Legislature(1999 - 2000)
03/03/1999 08:04 AM House URS
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON UTILITY RESTRUCTURING
March 3, 1999
8:04 a.m.
MEMBERS PRESENT
Representative Bill Hudson, Chairman
Representative John Cowdery, Vice Chairman
Representative Pete Kott
Representative Norman Rokeberg
Representative Ethan Berkowitz
MEMBERS ABSENT
Representative Brian Porter
Representative John Davies
Representative Joe Green (alternate)
COMMITTEE CALENDAR
* HOUSE BILL NO. 101
"An Act relating to the reinstatement of corporations that are
public utilities; and providing for an effective date."
- HEARD AND HELD
(* First public hearing)
PILOT STUDY PRESENTATION BY CH2M HILL
MARLOW POWER AND STEAM
PREVIOUS ACTION
BILL: HB 101
SHORT TITLE: CORPORATE PUBLIC UTILITY REINSTATEMENT
SPONSOR(S): REPRESENTATIVES(S) MORGAN
Jrn-Date Jrn-Page Action
2/19/99 258 (H) READ THE FIRST TIME - REFERRAL(S)
2/19/99 258 (H) URS, L&C
3/03/99 (H) URS AT 8:00 AM CAPITOL 120
WITNESS REGISTER
HEATHER GRAHAME, Attorney
Dorsey and Whitney LLP
1031 West Fourth Avenue, Suite 600
Anchorage, Alaska 99501
Telephone: (907) 257-7822
POSITION STATEMENT: Testified in support of HB 101.
JIM ROWE, Director
Alaska Telephone Association
201 East 56th, Suite 114
Anchorage, Alaska 99518
Telephone: (907) 563-4000
POSITION STATEMENT: Testified in support of HB 101.
BOB LOHR, Executive Director
Alaska Public Utilities Commission
Department of Commerce and Economic Development
1016 West Sixth Avenue
Anchorage, Alaska 99501
Telephone: (907) 276-6222
POSITION STATEMENT: Testified on HB 101.
GINNY FAY, Legislative Liaison
Office of the Commissioner
Department of Commerce and Economic Development
P.O. Box 441800
Juneau, Alaska 99811
Telephone: (907) 465-2503
POSITION STATEMENT: Answered questions on HB 101.
KARL RABAGO, Consultant
CH2M Hill Incorporated
301 West Northern Lights Boulevard
Anchorage, Alaska 99501
Telephone: (907) 278-2551
POSITION STATEMENT: Presented the Retail Pilot Program report.
RAY KREIG
201 Barrow Number 1
Anchorage, Alaska 99501
Telephone: (907) 276-2025
POSITION STATEMENT: Participated in the Retail Pilot Program
report.
ERIC YOULD
701 West Tudor
Anchorage, Alaska 99503
Telephone: (907) 561-6103
POSITION STATEMENT: Participated in the Retail Pilot Program
report.
STEVE CONN
507 East Street, Number 213
Anchorage, Alaska 99501
Telephone: (907) 278-3661
POSITION STATEMENT: Participated in the Retail Pilot Program
report.
MARY ANN PEASE
310 K Street, Number 601
Anchorage, Alaska 99501
Telephone: (907) 277-1003
POSITION STATEMENT: Participated in the Retail Pilot Program
report.
MARC MARLOW
Marlow Power and Steam, Incorporated
2600 Railroad Avenue
Anchorage, Alaska 99501
Telephone: (907) 229-8176
POSITION STATEMENT: Presented the Marlow Power and Steam report.
RANDY KAER
Marlow Power and Steam, Incorporated
2600 Railroad Avenue
Anchorage, Alaska 99501
Telephone: (907) 229-8176
POSITION STATEMENT: Presented the Marlow Power and Steam report.
ACTION NARRATIVE
TAPE 99-5, SIDE A
Number 0001
CHAIRMAN BILL HUDSON called the House Special Committee on Utility
Restructuring meeting to order at 8:04 a.m. Members present at the
call to order were Representatives Hudson, Cowdery, Kott and
Berkowitz. Representative Rokeberg joined the meeting at 8:08 a.m.
Representative Green (alternate) was not present.
HB 101 - CORPORATE PUBLIC UTILITY REINSTATEMENT
Number 0228
HEATHER GRAHAM, Attorney, Dorsey and Whitney, testified on behalf
of a client, Bush-Tell Inc., a small telephone company that
provides local telephone service in Western Alaska. She testified
strongly in support of HB 101. She said that Bush-Tell was
involuntarily dissolved by the state of Alaska through no fault of
its own back in 1993. As a result of that, it has a serious legal
problem that can only be resolved through an act of the
legislature. She said that the title of the bill includes the
words "public utilities" and she wanted to assure the committee
that this bill should not be controversial and should not be part
of any telephone or utility restructuring wars this legislative
session. This committee and the legislature has an opportunity
here to solve a large problem for a small company and any other
public utilities that are similarly situated.
