that
someone who had cancer before being hired as a firefighter would
not have that cancer established as a baseline if the department
didn't pay for medical exams, thereby exposing the department to
the risk of future workers' compensation claims from a cancer
that could have been detected had the department paid for exams.
This third part of Amendment 2, he argued, contravenes the
purpose of the underlying statute and HB 218 by potentially
increasing costs to fire departments.
3:37:44 PM
REPRESENTATIVE FIELDS asked whether Representatives Ruffridge
and Saddler want him to offer a conceptual amendment to add
lines 5-7 of Amendment 1 into Amendment 2.
REPRESENTATIVE SADDLER said that would not be his preference.
3:38:32 PM
REPRESENTATIVE SADDLER moved to adopt Amendment 1 to Amendment 2
to delete lines 16-20 on page 1 of Amendment 2. The language to
do this, he explained, is written in Amendment 3, labeled 33-
LS0709\B.3, Marx, 3/25/24, and which reads:
Page 1, lines 16 - 20 of the amendment:
Delete all material.
REPRESENTATIVE RUFFRIDGE objected to Amendment 1 to Amendment 2.
REPRESENTATIVE SADDLER stated that parts one and two of
Amendment 2 comport with the intent of the underlying statute
and with HB 218, but part three of Amendment 2 does not. So, he
continued, he would like part three excised from Amendment 2.
3:39:29 PM
REPRESENTATIVE CARRICK asked whether there are employers that do
not currently offer applicable qualifying medical examinations,
and whether the [other] language in Amendment 2 would establish
requirements that employers were capable of meeting. She
further asked about the sponsor's intent in this section.
REPRESENTATIVE RUFFRIDGE replied that, based on his research,
this language is variable throughout the multiple firefighting
apparatuses and groups across Alaska. He allowed that volunteer
firefighting groups struggle to offer these expensive medical
examinations. He recalled that testimony during the bill's
initial iteration indicated that moving the timeframe for a
medical exam by up to five years would help offset the cost,
which could be up to $1,800 according to his research. He said
many employers do make these qualifying medical examinations
available and offering them is probably a standard that should
be upheld, although it can be a cost barrier to some.
3:41:48 PM
REPRESENTATIVE SADDLER reiterated that part three of Amendment 2
would condition the periodic medical exam on whether the
department pays the cost of the exam, and he doesn't think there
is any requirement for an individual to get those examinations.
Without the exams, he said, a firefighter may have a harder time
proving that any cancer which developed later was caused by
their service as a firefighter. It is a disincentive, he
argued, for departments to provide those periodic medical exams,
so it is contradictory to the intent of the bill and the law.
3:42:35 PM
A roll call vote was taken. Representatives Saddler, Wright,
Carrick, and Sumner voted in favor of Amendment 1 to Amendment
2. Representatives Prax, Ruffridge, and Fields voted against
it. Therefore, Amendment 1 to Amendment 2 was adopted by a vote
of 4-3.
CHAIR SUMNER said there is still objection to Amendment 2, as
amended.
3:43:37 PM
A roll call vote was taken. Representatives Carrick, Fields,
Prax, Ruffridge, Saddler, Wright, and Sumner voted in favor of
Amendment 2, as amended. Therefore, Amendment 2, as amended,
was adopted by a vote of 7-0.
3:44:17 PM
REPRESENTATIVE RUFFRIDGE moved to report HB 218, as amended, out
of committee with individual recommendations and the
accompanying zero fiscal note. There being no objection, CSHB
218(L&C) was reported from the House Labor and Commerce Standing
Committee.
HB 313-PUBLIC UTILITY REGULATORY COST CHARGE
3:44:43 PM
CHAIR SUMNER announced that the next order of business would be
HOUSE BILL NO. 313, "An Act relating to the calculation of the
regulatory cost charge for public utilities and pipeline
carriers; and providing for an effective date."
CHAIR SUMNER noted that HB 313 is by request of the governor.
3:45:16 PM
BECKI ALVEY, Advisory Section Manager, Regulatory Commission of
Alaska (RCA), Department of Commerce, Community & Economic
Development (DCCED), co-provided a PowerPoint presentation
titled "House Bill 313: Public Utility Regulatory Cost Charge,"
dated 3/25, 2024. She turned to slide 2, "Organizational
Structure," and explained that the Regulatory Commission of
Alaska (RCA), comprised of four sections, performs quasi-
judicial and quasi-legislative functions. She explained that
the RCA is comprised of four sections: the Commission Section
with five commissioners appointed by the governor and confirmed
by the legislature, plus staff; the Administrative Law Section
with hearing examiners and paralegals; the Advisory Section
comprised of communication specialists, and tariff, engineering,
and financial analysts, and the Utility Master Analysts.
3:46:12 PM
MS. ALVEY moved to slide 3, "RCA Authority," and noted that the
RCA is created by statute, AS 42.04, and is required by statute
to regulate public utilities and pipeline carriers. She said
the RCA is also required by statute, AS 42.45, to determine the
per kilowatt hour support for eligible customers and electric
utilities under the power cost equalization (PCE) program.
MS. ALVEY displayed slide 4, "What We Do: Regulating Public
Utilities and Pipeline Carriers," and related that the RCA's
core services include certificating applicants that are fit,
willing, and able to provide service, reviewing tariff filings
made by utilities and pipeline carriers, ensuring rates are just
and reasonable, investigating complaints, and calculating PCE
and setting the PCE base rate, also known as the PCE floor.
3:46:57 PM
MS. ALVEY showed slide 5, "Tariff Review Process," and explained
that RCA staff analyzes the filings to determine if the rates
are just and reasonable, and if the tariff provisions are
reasonable and supported. She noted that the slide depicts the
general process of the tariff filing. An entity would make a
tariff filing, the RCA would issue a public notice of the
proposed change, and there is a 45-day review period for
utilities. Prior to the end of that review period the RCA would
approve, reject, or suspend the filing. If the RCA took no
action, which the RCA generally tries to avoid, then the filing
takes effect by force of law. If the tariff is suspended into a
docket for further investigation, the RCA would assign a
commission panel and an administrative law judge, hearings would
be held as applicable, and a final order would be issued with
the RCA's decision. The common timeline for changes to a
revenue requirement or rate design is 450 days and it is 270
days if it is not a change to the revenue requirement.
