Legislature(1999 - 2000)
02/10/1999 TBA House URS
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON UTILITY RESTRUCTURING
February 10, 1999
COMMITTEE CALENDAR
OVERVIEW: PHASE 1 AK RURAL ELECTRIC CO-OP(ARECA)
BACKGROUND ON UTILITY NETWORK
AURORA POWER
MUNICIPAL LIGHT & POWER (ML&P)
TAPE(S)
The recording begins with Tape 99-2A, Side B, and continues on Tape
99-2A, Side A, and then concludes on Tape 99-2B, Side A.
CALL TO ORDER
CHAIRMAN BILL HUDSON called the House Special Committee on Utility
Restructuring meeting to order at an unspecified time.
PRESENT
Members present at the call to order were Representatives Hudson,
Cowdery, Green, and Porter. Representatives Davies, Rokeberg and
Berkowitz arrived as the meeting was in progress.
OTHERS PRESENT
Eric Yould, Executive Director, Alaska Rural Electric Cooperative
Association, Incorporated; Mary Ann Pease, Aurora Power Resources,
Incorporated; Meera Kohler, General Manager, Municipal Light &
Power;
SUMMARY
[The recording begins with Tape 99-2A , Side B, and continues on
Tape 99-2A, Side A, and then concludes on Tape 99-2B, Side A.]
ERIC YOULD, Executive Director, Alaska Rural Electric Cooperative
Association, Incorporated (ARECA), discussed ARECA, the trade
association that represents the utility industry in Alaska. Mr.
Yould stated, "I'm really not here to advocate a position for or
against restructuring, in general." He noted that although ARECA
strongly supports the study initiated by the interim committee with
the APUC, ARECA questions the voracity, viability and timing of the
pilot study. Mr. Yould also noted that most utilities are opposed
to any restructuring in rural Alaska. The discussion then turned
to the federal activity in the area of deregulation as well as
state activity in order to provide a background of the utility
industry in the state. There was also discussion regarding some of
the standards that ARECA would like to see. Mr. Yould anticipated
deregulation on a national scale as there are two bills, at
minimum, that will be introduced this year. One bill, which is
very encompassing, was introduced by the Clinton Administration.
The other bill by Senator Murkowski, which has yet to be
introduced, would basically have no state mandate and no date
certain but rather would make it appropriate for states, if in
their best interest, to adopt utility deregulation [in a manner
appropriate for them]. He reviewed the status of what is happening
in the Lower 48 and noted that the National Rural Electric
Cooperative Association website keeps a summary of such
information. The discussion of the energy market in the Lower 48
was related to the energy market in Alaska. The discussion then
turned to Alaska's situation, specifically the difference between
the Railbelt and the rural areas. Mr. Yould mentioned the
following deregulation issues: market presence/ monopolization,
"cherry picking", stranded costs, obligation to serve under
deregulation, reliability and tax exempt status. In regards to
pilot programs, Mr. Yould noted that the utility industry would be
more favorable of such if the study first establishes the merits of
restructuring. He then reviewed the conclusions provided by the
General Managers [of the electric industry].
MARY ANN PEASE, Vice President, Aurora Power Resources,
Incorporated, reviewed who Aurora Power is, the benefits of
competition, the pilot program pending before APUC, the objectives
and goals of the pilot program. She also reviewed some of the
issues that Mr. Yould didn't cover as well as some of the issues
which she had a slightly different view on such as the retail cost
of electricity, the residential input, publicly-owned versus
investor-owned [utilities], urban and rural issues, and stranded
costs. In conclusion, she mentioned some legislative
considerations.
MEERA KOHLER, General Manager, Municipal Light & Power (ML&P),
discussed how the restructuring impetus has occurred gradually in
the Lower 48 as technological and economic factors have driven the
costs of generating electricity. Ms. Kohler discussed the
interstate power grid, which makes it feasible to move energy
across the [Lower 48]. This is not the case in Alaska as areas are
physically isolated from one another, specifically the rural areas
are physically isolated from the Railbelt which is physically
isolated from the Lower 48 grid. Furthermore, Alaska doesn't have
sufficient funds to cure either problem and thus if there is to be
competitive local generation sources, they have to be located in
the end-user area. The discussion, then, turned to the bottle neck
transmission facility and the marginal savings that could be
achieved through power pooling and unbundling. The need to address
consumer issues was noted as she predicted consumer confusion,
which would potentially result in the abuse of consumer interests.
She then discussed the electric restructuring efforts in the Lower
48, which have received mixed reviews. She specifically discussed
the situations in California and Oregon. She expressed concern
that the relatively fragile Alaskan infrastructure would make
policy reversals a lot more risky than in other parts of the
country.
MS. KOHLER, then, reviewed the basic principles that [ML&P]
believes should be followed in electrical restructuring. Those are
competition, safety, reliability, availability. It was noted that
change should not disadvantage any area nor should it create a
windfall to a particular area. The need for an Alaskan solution
was emphasized. The positive and negative aspects of the joint
study commissioned by the APUC and the Joint Committee on HCR 34
were discussed. In conclusion, questions regarding the pilot
project in the Railbelt and rebuttals to some of Ms. Pease's
comments were addressed.
A question and answer session followed.
NOTE: The meeting was recorded and a copy of the tapes may be
obtained by contacting the House Records Office at 130 Seward
Street, Suite 211, Juneau, Alaska 99801-1182, (907) 465-2214, and
after adjournment of the second session of the Twenty-first Alaska
State Legislature, in the Legislative Reference Library, (907)
465-3808.
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