MS. GRAHAME provided some background on Bush-Tell. It was started
in 1969 by Harry Colliver and is headquartered in Aniak, Alaska.
Mr. Colliver still lives in Aniak, is still the president and has
lived out there for approximately 40 years. Bush-Tell serves
several communities including Kalskag, Stony River, Holy Cross and
Red Devil. Throughout the 1970's and 1980's Bush-Tell followed the
state requirement of filing a biennial report. The biennial report
is a one or two page form sent out by the state to a corporation's
registered agent every other year. The company has to file it with
the state, the form identifies who the officers of the company are,
the number of outstanding shares and things like that. Throughout
the 1970's and 1980's Bush-Tell always filed its biennial report.
However, in 1991 the registered agent for Bush-Tell closed his law
practice and took a job with a government agency. He never told
the state or Bush-Tell that he was no longer going to be
Bush-Tell's registered agent. When the state sent the form in 1992
to the registered agent, the form didn't reach him because he had
closed his office and the forwarding address had expired. The
forms went back to the state and in 1993, when the state sent a
notice of dissolution again to the registered agent, it was simply
returned to the state of Alaska. Mr. Colliver and Bush-Tell had no
knowledge about any of this. Similarly, the state simply took the
unopened mail and never notified Bush-Tell, even though it would
have been easy for the state to find a public utility. Mr.
Colliver and his company didn't know the State had dissolved the
corporation. In 1998, Mr. Colliver called the Division of Banking,
Securities and Corporations with a question about registering his
corporation as a "dba" [doing business as] and was told that wasn't
possible because he didn't have a corporation; that it had actually
been dissolved in 1993.
Number 0564
MS. GRAHAME said this can be solved by enacting HB 101. Under AS
10.06.965, the legislature has the power to amend any provision of
the corporation code for any corporation whether or not that
corporation exists or not. The legislature has in fact re-extended
the reinstatement period for corporations in the past and that can
be found in AS 10.06.960 (k) where the reinstatement period was
extended for an Alaska Native corporation.
MS. GRAHAME cited the following reasons to enact HB 101: the
dissolution was no fault of Bush-Tell's or Mr. Colliver's; this
serious problem arose as the result of a very serious error by the
registered agent of the corporation; Bush-Tell didn't profit from
this in any way; the public was not harmed in any way; Bush-Tell
has followed all of its corporate formalities since 1993, except
for filing its biennial report; and it is necessary. The courts
can't do anything at this point. The only solution is a
legislative solution. Bush-Tell has been a very good corporate
citizen and it provides a very important service to residents of
rural Alaska. With the knowledge that Bush-Tell has been
dissolved, Bush-Tell is unable to do things, such as close a loan,
which it happens to be in the process of doing. The loan can't be
closed because Bush-Tell can't be certified as a corporation in
good standing. Bush-Tell needs assistance immediately.
Number 0717
REPRESENTATIVE COWDERY asked when did this lapse.
MS. GRAHAME said it was dissolved in September of 1993 for failure
to file its biennial report by the end of 1992.
REPRESENTATIVE COWDERY asked what has happened during the interim.
MS. GRAHAME answered that Bush-Tell didn't know there had been a
problem until recently so nothing has happened. The corporation
has functioned as it always has; it has filed its reports with the
Alaska Public Utilities Commission (APUC); it has paid its income
tax and its employees. Because Bush-Tell was unaware of the
problem, it has conducted its business in the normal way.
Number 0763
REPRESENTATIVE COWDERY asked whether it has the financial ability
to continue doing what they have been doing in the past.
MS. GRAHAME said absolutely, and Mr. Colliver has been a tremendous
corporate citizen as well as providing great service. He hires
high school students in Aniak so they have something on their
resume. He goes out of his way to help people in the community.
Number 0813
REPRESENTATIVE KOTT said it was his understanding in statute that
a registered agent has a responsibility to notify the Division of
Banking, Securities and Corporations once that agent is no longer
an agent. He wanted to know if that is correct and what type of
action has or should have been taken.
MS. GRAHAME said, when a registered agent resigns, that agent has
to follow requirements set forth in the statutes for notifying the
Division of Banking, Securities and Corporations that that agent is
no longer going to be the registered agent. If the registered
agent isn't there to receive the papers, or unless somebody takes
the additional step of notifying the corporation, the corporation
never learns of any legal action. The statute says when a
registered agent is no longer the registered agent, that agent has
to notify the state in writing, and then the state notifies the
corporation. None of that took place.