3:48:02 PM
MS. ALVEY discussed slide 6, "Power Cost Equalization (PCE)
Program." The RCA, she explained, establishes the PCE amounts
for 11 regulated electric utilities and 78 non-regulated
utilities that participate in the PCE programs, which impacts
more than 150 communities. The RCA sets the PCE floor, she
further explained, which is the weighted average cost of the
retail rate in Anchorage, Fairbanks, and Juneau, which is
subject to the statutory ceiling of $1. The PCE program is
administered by the Alaska Energy Authority (AEA), she noted.
3:48:45 PM
MS. ALVEY spoke to slide 7, "Funding of the RCA and RAPA." She
stated that since 1993, the Regulatory Cost Charge (RCC) program
has been the RCA's main source of funding. Beginning in 2005,
she continued, the RCC program also became the main source of
funding for the Department of Law's Regulatory Affairs and
Public Advocacy (RAPA) section. She said the RCA also receives
funds from the AEA through a reimbursable service agreement
(RSA) to offset costs of administering the PCE program. She
noted that no other general fund support is received for RCA
operations. She further noted that regulated public utilities,
telecommunications utilities, and pipeline carriers pay RCCs,
which they are permitted to recover from customers and shippers.
MS. ALVEY addressed slide 8, "Revisions to the RCC." After the
RCA's annual budget is passed by the legislature, she explained,
the RCA is required to notify the public and the regulated
entities of the annual RCC amount. The [RCC] is calculated on
an annual basis, effective July 1 of each year, based on the
formula set out in regulation, and is established by RCA order.
Once established by order, she added, tariff sheets are issued
to the regulated entities reflecting the new RCC amount.
3:50:13 PM
MS. ALVEY turned to slide 9, "Statutory Cap," and explained that
the statutory cap for the amount the RCA expects to collect
through the RCC may not exceed the sum of the following
percentages of the total adjusted gross revenue of all regulated
public utilities, certificated telecommunication utilities, and
pipeline carriers: no more than 0.7 percent to fund operation
of the RCA and no more than 0.17 percent to fund operations of
RAPA. She conveyed that these caps were enacted with Senate
Bill 392 and signed into law on 6/25/04. She further informed
the committee that: the statutory cap sets the ceiling of what
the RCA may collect in revenue; the legislature approves the
RCA's operating budget and the RCC formula calculates how much
of the operating budget is needed to be collected from RCCs; and
the RCA is unable to collect more in RCCs than what is set as
the statutory cap.
MS. ALVEY presented slide 10, "Proposed Changes to the Statutory
Cap." She explained that HB 313 proposes to increase the
percentages from 0.7 percent to 0.98 percent to fund operations
of the RCA, and from 0.17 percent to 0.22 percent to fund
operations of RAPA.
MS. ALVEY moved to slide 11, "Alaska Energy Security Task Force
Report." She related that one of the priority actions suggested
in the report is to provide support for the RCA "sufficient to
improve the RCA's ability to respond timely and appropriately to
the complex energy production, generation, and transmission
challenges in Alaska." The task force, she further related,
found that the RCA must be provided sufficient budgetary support
to be able to attract and retain the highly skilled staff
necessary to adjudicate the complex and rapid pace of decisions
that are necessary for Alaska's continued access to affordable,
reliable, and resilient energy.
3:52:22 PM
MS. ALVEY displayed slide 12, "Possible Impacts of an Increase
to the Statutory Cap." She advised that the projected budgets
for the RCA and RAPA will soon exceed the statutory cap, and
without an increase to the statutory cap, the RCA and RAPA may
not be able to collect the amount needed through the RCC to fund
operations. Regarding the potential impact to ratepayers, she
specified that under the statutory cap proposed in HB 313, the
RCC impact on a customer would increase by about 27 cents, going
from about 67 cents to about 94 cents on a 650-kWh monthly
customer bill.
3:53:26 PM
NAOMI JOHNSTON, Administrative Operations Manager, Regulatory
Commission of Alaska (RCA), Department of Commerce, Community &
Economic Development (DCCED), co-provided a PowerPoint
presentation titled "House Bill 313: Public Utility Regulatory
Cost Charge," dated 3/25, 2024. She drew attention to the two
charts depicted on slide 13, "Statutory Cap vs. RCC Revenue."
She explained that both charts, one for RCA and one for RAPA,
present a projected 10-year forecast with the current statutory
cap and with the proposed increased statutory cap. The
fluctuations seen in both charts, she noted, are based on a
five-year historical pattern that shows how the statutory cap
can increase or decrease depending on the gross operating
revenues of the utilities in the prior calendar year. She
pointed out that the blue line on each chart represents the
requested statutory cap with the same fluctuations. Regarding
the RCA chart, Ms. Johnston explained that the green columns
represent the RCA's authorized budget, which is projected by
using an average of the prior five years and is an increase of
roughly 2.11 percent. The orange columns, she continued,
represent the revenue the RCA needs to collect from RCCs, which
can vary depending on the estimated carry forward from the prior
year, whether there are any other sources of revenue, and
whether there are any uncollectable RCCs from the prior year.
The RCA, she added, is not always collecting the full amount in
RCCs that are outlined in the RCA's budget. Regarding the RAPA
chart, she explained that it shows RAPA's projected operating
budget together with the current statutory cap and with the
proposed statutory cap. She noted that in fiscal year 2023 (FY
23), RAPA began to exceed its statutory cap by about $8,700.
3:55:16 PM
REPRESENTATIVE FIELDS posed a scenario in which the committee
deregulates approval of projects that are, say, under 200
megawatts. He asked how much that would save the RCA and
whether that would obviate the need for an increase in fees.
MS. ALVEY responded that she doesn't know how that would impact
the RCA and its operation and whether it would need the
statutory cap.
REPRESENTATIVE FIELDS related that three projects of about 120-
130 megawatts each are being pursued by Golden Valley Electric
Association (GVEA) and Chugach Electric Association (CEA) [in
Fairbanks and Anchorage, respectively]. The projects are about
the cost of current gas and much less expensive than imported
gas, he further related, plus the cooperatives have boards
elected by voters so there is a high degree of accountability.
He asked how much money would be saved if these three projects
were deregulated.
3:56:39 PM
REPRESENTATIVE RUFFRIDGE asked whether HB 313 would increase the
number of fees that go to operation of the RCA.
MS. JOHNSTON explained that the bill would increase the ceiling
that the RCA can collect to fund its operations. If the current
trajectory continues, she said, the RCA will exceed the current
cap in FY 26.
REPRESENTATIVE RUFFRIDGE, regarding the funding of operations,
inquired whether the RCA currently has vacant positions.
MS. JOHNSTON replied that the RCA has a 33 percent vacancy rate,
about 19 positions.
REPRESENTATIVE RUFFRIDGE asked whether Ms. Johnston is aware of
Resolution 23-18 that was passed by the Alaska Federation of
Natives (AFN) in October [2023].
MS. JOHNSTON answered that she is not aware.
REPRESENTATIVE RUFFRIDGE conveyed that Resolution 23-18 calls
for the State of Alaska to investigate the operations of the
Regulatory Commission of Alaska (RCA) that cause Alaska's rural
residents undue financial hardships that affect their ability to
thrive. He expressed his concern that even though the bill's
proposed increase is small, there are individuals within the
state who are already saying they pay too much.
3:59:15 PM
MS. ALVEY stated she is aware of the resolution. She explained
that there are multiple factors in a customer bill, one being
the RCC if the utility chooses to pass that on to its customers.
She further explained that some of the items happening are
outside of the RCC, such as increases in costs.
REPRESENTATIVE RUFFRIDGE inquired as to what the RCA is doing
about the resolution. Asking to raise the statutory cap seems
odd, he remarked, given that people, and rural Alaskans
specifically, are crying for help. He asked whether the RCA is
really needs that extra money when everyone else is hurting.
4:00:53 PM
REPRESENTATIVE PRAX surmised that more people could be hired if
the RCA received more money. He asked whether hiring more
people would reduce the timeline for docket processing, which he
gathers is almost a year.
MS. ALVEY replied that the timelines are set out in statute, but
that the RCA tries to get things done as efficiently as
possible. The RCA can handle the filings within the usual
tariff process, and it is about 45 days, she explained, but the
longer timelines are when the RCA suspends a filing for further
investigation. The items getting suspended, she continued,
frequently are the revenue requirements of the rate cases, which
can be complex and do need the timeline.
4:02:21 PM
CHAIR SUMNER asked whether the RCA regulates residential trash
pickup.
MS. ALVEY answered that the RCA regulates residential and
commercial trash, except commercial in Anchorage. The Fairbanks
borough, the Mat-Su, and the Kenai are not rate regulated, she
added, but they still are required to do filings with the RCA
CHAIR SUMNER asked whether the RCA regulates residential trash
pickup in the Mat-Su.
MS. ALVEY clarified that the RCA regulates residential trash
pickup across the state.
CHAIR SUMNER inquired about the amount of time spent on this.
MS. ALVEY replied that she is not sure on the number of hours.
She said the RCA accounts for trash as a whole and not just
commercial or residential when keeping track of the RCA's time.
CHAIR SUMNER asked about the number of trash haulers that the
RCA is currently regulating in the Mat-Su.
MS. ALVEY offered her belief that it is about four, but perhaps
a couple more.
4:04:11 PM
REPRESENTATIVE CARRICK inquired about the average percentage or
dollar amount of a utility's cost that the RCC represents.
MS. ALVEY responded that it would depend on the sales of the
utility because it is the number of kilowatt hours that the
utility sells times the rate. It is going to vary between the
smaller utilities and a [large] utility like CEA, she continued,
but probably up to a couple thousand dollars. She said she
would see if the RCA has an average of how many kilowatt hours.
REPRESENTATIVE CARRICK stated that that would be valuable
information for the committee to have.
4:05:33 PM
REPRESENTATIVE FIELDS mused as to whether costs could be cut on
the side of the utilities. He asked whether the RCA has
estimated the administrative costs of Alaska's electric
utilities for staff time and attorney time to go through the
process to permit new generation.
MS. ALVEY answered that typically the RCA does not see new
projects come in for project pre-approval; the RCA sees the
costs for a project when a utility files its rate case. But,
she noted, that will change with the large project pre-approval
statutes that currently operate under the electric reliability
organization (ERO).
REPRESENTATIVE FIELDS surmised that RCA staff spent as many
hours on CEA's two community solar applications as did CEA. He
said minimizing administrative burden for Anchorage's electric
utility is something he is thinking about.
4:07:41 PM
REPRESENTATIVE SADDLER put forth his understanding that HB 313
is a formulaic and housekeeping bill for how RCA and RAPA can
get the funds they need for doing their job of regulating the
utility situation right now. He questioned whether it is fair
to be getting into the larger issues of energy policy when Ms.
Alvey and Ms. Johnston are before the committee to discuss
funding in the bill.
CHAIR SUMNER remarked that the bill has an interesting title.
4:08:25 PM
REPRESENTATIVE RUFFRIDGE agreed with Chair Sumner. He asserted
that when RCA asks for an increase to the statutory cap, it puts
everything that RCA does under the microscope as far as, "Should
that cost that, and should those people do that?" He asked how
many people are currently employed under the sphere of the PCE
program with RCA.
MS. ALVEY replied that the majority of one financial analyst's
part is dealing with rural non-regulated PCE; the tariff section
currently has three of its four positions filled that deal with
calculation of power cost equalization in addition to the other
items; and the RCA has some clerical staff that helps with the
clerical pieces of it.
4:09:47 PM
REPRESENTATIVE CARRICK asked which vacancies the RCA would fill
should the cap increase be passed.
MS. ALVEY responded that the RCA would fill the currently vacant
analyst and support staff positions.