Number 0895
REPRESENTATIVE KOTT asked whether there was any penalty against the
registered agent for not notifying the division.
MS. GRAHAME said there was no penalty by the state against the
registered agent.
REPRESENTATIVE KOTT said if the division sends out a notification
that a biennial report is required and it is returned back to them,
it seems like the division should forward that biennial report and
notification to one of the officers listed for that corporation.
MS. GRAHAME said that did not occur and it is her understanding
that the Division of Banking, Securities and Corporations has
changed its practice and now notifies the corporation itself. When
important legal matters like this occur, the division finds the
president or an officer, but back in 1993 the division only
notified the registered agent.
Number 0972
CHAIRMAN HUDSON asked whether this is the only instance where there
has been a requirement to reinstate.
MS. GRAHAME said it is the only instance right now where this has
happened to a public utility, but she has looked at the statutes
and knows that the legislature has enacted similar acts for other
companies over the years - most recently for an Alaska Native
corporation.
Number 1001
REPRESENTATIVE ROKEBERG asked whether a law could be drafted to be
applicable to all corporations who find themselves in this
circumstance.
MS. GRAHAME said on behalf of Bush-Tell, they wouldn't have a
problem with that, but she hasn't spoken to the Division of
Banking, Securities and Corporations about that, so she doesn't
know if there would be any additional issues by doing that. What
happened to Bush-Tell could have happened to other corporations.
REPRESENTATIVE COWDERY asked what the APUC's position is on this.
MS. GRAHAME said she had not spoken to the APUC about its position
on this bill, but would be happy to do so and get back to the
committee.
REPRESENTATIVE COWDERY said he would like to get the position of
the APUC and the Division of Banking, Securities and Corporations
on this before it is wrapped up.
Number 1191
JIM ROWE, Director, Alaska Telephone Association, testified via
teleconference from Anchorage that he supported HB 101. There are
800 access lines served by Bush-Tell which is a member of the
Alaska Telephone Association. He thinks it is important for the
legislature to consider the needs of those rural telephone
customers and their families because if that corporation is not
able to serve them, they will be very disadvantaged. He hopes the
committee will consider strongly and quickly getting this measure
through.
REPRESENTATIVE KOTT asked whether Mr. Rowe had any problem with
broadening the bill to blanket all those corporations that may fall
into the same category.
MR. ROWE answered he would have no problem as long as the time
frame wasn't extended substantially.
Number 1381
BOB LOHR, Executive Director, Alaska Public Utilities Commission,
testified via teleconference from Anchorage. He said the APUC has
not adopted a formal position. The APUC, in the process of
deciding whether to issue a certificate of public convenience of
necessity to a utility, does review its corporate status to ensure
that it is in compliance with all applicable rules and regulations
of other agencies. At the time Bush-Tell was certificated, that
was the case. The APUC had no reason to check on corporate status
on any on-going basis so this was not a regulatory issue at the
time. From the perspective of the commission, Bush-Tell is a
public utility in good standing providing service to the
communities within its service area. To date, this has not become
a regulatory issue for the commission.
REPRESENTATIVE ROKEBERG said the APUC can issue a certificate to a
business organization that is not a corporation. In other words,
if there was a partnership in LLCs [limited liability companies],
LLPs [limited liability partnerships] or some other form authorized
under state law, a certificate could be issued.
MR. LOHR said there is a zero fiscal note for the bill and it would
not require any expenditure by the APUC.
Number 1518
REPRESENTATIVE ROKEBERG said one of the charges of the APUC is to
look after consumer protection and asked whether the failure to
register as a corporation has had a negative impact on the
consumers.
MR. LOHR said this has not affected the consumers in the area
served by the utility to the best of his knowledge. He said the
APUC has not received any complaints that relate to the corporate
status. They have operated in every respect as if they had valid
corporate status which is what they believed.
REPRESENTATIVE BERKOWITZ asked whether the certification in any way
affects the regulatory authority or oversight of the APUC.
MR. LOHR said the certification is extremely important and the
absence of the certificate would be a serious violation of public
utilities law, but the lack of corporate status has not affected
the certificate in any way to date.
REPRESENTATIVE BERKOWITZ asked whether it affects their ability to
do business as a phone company, if there is no corporate status.