4:10:38 PM
The committee took a brief at-ease.
CHAIR SUMNER passed the gavel to Vice Chair Ruffridge.
4:11:11 PM
REPRESENTATIVE CARRICK requested further specifics regarding
RCA's personnel needs.
MS. ALVEY explained that everything comes into the RCA through
the Records and Filing Section. She further explained that
there are a few vacancies in the Advisory Section where the
analysts are and potential energy issues [are handled by]
engineering. She said everything with PCE has so far been
handled by current RCA staff.
4:12:46 PM
VICE CHAIR RUFFRIDGE asked why an increase is needed with a 33
percent vacancy rate and whether some other cost will be
significantly altered in the coming two years. He further asked
whether more people will be needed in addition to the
approximately 20 vacant positions.
MS. ALVEY replied that depending on what comes out of the
legislative session, RCA will potentially have some additional
needs for personnel. She said RAPA is currently at its
statutory cap and RAPA will intervene in cases before the
commission as part of ensuring the public interest. She stated
that she is unclear whether there will be additional needs in
the future outside of what has been projected in RCA's budget,
but based on projections RCA will exceed its current statutory
cap. She noted that RCA is working to fill its vacancies.
4:14:40 PM
MS. JOHNSTON pointed out that over the last couple years, some
of RCA's fixed costs over which it has no control have increased
significantly, which has increased RCA's budget by an unexpected
amount. She said the proposed [statutory cap] increase would
allow flexibility in RCA's budget to prepare for future
replacement of RCA's case management software and digitizing its
records, which would make those records available.
VICE CHAIR RUFFRIDGE suggested that potentially there could be a
capital request for reaching those efficiencies rather than a
long-term statutory cap increase, which would negate the need to
pass this along to Alaskan residents.
4:16:13 PM
VICE CHAIR RUFFRIDGE announced that HB 313 was held over.
4:16:29 PM
The committee took an at-ease from 4:16 p.m. to 4:20 p.m.
HB 324-INS. DATA SECURITY; INFO. SECURITY PRGRMS
4:20:00 PM
VICE CHAIR RUFFRIDGE announced that the next order of business
would be HOUSE BILL NO. 324, "An Act relating to insurance data
security; amending Rule 26, Alaska Rules of Civil Procedure, and
Rules 402 and 501, Alaska Rules of Evidence; and providing for
an effective date."
4:21:14 PM
The committee took a brief at-ease at 4:21 p.m.
4:21:36 PM
REPRESENTATIVE WRIGHT moved to adopt the proposed committee
substitute (CS) for HB 324, Version 33-LS1348\B, Wallace,
3/21/24, ("Version B"), as the working document.
REPRESENTATIVE CARRICK objected for purposes of discussion.
4:21:57 PM
The committee took a brief at-ease.
4:22:32 PM
REPRESENTATIVE CARRICK removed her objection. There being no
further objection, Version B was before the committee.
4:22:43 PM
REPRESENTATIVE WILL STAPP, Alaska State Representative,
introduced HB 324 as prime sponsor. He stressed that insurance
data security is paramount in today's digital age given that
data breaches have occurred throughout Alaska and insurance is
no different. While most insurance companies have taken steps
to mitigate the risk of data breaches, he stated, the bill would
set a uniform standard to allow the Division of Insurance to
regulate those companies to ensure that Alaska's constitutional
provision of right to privacy is upheld and consumers'
information is protected as much as possible. He allowed [it's
likely impossible to] devise a system in which an individual's
personal information is always going to be protected but said HB
324 would be one step forward to establishing a good regulatory
framework to ensuring that an individual's data is protected.
4:24:32 PM
CLIFTON COGHILL, Staff, Representative Will Stapp, Alaska State
Legislature, on behalf of Representative Stapp, prime sponsor of
HB 324, presented the changes in Version B, the proposed CS for
the bill. He spoke from the document, titled "Summary of
Changes for HB 324 Bill Version A to B" [included in committee
packet], which read as follows [original punctuation provided]:
Structural Change
All sections of the bill moved from AS 21.96 to AS
21.23. Legal Services Division felt that the topic of
the bill would fit better under Risk Management in
Alaska statute.
Throughout the bill, changes all references of 72
hours to 3 business days instead.
All Changes are in Section 1
• Page 1, Line 5
o Adds a new section, Purpose and Construction,
establishing an exclusivity standard.
• Page 2, Line 1-5
o Adds clarifying language.
commensurate with the size and complexity of the
licensee and in consideration of the nature and scope
of the licensee's activities and be used by on in
possession or control of the licensee
• Page 4, Line 2-4
o Adds clarifying language.
The licensee shall adopt procedures for testing the
security of externally developed applications used by
the licensee.
• Page 5, Line 2-9
o Adds clarifying language.
where appropriate, encrypted nonpublic information is
not considered accessible to, or held by, the third-
party service provider if the associated protective
process or key necessary to assign [meaning] to the
nonpublic information is not within the possession of
the third-party service provider;
• Page 8, Line 8-10
o Changes "law enforcement official" to be exclusively
of federal law enforcement. There were
concerns that law enforcement would be too broad.
o (a) Unless a federal law enforcement official
instructs the licensee not to distribute information
regarding a cybersecurity event
• Page 8, Line 25-26
o Adds clarifying language
o (b) To the greatest extent possible and in a form
and format prescribed by the
o director,
• Page 10, Line 27-28
o Except as provided in (f) and (g) of this section, a
licensee acting as an assuming insurer ovides
reporting requirement exemptions for reinsurers with
exceptions.
• Page 11, Line 9-23
o Clarifies reporting requirements regarding insurers
and insurance producers.
o (j) An insurer shall notify an insurance producer of
a cybersecurity event
o involving nonpublic information, not later than the
date the notice is provided to the affected consumers,
if (1) the nonpublic information is in the possession
or control of a licensee that is an insurer or the
licensee's third-party service provider; (2) the
consumer accessed the insurer's services through an
insurance producer; and (3) the insurer is required to
notify affected consumers
• Page 13, Line 1-4
o Clarifies that the director cannot share privileged
information without the written consent of licensees.
• Page 14-15
o Clarifies some definitions. Of note is the
definition of "non-public information" is expanded
upon.
4:28:28 PM
REPRESENTATIVE FIELDS asked whether local or state law
enforcement has been involved in security breaches in the past.
4:29:06 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community & Economic Development (DCCED) State of
Alaska, responded that when the original bill was introduced
there was discussion with the insurance industry that if a
cyberbreach occurred and the industry was also working with the
Federal Bureau of Investigation (FBI) or the [US] Department of
Justice (DOJ), industry might not have to report to the Division
of Insurance, yet the Division of Insurance is the is the
insurance industry's regulator. The compromise, she continued,
was that industry would report to the division unless the FBI or
the DOJ directs otherwise, and so the division's mission would
be to ensure that consumers in Alaska receive notice and then
the investigation would proceed from there.
REPRESENTATIVE FIELDS reported that half of the other US states
have adopted some version of this bill. He asked whether it
varies or is cookie cutter across these states in following the
language of the National Association of Insurance Commissioners
(NAIC). He further asked whether HB 324 is cookie cutter or has
specific factors built in.
MS. WING-HEIER responded that there was nothing built in by the
department. There were discussions, she said, about whether to
exempt agencies with 10 employees or with 15 employees, but
there was no giving up on any major deviations from the NAIC
model law.
4:30:48 PM
REPRESENTATIVE CARRICK inquired about the reasons for the
exemption of 10 or fewer and how that looks in other states.
MS. WING-HEIER answered that the NAIC model uses the number 10
because NAIC thought the cost to a very small agency would be
prohibitive. She pointed out that companies like State Farm or
Allstate will get what HB 324 asks for in cybersecurity data
protection, and smaller agencies that are in direct riders would
rely on the insurer itself.
REPRESENTATIVE CARRICK surmised the intent would be that this
language would cover the larger company, which would therefore
cover the small entities. In other words, she continued, every
insurer in the state would be covered by this language in some
form or fashion.
4:31:54 PM
REPRESENTATIVE STAPP replied that HB 324 has two aspects, one on
the insurer side and one on the producer side. The number being
referenced is relevant to 10 folks at a producer firm, he said.
Big companies like State Farm and Allstate, he continued, have
way more than 10 staff, have individual agencies, and already
have some different aspect of cybersecurity, such as the now-
standard two-step authentication. This bill, he explained, sets
the regulatory framework at the state level because states'
divisions of insurance still regulate that practice individually
across the 50 states.
4:33:28 PM
REPRESENTATIVE STAPP advised that there are aspects in HB 324
that should be tweaked, and he is working with the sponsor of
the Senate companion bill to address them. He said the number
10 is NAIC language and he doesn't know whether that figure is
applicable to any kind of agency in Alaska, and it may not
matter if the number were changed to 15. The bill is very
technical and needed, he added, even though he doesn't like
additional regulatory things.
4:34:27 PM
VICE CHAIR RUFFRIDGE announced that HB 324 was held over.
4:34:36 PM
The committee took an at-ease from 4:34 p.m. to 4:35 p.m.
HB 55-EXTEND WORKFORCE INVEST BOARD ALLOCATIONS
4:35:57 PM
VICE CHAIR RUFFRIDGE announced that the next order of business
would be HOUSE BILL NO. 55, "An Act relating to allocations of
funding for the Alaska Workforce Investment Board; and providing
for an effective date." [Before the committee was CSHB
55(EDC).]
4:36:15 PM
REPRESENTATIVE CARRICK noted that HB 55 was before the committee
[on 3/22/24], so today she will take questions about policy.
4:37:02 PM
TERI COTHREN, Associate Vice President, Workforce Development,
University of Alaska, provided a PowerPoint presentation titled
"Technical Vocational Education Program," [TVEP], dated 3/25/24.
She displayed the title slide and said she will provide the
context for the importance of reauthorizing TVEP and providing
funding to upscale and rescale Alaskans for high demand jobs in
the state. She stated that because of the billions in federal
funding for infrastructure projects, skilled workforce needs
will steadily increase over the coming years, and TVEP provides
stable funding to train Alaskans for these projects and for
maintaining the infrastructure long term.
MS. COTHREN showed slide 2 and discussed the 2024 jobs forecast.
She said the University of Alaska (UA) is the state's largest
and most comprehensive workforce provider and is key to meeting
Alaska's workforce needs. She moved to slide 3 and pointed out
that the three separately accredited universities within the UA
system have distinct missions. She said they are also
responsible for serving the community college mission through
thirteen community campuses that provide access to current
technical education across all six of Alaska's economic regions.
4:38:50 PM
MS. COTHREN stated that slide 4 is a summary of employment
outcomes for nearly 27,000 graduates across 11 industries
important to Alaska's economy. She reported that the graduates
from short-term certificate and associate programs are
outearning the average Alaska wage by their fifth year of
employment. She specified that 94.8 percent of these working
graduates are Alaska residents and said reauthorization of TVEP
is critical in addressing the state's workforce needs.
MS. COTHREN spoke to slide 5. She explained that the university
collaborates with the Department of Labor and Workforce
Development (DLWD) on the annual Technical and Vocational
Education Program Report and demonstrates requirements outcome.
She related that [for fiscal year 2023], the university utilized
its 45 percent allocation to train nearly 5,000 students who
overall had an 80 percent employment rate [after exit], and
nearly 1,300 high school students [received college credit].
The university, she continued, distributes its single TVEP
allocation through a competitive grant process that includes all
campuses and programs in the UA system that are aligned state
identified priorities and are the intent of TVEP.
4:40:51 PM
MS. COTHREN addressed slide 6. She said TVEP supports high
priority industries that are aligned to Alaska Workforce
Investment Board priority industries and TVEP serves all six of
Alaska's economic regions. The Fairbanks Pipeline Training
Center, she noted, receives a portion of UA's 45 percent
allocation as pass-through funding based on a 2008 fiscal note.