MR. LOHR said he couldn't say that based on what they have
indicated. It affects their ability to attain loans and other
considerations, but to date they have not used the knowledge of
their lack of corporate status to begin any sort of regulatory
enforcement. To the best of his knowledge, it has not affected
their residential operations. If this were left unaddressed for
a long time and their inability to get loans became an issue, they
would have to take a look at that.
Number 1638
REPRESENTATIVE BERKOWITZ asked whether the APUC has encountered
anything like this in the past.
MR. LOHR said not in his time which goes back about seven years,
and he is not familiar with any cases reported by the commission
that relate to this type of involuntary dissolution. To his
knowledge, this is the first time it has occurred.
CHAIRMAN HUDSON said he thought the question about expanding the
legislation beyond public utilities to all corporations is
legitimate so he will hold the bill over.
Number 1720
GINNY FAY, Legislative Liaison, Department of Commerce and Economic
Development, said there have been cases where corporations have
inadvertently been dissolved. There have been times where a
corporation uses its address as that of its agent and that agent
moves and does not leave a forwarding address so the papers never
get to the corporation. The division changed its procedures a few
years ago and now they send the paperwork to the address of the
corporation, not to any of the agents. If it is returned from the
corporation address, then they send it to their agent and continue
to try to find the people who should be doing the filing.
Number 1821
CHAIRMAN HUDSON asked whether they have statutory authority to take
care of the other entities.
MS. FAY said it is her understanding that all corporations face
this potential problem if they don't get their biennial reports in
every two years.
CHAIRMAN HUDSON asked Ms. Fay whether she thought this should be
extended to all corporations.
MS. FAY said she would have to talk to someone in the Division of
Banking, Securities and Corporations to confirm that. She thinks,
if public utilities who provide a necessary public service go out
of business, the lights go out in those communities. She thinks
there are other corporations who are in better positions to avoid
being dissolved, especially since the department has changed the
way they go about it.
Number 1886
REPRESENTATIVE BERKOWITZ cited AS 10.06.633, "Involuntary
dissolution by the commissioner: grounds, procedures,
reinstatement", and stated subsection (c) reads, "If, following a
hearing, the commissioner determines the presence of neglect,
omission, delinquency, or noncompliance providing grounds for
involuntary dissolution under this section, the corporation may
appeal". He said as he reads that, if there is negligence on the
part of the agent or one of the corporate officers, then the
superior court has the authority to reverse a decision of the
commissioner which would negate the necessity of the legislature to
change the law. He asked Ms. Grahame whether the superior court is
reading that differently.
MS. GRAHAME replied an appeal to the superior court is not an
avenue available to Bush-Tell because too much time has passed.
Under AS 10.06.633, the state sends out a notice of dissolution
saying if it is not contested within 60 days, it is dissolved and
it has to be contested in the 60 days.
Number 1959
REPRESENTATIVE BERKOWITZ said, if the commissioner determines the
presence of neglect and the commissioner has determined neglect,
that should open the court doors again.
MS. GRAHAME said according to her understanding it is not for
neglect or failing to file biennial reports, it is for other
corporate misdeeds to be dissolved.
CHAIRMAN HUDSON said they would be holding this bill over because
they need the prime sponsor there, something from the APUC as to
the position, the fiscal note, the ability to respond to questions
by the committee members and the answer to extending it to
everyone.
PILOT STUDY PRESENTATION BY CH2M HILL
TAPE 99-5, Sides A & B
TAPE 99-6, Sides A
SUMMARY OF INFORMATION
KARL RABAGO, Consultant, CH2M Hill, presented the "Recommendations
to the Alaska State Legislature and the Alaska Public Utilities
Commission Regarding a Retail Pilot Program."
RAY KREIG participated via teleconference from Anchorage on the
Pilot Study Presentation by CH2M Hill.
ERIC YOULD participated via teleconference from Anchorage on the
Pilot Study Presentation by CH2M Hill.
STEVE CONN participated via teleconference from Anchorage on the
Pilot Study Presentation by CH2M Hill.
MARY ANN PEASE participated via teleconference from Anchorage on
the Pilot Study Presentation by CH2M Hill.
MARLOW POWER AND STEAM
TAPE 99-6, Side A
SUMMARY OF INFORMATION
MARC MARLOW, from Marlow Power and Steam, Incorporated, presented
plans for repowering the Knik Arm Power Plant in Anchorage.
RANDY KAER, from Marlow Power and Steam, Incorporated, presented
plans for repowering the Knik Arm Power Plant in Anchorage.
COMMITTEE ACTION
The Committee took no action.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Utility Restructuring meeting was adjourned at
10:20 a.m.
NOTE: The meeting was recorded and handwritten log notes were
taken. A copy of the tapes and log notes 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.
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