MS. COTHREN turned to slide 7 and reviewed the performance
outcomes and efficient use of funding to train Alaskans
reflected in the TVEP annual report. Multiple access points are
being provided for technical education across Alaska, she
stated, and collectively across the 10 TVEP recipients over
8,500 participants were trained in fiscal year 2023 for an
average cost of just over $1,600 per participant.
4:42:03 PM
MS. COTHREN displayed slide 8 and concluded her presentation.
She said the University of Alaska strongly supports the
reauthorization of TVEP [HB 55] to provide stable funding to
address Alaska's growing workforce needs. She added that the
university continues to be aligned with the Workforce Investment
Board's identified industry priorities and to ensure outcomes
that align with TVEP performance criteria.
4:42:40 PM
REPRESENTATIVE FIELDS drew attention to slide 7 and noted that
the Amundsen Educational Center received [$274,100] and trained
5 people [at an investment of $54,820 per person]. He inquired
about the training programs that Kenai residents would enjoy if
the legislature allocated another $274,000 to the Kenai
Peninsula.
MS. COTHREN replied that the university's Kenai Peninsula
College, which serves over 1,700 students, has welding programs
and programs in process technology that were started in
partnership with the oil and gas industry, as well as general
education requirements as a pathway into other degree programs.
4:44:20 PM
REPRESENTATIVE SADDLER brought attention to slide 7 and inquired
about the high utilization rate by adults at Ilisagvik College
[799] versus the number of adults served by Alaska Vocational
Technical Center (AVTEC) [1,170], given the small number of
people in the North Slope area as compared to the statewide
population of about 750,000.
MS. COTHREN responded that she cannot speak to that.
4:45:14 PM
REPRESENTATIVE CARRICK posited that as a hub campus for lots of
communities on the North Slope, Ilisagvik College is providing
training to a large region and not just the community of
Utqiagvik [formerly Barrow].
4:45:51 PM
VICE CHAIR RUFFRIDGE announced that HB 55 was held over.
4:46:12 PM
The committee took an at-ease from 4:46 p.m. to 4:48 p.m.
HB 226-PHARMACIES/PHARMACISTS/BENEFITS MANAGERS
4:48:01 PM
VICE CHAIR RUFFRIDGE announced that the final order of business
would be HOUSE BILL NO. 226, "An Act relating to the Board of
Pharmacy; relating to insurance; relating to pharmacies;
relating to pharmacists; relating to pharmacy benefits managers;
relating to patient choice of pharmacy; and providing for an
effective date." [Before the committee was CSHB 226(HSS).]
4:48:30 PM
VICE CHAIR RUFFRIDGE opened public testimony on HB 226.
4:48:50 PM
BRIAN RIDLEY, Chief/Chairman, Tanana Chief's Conference (TCC),
testified in support of HB 226. He stated that patients and
pharmacists in Alaska are currently in a state of financial
crisis, with prescription drugs becoming unaffordable. He
reported that, through mergers, just three of the 70 pharmacy
benefit managers (PBMs) in the US control 80 percent of the
prescription drug market. He further reported that each of
these three also own a health insurer, a large franchise
pharmacy, and large medical providers, thereby controlling
pricing, coverage, cost control, where prescriptions can be
filled, and the ultimate cost to the employer and patient.
Tribal health organizations, he stated, are the only healthcare
option in many of Alaska's rural communities and their ability
to continue providing pharmacy services is in serious jeopardy
due to the practices of PBMs. Mr. Ridley said [TCC] has
calculated a loss of more than $4 million annually to the bottom
line of [tribal health care] pharmacies and the State of Alaska
is spending nearly $8 million more annually using the current
PBM contract than it would under the provisions included in HB
226. He urged the rapid passage of HB 226.
4:51:22 PM
REPRESENTATIVE FIELDS asked whether it is the Title 21 or Title
39 language in the bill that would have primary impact on tribal
health providers.
MR. RIDLEY answered that he is not sure.
4:52:06 PM
TAMMY THIEL, Executive Director, Denali Oncology Group (DOG),
testified in support of HB 226. She said the bill seeks to
regulate the harmful practices of white bagging and brown
bagging policies employed by insurers and pharmacy benefit
managers (PBMs). White bagging and brown bagging policies, she
explained, require that patient medications be delivered through
an insurer or PBM-designated specialty pharmacy rather than
allowing providers to acquire and dispense these medications
directly. This can lead to many issues for patients and
providers, she noted, including the improper delivery and
storage of medication, delayed end care, and medical waste. She
said DOG believes that healthcare providers, in consultation
with their patients, should maintain the ability to choose the
most appropriate sources for obtaining and administering
necessary medication. She said HB 226 would preserve the
ability of oncologists to manage the procurement and
administration of medication through established and trusted
channels, thereby protecting the wellbeing of cancer patients in
Alaska. She asked that the committee pass HB 226.
4:54:31 PM
JAMES LEE, Director, State Regulation and Policy, Community
Oncology Alliance (COA), testified in support of HB 226. He
said COA believes that white and brown bagging practices
threaten patient safety, compromise treatment efficacy, and pose
significant challenges to the continuity of care for Alaskans
with cancer. He explained that white and brown bagging refers
to the process where insurers and PBM affiliated specialty
pharmacies mail or deliver cancer medications directly to the
physician's office or to the patient's home rather than allowing
the patient's oncologist to directly handle and dispense the
medications. Under white and brown bagging insurer policies, he
argued, the integrity and safety of highly specialized and
fragile cancer medications cannot be guaranteed once they leave
the controlled environment of their affiliated specialty
pharmacy. He pointed out that improper handling, storage, or
temperature control during shipping can compromise the efficacy
of a drug and impact patient outcomes. Dosage changes are
common in cancer care, he noted, but these policies can delay
changes due to the need to reorder and await delivery of new
medication, further complicating a patient's health.
4:57:11 PM
TONIA NEAL, Senior Director, State Affairs, Pharmaceutical Care
Management Association (PCMA), testified in opposition to HB
226. She noted that PCMA is the national trade association for
PBMs. She said PBMs operate within a highly regulated framework
overseen by several federal agencies, and their role is to serve
as a service provider for health plans, not to unilaterally set
pharmacy access or out of pocket cost. Drug pricing is dictated
by manufacturers, she stated, and PBMs promote the use of
generic alternatives which account for 90 percent of dispensed
prescriptions in the US. Specialty drugs are responsible for
about 82.5 percent of the cost, she continued, so the committee
should look at the whole supply chain, not just the one entity
involved in HB 226. She said specialty pharmacies focus on high
cost and high-tech medications that are not self-administered,
that are typically sent to the provider's office to administer,
and that may require special handling, storage, and
administration. She argued that the mandate in HB 226 to shift
pricing to National Average Drug Acquisition Cost (NADAC) will
increase costs to Alaskans without a benefit. She further
argued that the bill's mandate of profit guarantees for
pharmacies could compromise costs and patient safety by
undermining the specialty drugs.
4:58:43 PM
BALLARD SAUL, PharmD, BCPS, representing self, testified in
support of HB 226. He stated that the current practice of white
and brown bagging by PBMs hinders the ability of pharmacists to
ensure the delivery of safe and effective therapy to patients
because pharmacists are unable to certify the medication's
integrity. He asked that committee members consider whether
they would prefer a supply chain that is manned by individuals
who have dedicated their lives to education and training, or one
that is comprised of health care facilities that have invested
millions of dollars to ensure that the medication received by a
patient is safe and effective, or one that has very few checks
and balances to ensure the medication is handled appropriately.
White and brown bagging, he stressed, are a medication safety
concern anywhere, and especially in Alaska.
[VICE CHAIR RUFFRIDGE returned the gavel to Chair Sumner.]
5:01:59 PM
SHAWNA KING, PharmD, BCPS, Providence Alaska Medical Center,
testified in support of HB 226. She stated that the lack of PBM
regulation in Alaska is allowing mail order only practice by
insurance companies, causing local pharmacies in Alaska to close
and thereby limiting access to medications for everyone. It
impacts the appropriate management of chronic diseases, she
maintained, and limits access to medications needed to treat
urgent medical issues, such as antibiotics. Pharmacy benefit
managers do not equally reimburse local pharmacies, she said,
and PBMs claim to reduce medication cost but fail to provide
transparent evidence of medication cost savings to patients.
She related that several home infusion pharmacies and infusion
centers in Anchorage have closed due to the negative financial
impacts of the white bagging and brown bagging practices
required by PBMs. There is unclear chain of medication custody,
she asserted, which violates the Drug Supply Chain Security Act
[of 2013] and appropriate therapy is often delayed for patients
because of the known shipping issues for specialty medications,
especially to Alaska.
5:04:07 PM
LEIF HOLM, PharmD, Owner, Alaska Family Pharmacy, testified in
support of HB 226. He related that Alaska Family Pharmacy
opened its first store in 1960 and grew into four stores serving
Interior Alaska with plans to expand. But instead, he
continued, Alaska Family Pharmacy had to close its tele-pharmacy
in Healy due to unfair reimbursement practices and another
pharmacy due to an employee crisis exacerbated by a lack of
capital from consistently inadequate reimbursements. He said
his pharmacy became the only independent pharmacy in Interior
Alaska in 2022 when the other independent pharmacy closed, and
he is aware of two independent locations in Juneau that closed
recently. He noted that his pharmacy continues to struggle with
reimbursement issues. He asserted that it is not an isolated
case of him being a terrible businessman, but rather it is a
case of the math not adding up given that demand is increasing,
prices are increasing, overhead is increasing, while
reimbursements to pharmacies are shrinking. [Pharmacies] have
no ability to set their prices, he continued, and no other
business has such little power to deal with the inflation that
is happening.
5:06:03 PM
SAMANTHA ERVIN, PharmD, BCACP, representing self, testified in
support of HB 226. support for HB 226. She stated that in her
nearly three years as a pharmacist in Tok she has become
increasingly concerned with current PBM practices because they
put a threat to all small rural pharmacies in Alaska. She
related that prior to the Tok pharmacy opening in 2021, patients
used mail order pharmacies or drove eight hours round trip for
their chronic medication needs. If critical medications came
from a mail order pharmacy, she continued, they arrived with no
counseling support on how to use complicated devices or special
ways to take the medications or which side effects to watch for.
She said some of her concerns with PBMs include forced co-pays
to use local pharmacies, refusal to send diabetic medication for
risk of freezing resulting in a loss in care, continued sending
of medications that were stopped by providers, and sending
critical lifesaving medications late, resulting in patients
going to local pharmacies for the medication to prevent a lapse
in care and having to pay again. The option to use mail order
pharmacies should be kept as an option, she stated, not a must.
5:08:12 PM
DARLENE HUNTINGTON, representing self, testified in support of
HB 226. She stated that she primarily serves patients residing
in villages throughout Interior Alaska. Because the villages
are not connected to a road system, she continued, patients
cannot walk down the street to a local pharmacy to rectify a
prescription that has been damaged in transit or damaged due to
weather. She said the PBM mail order system does not
accommodate for real life scenarios in villages, such as post
offices sometimes being closed for long periods due to
postmaster staffing shortages, medications getting stuck in the
US Postal Service for extended periods of time and having to be
wasted because of going out of an acceptable temperature storage
range, and patients being unable to cross rivers during spring
breakup to get to a post office. She asserted that the current
PBM model does not provide an acceptable level of care and
diligence that is provided by local pharmacists in Alaska and
does not fit or serve the logistical challenges of communities
in rural Alaska.
5:10:30 PM
GERALD "JERRY" BROWN, Pharmacist, representing self, testified
in support of HB 226. He related that about 10 years ago he and
his wife purchased a legacy pharmacy in Fairbanks but lost the
pharmacy because of the negative revenue that was being forced
on them by the PBMs. He stated that 10 years ago the gross
margins were about 22 percent as compared to 2 percent today,
which makes it impossible to hire enough pharmacists and/or
staff to conduct business and so the pharmacy was running in
negative revenue. The purpose of government, he said, is to
provide and develop infrastructure for the state and develop
rules of conduct through legislation to provide a stable tax
state and guide the future of Alaska.
5:12:59 PM
DIRK WHITE, RPh, representing self, testified in support of HB
226. He stated that the retail pharmacy world is under attack
by pharmacy benefit managers. He maintained that PBMs have a
hidden agenda to close all competition, which has been creating
health care deficits across the US, including Alaska. He
recounted that just today two patients informed his pharmacy
that Optum, the State of Alaska's pharmacy benefit manager,
called them trying to get them to move to mail order pharmacy
out of state. How many other patients have been called, he
asked. He argued that it is an egregious policy when Alaska's
retiree and active employee pharmacy benefits manager tries to
remove patients from [local] care and get them to go to mail
order. This pulls money from Alaska's fragile state economy, he
said, and Sitka is isolated on an island without other economic
engines. The PBMs must be stopped, he submitted, because they
only care about their profits and not Alaska's citizens or their
health.
5:14:49 PM
MEGAN PENNER, PharmD, BCPS, representing self, testified in
support of HB 226. She stated that she recently had corneal
transplants, and as a patient herself she has seen the impacts
of PBMs on medication access because limited pharmacies carry
the eye drops that she needs. She said PBMs have forced Tri-
Care's hand on restricting where she can get her prescriptions
filled in Eagle River, resulting in significant delays in
accessing the medication she needs for her transplants. She
related that as a hospital pharmacist she sees the impacts of
PBMs in transitions of care and she often worries that patients
will not receive their prescriptions in a timely manner because
of PBMs. As an educator, she further related, she sees the
impacts of PBMs on new graduates as they have decreased
opportunities for work in Alaska's small local pharmacies.
5:15:52 PM
MARK BOHRER, RPh, Pharmacy Practice Coordinator, Fred Meyer,
testified in support of HB 226. He stated that Fred Meyer
believes HB 226 represents a step towards safeguarding patients'
rights and improving access to quality health care. The reforms
in HB 226, he said, would ensure that patients have the freedom
to choose their pharmacy without undue influence from PBMs;
would bring PBMs within the purview of the Alaska Unfair Trade
Practices and Consumer Protection Act; and would require
reimbursement at an objective and transparent standard. He put
forth that the PBM practice of reimbursing pharmacies below drug
acquisition cost has led to permanent and/or temporary pharmacy
closures within Alaska. Those pharmacies that have not yet had
to close their doors or reduce hours, he advised, have not yet
had to make the difficult decisions of which drugs to stock, how
to remain open without making staffing cuts, or not renewing
certain third-party contracts due too low a reimbursement. He
said HB 226 will help ensure pharmacies continue providing
Alaskans with the same level of service and access to
medication, and will advance patient rights, improve health care
outcomes, and promote fairness in the pharmacy industry.
5:18:12 PM
BRITTANY KARNS, PharmD, representing self, testified in support
of HB 226. She related that she has worked across a spectrum of
pharmacies, and all are being directly impacted by bad PBM
practices. The bottom line, she submitted, is that PBMs are big
businesses that are making big money off unfair practices and
what [Alaska's pharmacies] are asking for is fair practices.
Local pharmacies, she said, are telling the committee today that
they are being choked out by big businesses who want all that
money. She questioned the choice to have white and brown
bagging practices when clinics and hospitals already have
pharmacies staffed with Doctors of Pharmacy, who have completed
residencies. The only reason, she answered, is so the PBMs can
make the money on the drug and other people do all the work.
The medications are shipped with no instructions, she continued,
and then the recipients come to her pharmacy to ask how to do it
and she doesn't make any money. She asserted that the PBM model
is not transparent, and it drives the money out of state, while
constituents tell their legislators that it is killing their
businesses and driving pharmacy out of Alaska.
5:20:32 PM
KAREN MILLER, Pharmacist, representing self, testified in
support of HB 226. She said she is concerned about access to
pharmacy care and noted that in the last two years independent
pharmacies have closed their doors or decreased their hours.
For example, she continued, her employer Denali Pharmacy is
supported by a facility but had to [reduce the time it is open
by five hours]. She said she is concerned about the practices
of PBMs and all she is asking for is transparency. She offered
her belief that when PBMs say they save health care dollars,
these savings turn into a burden of cost to providers,
pharmacies, and patients. [Providers] are having to hire more
staff, she specified, one full time equivalent (FTE) for every
five providers, just to deal with the PBM practices for paying
claims, or contracting with third party vendors for thousands of
dollars a year just to figure out what medication is currently
covered by this pharmacy benefit plan. Further, she related,
pharmacies are not getting reimbursed for the cost of the drug,
let alone a dispensing fee. Patients are paying bigger co-pays
than ever before, she continued. Where are the cost savings,
she asked, to a patient who ends up in the intensive care unit
(ICU) for diabetic ketoacidosis (DKA) because they couldn't
afford to pick up their insulin?
5:23:06 PM
CHAIR SUMNER closed public testimony on HB 226.
[HB 226 was held over.]
5:23:20 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:23 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB313 PowerPoint Presentation for HL&C.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 313 |
| HB313 ver. A.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 313 |
| HB313 Transmittal Letter.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 313 |
| HB313 Sectional Analysis ver. A.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 313 |
| HB313 Fiscal Note DCCED-RCA.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 313 |
| HB 324-Sponsor Statement.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 324 |
| HB 324 Sectional Analysis.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 324 |
| HB 324 Supporting Documents-State Map.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 324 |
| HB233 Support Letter - Chair of Automative and Diesel Tech UAA.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 233 |
| UA TVEP_HLC Committee_3-25-24.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 55 |
| 2024 UA TVEP Reauthorization Report.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 55 |
| FY23 AWIB Technical and Vocational Report.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 55 |
| AWIB Resolution Supporting Reauthorization of TVEP-docx.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 55 |
| B.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 324 |
| Summary of Changes HB 324 – Bill Ver A to B.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 324 |
| 20240325 AK HB 226 COA support.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 226 |
| HB218 Amendments.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 218 |